Blogs & Comment

Bribery at Wal-Mart de Mexico

This scandal has far-reaching implications, all the way to the top of Wal-Mart's international operations.

Photo: Spencer Platt/Getty

Just when things seemed to be going so well at Wal-Mart!

Six years ago, just after I started blogging, I made a happy prediction about Wal-Mart. At the time the company was subject to a truly enormous amount of bad press, accused of everything from environmental infractions to falsifying employee time-cards. Nonetheless, I predicted that “within 5 years, Wal-Mart will be at the top of at least some business ethics/corporate social responsibility/corporate citizenship rankings.” I don’t think it was a particularly brave prediction: Wal-Mart has the money, and the organizational efficiency, to do just about anything it turns its mind to. And most of the bad things the company was being accused of weren’t central to its business model, so there didn’t seem to be any major barriers to the company turning over a new leaf in response to massive public pressure.

My prediction turned out to be roughly right. While certainly not free of criticism, Wal-Mart has turned into an icon of environmental sustainability, and has indeed won a number of ethics-related awards. The bad press had dropped to virtually zero.

And then this.

If you haven’t yet read the stunning exposé on bribery at Wal-Mart de Mexico, you should. The short version: Wal-Mart de Mexico was allegedly involved in an organized campaign to use bribery as an aid to its ambitious plans for expansion. When insiders notified Wal-Mart head office in Bentonville, Ark., of what was going on—the corruption, the devil-may-care attitude to law-breaking, the risk to corporate reputation—the big fish there basically swept the problem under the rug.

It’s a damning story, one that has vast implications all the way to the very top of the company’s worldwide operations. All kinds of questions arise. Where was the Board? What does this say about ‘tone at the top’? What role was played by international differences in law and custom? What damage will this do to Wal-Mart’s attempt to rehabilitate its reputation? What does this scandal say about the management skills of top executives at Wal-Mart de Mexico? Should heads roll? Or, more likely, whose heads should roll? To what extent does this pull the rug out from under the company’s sustainability and CSR efforts? I’ll explore a few of those questions here in the coming days.