by Marion Nestle
Apr 26 2012

Walmart’s embarrassing bribery case

On April 22, the New York Times published an unusually lengthy account (front page plus three full pages) of how Walmart executives in Mexico bribed officials to allow the company to open stores in many locations in record time.

I was struck by the simplicity of the rationale for the illegal behavior (I’ve italicized the key points):

But The Times’s examination uncovered a prolonged struggle at the highest levels of Wal-Mart, a struggle that pitted the company’s much publicized commitment to the highest moral and ethical standards against its relentless pursuit of growth.

Under fire from labor critics, worried about press leaks and facing a sagging stock price, Wal-Mart’s leaders recognized that the allegations could have devastating consequences, documents and interviews show.

Wal-Mart de Mexico was the company’s brightest success story, pitched to investors as a model for future growth. (Today, one in five Wal-Mart stores is in Mexico.) Confronted with evidence of corruption in Mexico, top Wal-Mart executives focused more on damage control than on rooting out wrongdoing.

As I keep saying, Wall Street pressures on corporations not only to make profits, but to grow profits every quarter, are the root cause of much food company corruption and corner-cutting.

 

  • no pisotees

    WALMART: DON’T WALK ALL OVER MEXICO /
    WALMART: NO PISOTEES A LOS MEXICANOS
    http://www.change.org/petitions/walmart-don-t-walk-all-over-mexico-walmart-no-pisotees-a-los-mexicanos

  • FarmerJane

    Testimony of farm leaders at the Obama dairy antitrust hearings held in spring of 2010 was that large chain stores, especially Walmart have tremendous power to drive the prices to dairy farmers down down down. We keep seeing USDA estimates that margins have become so razor thin, if even existent, that farmers must now milk 1,000 cows to break even. Onward to the multi-thousand cow CAFO’s. We’ve also seen accusations that the so-called organic milk that’s sold in some chain stores is trucked in from organic CAFO’s milking thousands of cows in states like Texas. (Just show consumers pictures of happy little farms and they buy it for top dollar). “Pay less, live better” applies only to urban America while farming communities flounder.

  • http://www.tipsonhealthyliving.com/ Val @ Tips on Healthy Living

    What’s the verdict on Wal-Mart’s use of the organic label? I had heard years ago that they were squeaking under the FDA rules on what constitutes organic and pressuring organic farmers. Still true?

  • brad

    I think this is less of a commentary specifically on Wal-Mart versus a commentary on the effect of shareholder pressure on companies to keep growing their profits, which can lead to reckless pursuit of profits at all cost. As someone who works for a company that went public a few years ago, I’ve seen firsthand what those pressures can do internally in terms of company policies, employee morale, and overall priorities.

    I’ve decided I no longer want to contribute to that game as a shareholder, so I’m in the process of moving all my investments out of the stock market and into impact investments, which is a new form of social/environmental investment that puts your principal directly to work while still earning competitive returns (unlike most “socially responsible” investments).

  • Cathy Richards

    Completely agree that Wall Street pressures on food companies is confounding public health goals.

    But I do wonder (naively I admit) if ANY company can survive in Mexico without some degree of corruption.

    Perhaps they can’t survive ANYWHERE without some degree of corruption, given how competitive things are. Even non-profit companies seem to have to grease wheels and fudge things nowadays.

  • Anthro

    Brad, thanks for the tip! I hadn’t heard of this type of investing but will have a look. I’ve been preaching for some time about people who holler about policy and corruption but collect nice dividends from the very companies that perpetuate the problem.

  • brad

    Anthro- you’ll find plenty of info online and a great book by Antony Bugg-Levine and Jed Emerson, but unfortunately the impact investing opportunities for retail investors are limited (I’m investing for my retirement). But it’s a rapidly growing field and things are changing fast. Currently most of the retail opportunities involve debt rather than equity, which means your financial returns are very small (compared with the sometimes fantastic returns you can get from impact investments in equity…for now those are mostly enjoyed by venture capitalists rather than small-timers like me). But if you redefine “return on investment” to mean social and environmental improvements as well as financial returns, these look very attractive.

    Check out the Slow Money movement: they have links to a number of impact investment opportunities on their site (none of which are available to me because I live in Canada).