Gini Dietrich

The PR Nightmare for Walmart

By: Gini Dietrich | April 24, 2012 | 
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I would be remiss if I didn’t blog about the PR nightmare Walmart has caused itself by allegedly covering up the bribes they paid Mexican officials in exchange for getting building permits faster and other favors to help it aggressively expand in the region.

Late last week the New York Times revealed a Walmart attorney received an alarming email from a former executive at the company’s Mexico subsidiary, which described how the company had orchestrated a campaign of bribery in order to win market share. The problem? This happened in 2005.

That same year, the attorney dispatched a committee to Mexico City and found, yes indeed, there was suspicion both Mexican and U.S. laws had been broken. The lead investigator at the time recommended Walmart continue the investigation to confirm suspicions.

Instead, Walmart shut it down.

The campaign of bribery isn’t the PR crisis…it’s in how it was handled. Rather, in how it was not handled.

I’m not an investor relations communication professional, but I do know enough to know Walmart has violated the Sarbanes-Oxley act, which was instituted in 2002 in the wake of accounting scandals at Enron, Tyco, WorldCom, and other giant organizations.

Sarbanes-Oxley requires corporations and their auditors to report on the company’s internal controls for financial reporting. It also requires CEOs and CFOs certify the material accuracy of financial reports.

If these allegations are true, Walmart has run afoul of all of these provisions…and the responsibility lies at the feet of its current chief executive, who had just been promoted to run all international divisions in 2005…which Mexico falls under.

If Walmart is found to have violated the Foreign Corrupt Practices Act, which forbids paying bribes to foreign officials, there will be huge fines, its executives will lose their jobs, or they may even go to jail.

And the giant retailer will be left with a PR crisis that will hurt its reputation for years to come, not to mention the distraction the company is facing for most of the rest of this year.

It’s been reported Lee Scott, the company’s CEO in 2005 and current board member, called a meeting in early 2006 to discuss the findings of the investigation committee and decided to hand it back to the Mexico subsidiary’s general counsel (who has been named in the investigation). From there it went nowhere.

I know I’ve been accused of being ethical to a fault, but I really don’t understand how you can sit in a board meeting and decide not to do anything, when it’s pretty clear there have been bribes.

Did we not learn from Arthur Andersen and Bridgestone/Firestone and Enron and WorldCom and John Edwards and Bill Clinton, and, and, and?

The problem is never in the issue at hand. The problem is always in how it’s handled when the truth comes out.

Why is it so hard for human beings to say: We made a mistake, we’re fixing it, and we’re sorry?

Are we so ego-centric we think we won’t get caught?

About Gini Dietrich


Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, co-author of Marketing in the Round, and co-host of Inside PR. She also is the lead blogger at Spin Sucks and is the founder of Spin Sucks Pro.

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