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Walmart bribes ‘went via Mexican governor’

Jef Feeley Wilmington, Delaware

WalMart’s Mexican unit used a current state governor there to facilitate $156 000 (R1.4 million) in bribes meant to help open stores, an ex-lawyer for the retailer told company officials in 2005, according to documents released by members of the US Congress.

The payments were negotiated by Graco Ramírez Garrido Abreu, who at the time served as a federal legislator for the state of Morelos, a Walmart summary of the accusations stated. It was released on January 10 by Democratic Representatives Henry Waxman and Elijah Cummings, whose staff is investigating the lawyer’s allegations.

The accusations by attorney Sergio Cicero Zapata, who alleged Ramírez was “the main contact person” to speed up needed permissions from the Urban Development Ministry, came in a summary of an October 13, 2005 meeting with the retailer’s officials.

Cicero, a 28-year veteran of the company, told them he set up the bribery scheme while employed by Walmart. He was forced out in 2004 after colleagues queried his oversight of payments to consultants in company-related property deals.

Ramírez, who was elected as governor of Morelos last year, denied Cicero’s claims, saying on his official website that he had no relationship with Walmart at the time in question.

Partly based on Cicero’s accounts, the New York Times reported last year that $24m in “suspect payments” were made in Mexico on Walmart’s behalf to open stores. Cicero could not be reached for comment.

Both US and Mexican prosecutors said last year that they were investigating the bribery allegations.

Walmart de México is the country’s largest private employer, with more than 209 000 employees. Twenty percent of Walmart’s more than 10 000 stores worldwide are in Mexico, following rapid growth over the past decade.

After the New York Times report, Walmart officials said they had started a corruption investigation of the Mexican unit and expanded the probe to the company’s operations in India, China and Brazil.

Walmart officials said last November that they had assigned more than 300 lawyers and accountants to the investigation and had spent almost $100m. While Cicero’s claims about the governor were previously reported in Reforma and other Mexican newspapers, they have not been widely published outside the country.

“There is nothing new in these documents,” Walmart spokesman Randy Hargrove said. “This information has been part of the company’s ongoing investigation of potential violations of the US Foreign Corrupt Practices Act for more than a year and has been the subject of two New York Times articles.”

He said the company had provided the documents to the US Department of Justice and the Securities and Exchange Commission as part of its co-operation with those agencies.

Among the fresh details in the documents released by Waxman and Cummings were that Walmart paid at least $273 000 in bribes to local officials and managers of a power company to expedite construction projects.

Lawyers hired as Walmart consultants handed out envelopes with more than $156 000 in cash to government regulators in Mexico City over a two-year period starting in 2003 to speed up environmental approvals to build new stores, according to the files.

Walmart also paid more than $117 000 in bribes to managers of Luz y Fuerza del Centro, a now defunct energy company operating outside Mexico City, to jump ahead of other customers and get power for a distribution centre, Cicero told a Walmart investigator.

“The same method using an external office was used for the cash deliveries” to the power company, according to notes of the interview with Cicero.

The bribery allegations prompted Walmart investors to sue the retailer’s board in the US, alleging in a lawsuit that directors failed to properly oversee the Mexican unit’s operations. Three lawsuits have been filed there, seeking access to company files on the bribery allegations. – Bloomberg

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