Walmart Bribery

7/31/2019 Walmart Bribery

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Blog on Bribery

The latest allegations of bribery have been leveled at Walmarts Marts

Mexican operations, charging it with covering up illegal proceedings, thus

embroiling the company in scandal. More recently, reports circulated that

Walmart, a committee member of the U.S. Chamber of Commerce, had

been lobbying the government to amend the Foreign Corrupt Practices Act

to reduce liability for companies that bribe foreign officials and exempt

companies, such as Walmart itself, that have their own compliance

programs. On this last point, lobbyists argue that if internal rules exist, no

matter how insubstantial, company executives are off the hook should

bribery be uncovered on their watch.

Corruption corrodes the political system and involves a massive transfer of

wealth from poor to rich corporations and venal politicians. It also adds

an unseen tax, as officials cream their take from major infrastructure

projects or privatizations. The World Bank estimates that bribery is a

trillion dollar business.

The most lucrative sources of bribes are large capital programsbig dams,

big highways, new power stations, massive building programs, and so on

because they provide ample opportunities to inflate prices, with plump

commissions flowing back into the pockets of politicians and bureaucrats.

As a result, many struggling countries are burdened with expensive white

elephants and debts that will cripple its economy for decades to come. In

Page 1 New Globalists Harry Blutstein 2012
http://www.huffingtonpost.com/2012/04/24/wal-mart-bribery-scandal-lobbying_n_1450873.html?ref=daily-brief?utm_source=DailyBrief&utm_campaign=042512&utm_medium=email&utm_content=NewsEntry&utm_term=Daily%20Briefhttp://www.huffingtonpost.com/2012/04/24/wal-mart-bribery-scandal-lobbying_n_1450873.html?ref=daily-brief?utm_source=DailyBrief&utm_campaign=042512&utm_medium=email&utm_content=NewsEntry&utm_term=Daily%20Brief


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the end, the poor pays through increased taxes they can ill afford and

inflated prices for basic services, like electricity and water.

Corporations involved in bribery are the big winners, just as competitors

who play by the rules are the big losers. It robs them of contracts they

would have otherwise won by tendering the lowest quote. Consequently,

ruthless corporations thrive while good ones struggle or even go under.

Politicians in developing countries are no less complicit. They create

impenetrable rules for businesses that can only be navigated if corporate

executives are willing to oil the wheels, which invariably translate into

commissions for helpful bureaucrats and politicians amenable to showing

the way through the legislative morass.

Globalization has made bribery easier to get away with. Bribes are often

disguised as commissions to intermediaries who hand over the cash or

transfer the funds into Swiss bank accounts where corrupt politicians can

keep their identities secret. These intermediaries can be agents, shelf

companies, or subsidiaries located in Third World countries, making

tracking money transfers difficult. Here we glimpse the sordid back-alleys

of globalization, where deals are done and crimes are committed with

every expectation that they will go undetected.

Until recently, bribery was not just tolerated by governments but also

rewarded. For example, bribes were treated as normal business expense

and allowed to be claimed as tax deductions.



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Mainly through the efforts of the US, the international community was

shamed into taking action to outlaw bribery, albeit reluctantly. In 1997,

the OECD adopted an anti-bribery treaty, and in 2005, the United Nations

followed suit with its Convention against Corruption.

Disappointingly, even though these two major treaties are now on the

books, the situation has not noticeably improved, and relatively few

prosecutions have trickled through the courts. To understand why these

treaties have failed, we need to look at how the political dynamics play

out.

Implementing these conventions by creating local regulations is far from

straightforward. As much as countries accept the evil of bribery, there is

a strong temptation to game the system. They know that if they crib,

they can give their corporations a competitive advantage. There is a lot

of money at stake. With military equipment, construction, and aerospace

industries fighting for billion dollar contracts, adding a few millions in

kickbacks is awfully tempting.

Cover-ups are usually the order of the day, unless the scandal hits the

newspapers, as it has in the case of Walmart. In 2009, Transparency

International concluded that the global financial crisis had increased the

risk of backsliding, as competition for decreasing numbers of orders

intensifies. Rather than being able to report progress, the account ended



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by speculating that there was a distinct probability that enforcement of the

Convention could go into reverse.

And they were right. Behind the scenes, lobbyists were at work, ultimately

getting Forbes magazine to take up their cause. In a 2010 article, the

author argued that the only beneficiaries of the government's crusade

seemed to be white-collar defense lawyers.

What are these prosecutors accomplishing? Maybe they are fighting

for truth and justice. Maybe, that is, it makes sense for the U.S. to

hold its corporations to a higher standard of integrity than the French

or Chinese outfits they compete against when trying to win business

abroad.

What the Walmart case reveals is that the US government, which has

been at the forefront pursuing strong international bribery laws, is being

stoutly lobbied to dilute its bribery laws. One can only hope that this

lobbying will cease in the face of the Walmart revelations. Sadly, I

suspect it will renew the efforts of business lobbyists to ensure that it is

harder to uncover and prosecute bribery in the future.


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Walmart Bribery