6 Burning Questions on the Wal-Mart Corruption Scandal
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6) How does the company know that its training and auditing practices for its employees, agents, suppliers and partners are effective?
Similarly, socially responsible investors should hold the company accountable at the June annual meeting, through shareholders resolutions, substantive meetings with management and detailed progress reports as to the effectiveness of the new compliance structure.
All companies should ensure that their employees know they can and must do business legally in environments in which the local governments demand payment to play. While “facilitating” payments to expedite permits may be legal under US law, in many countries, including Mexico, they’re considered pure bribes even if they are requested and expected. And even if they were legal under US and Mexican law, Wal-Mart would have been required to accurately report these payments in their books.
Instead of pandering to the justifiable public outrage, we need to get to the heart of the scandal -- a corporate culture that reportedly condoned widespread bribery and deliberately suppressed efforts to investigate further.
While none of this may be important to the average Wal-Mart shopper who values convenience for the cheapest price on goods and services, the allegations, if corroborated, are a serious reminder to all companies and investors that there are more important things than profits and growth. Crime should not pay and an ethical reputation is priceless.
Marcia L. Narine is a visiting assistant professor at the University of Missouri-Kansas City and a compliance consultant for MDO Partners.