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PORTSIDE  April 2012, Week 4

PORTSIDE April 2012, Week 4

Subject:

Is Walmart Too Big, Powerful, Influential to Obey the Law?

From:

Portside Moderator <[log in to unmask]>

Reply-To:

[log in to unmask]

Date:

Thu, 26 Apr 2012 22:04:01 -0400

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (135 lines)

Is Walmart Too Big, Powerful, Influential to Obey the Law?

By Richard Trumka,
President - AFL-CIO

Huffington Post
April 26, 2012

http://www.huffingtonpost.com/richard-trumka/walmart-mexico-bribery_b_1455680.html

This week's reports from the New York Times about Walmart's
practices in Mexico are breathtaking. The Times found
"credible evidence that bribery played a persistent and
significant role in Walmart's rapid growth in Mexico." The
Times interviewed an executive of Walmart's Mexican
subsidiary who "bought zoning approvals and reductions in
environmental impact fees." According to the New York Times,
when lawyers for Walmart discovered this activity and
informed senior management, then Walmart CEO Lee Scott
ordered Walmart's internal investigative protocols revised
to give the targets of internal investigations more control
over those same investigations. The specific reports about
conduct in Mexico were ignored, the executives involved were
promoted and a senior in-house lawyer who objected
subsequently left Walmart. The apparent result was that
Walmart grew dramatically in Mexico at the expense of its
Mexican competitors, leading to Mexico becoming Walmart's
second largest market after the United States. The executive
identified in Walmart's in-house investigator's notes as
"most responsible" was promoted to head of all U.S. Walmart
stores.

Under the Foreign Corrupt Practices Act, it is a crime for a
U.S. company to bribe an official of a foreign government --
just as it is a crime to bribe an official of the United
States government. It is also a crime in Mexico to bribe an
official of the Mexican government. And bear in mind that
the Times story does not describe the acts of isolated
individuals -- it describes conduct and elaborate efforts to
suppress the results of internal investigation of that
conduct involving multiple top executives over a period of
years. In other words, the New York Times story describes
"credible evidence" of criminal activity and the willful
neglect of criminal activity involving individuals at the
highest levels of one of America's largest corporations.

Nothing like this has happened since the collapse of Enron
and Worldcom in 2002. And Walmart is of course a more
important company than either Enron or Worldcom. Walmart is
the largest private employer in the United States. And in
the days since the Times story appeared, the Washington Post
has reported that Walmart has participated in an aggressive
lobbying campaign to weaken the Foreign Corrupt Practices
Act which makes bribing foreign officials a crime.

Breathtaking, yes. Yet not a total surprise to Walmart
employees in the U.S. or Mexico. Walmart workers know that
Walmart is indifferent to the law -- that is the lesson of a
trail of employee harassment and fired union activists in
the U.S. and Canada. And in Mexico, employees work under
protection contracts with company- controlled "unions" that
ensure the company will maintain low wages and prevent
workers from organizing a legitimate union.

But this story has a number of other lessons that all
Americans need to understand, lessons about even more than
Walmart.

First, the Walmart episode shows the utter futility of
expecting large corporations, their boards and their law
firms to police themselves. Over the last 10 years, Walmart
has spent many millions of dollars trying to persuade
investors and policy makers that it is a responsible
corporate actor -- with internal checks on improper
behavior. The Times report reveals all of this as so many
fairy stories -- behind which is a strategy for corporate
growth that appears to have relied on bribery.

Second, this episode reveals the tragic folly of NAFTA. When
NAFTA was passed in 1994, many in Mexico hoped NAFTA would
lead to their country shedding a legacy of public corruption
and becoming more like the United States in terms of rule of
law. This expectation was right in that it flowed from an
understanding that a free trade agreement means economic and
legal integration. But it naively assumed that rule of law
would win out. Instead, NAFTA has been a race to the bottom
in every respect -- including rule of law. U.S. firms like
Walmart did not want a North America where the rule of law
applied to big corporations -- they wanted a legal system
that was for sale both in Mexico and the United States. And
so far that's what it appears they got.

Third, who were the losers in Walmart's Mexican business-as-
bribery strategy? It appears the losers were Mexicans --
Mexican retailers who could not outbid Walmart, Mexican
citizens who saw their environmental laws ignored. The
inevitable next question is: Are we too going to be losers
in that the rule of law will be undermined in the United
States when we decide Walmart is too big, too powerful, too
influential to have to obey the law?

That question is now before the bodies responsible for
enforcing the Foreign Corrupt Practices Act -- the
Securities and Exchange Commission and the Justice
Department -- and ultimately the courts. The federal statute
book is clear -- it is a crime for a U.S. corporation to
bribe an official of a foreign government. The U.S. code is
also clear that it is illegal to fire a worker for trying to
form a union. Walmart has gotten away with violating our
labor laws en masse for decades. Will they be able to
similarly ignore our criminal laws and get away with it? If
they do, we will know that NAFTA has succeeded not only in
lowering living standards on both sides of the border, but
in destroying the rule of law.

==========

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