Walmart Inc. and Brazilian Subsidiary Agree to Pay $137 Million and Sub Pleads Guilty to FCPA Violations

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Friday, June 28, 2019
Author: 
Bruce Zagaris
Volume: 
35
Issue: 
7
Abstract: 

On June 20, 2019, Walmart Inc. (Walmart), a U.S.-based multinational retailer and its wholly owned Brazilian subsidiary, WMT Brasilia S.A.R.L. (WMT Brasilia), settled Foreign Corrupt Practices Act (FCPA)  charges by agreeing to pay a combined criminal penalty of $137 million and a guilty plea by WMT Brasilia to end a seven-year inquiry. Walmart admitted that, from 2000 until 2011, certain Walmart personnel responsible for implementing and maintaining the company’s internal accounting controls related to anti-corruption were aware of certain failures involving these controls, including relating to potentially improper payments to government officials in certain Walmart foreign subsidiaries, but still failed to implement adequate controls.  Such controls would have, among other things, ensured: (a) that adequate anti-corruption related due diligence  was conducted on all third-party intermediaries (TPIs) who interacted with foreign officials; (b) that sufficient anti-corruption-related internal accounting controls concerning payments to TPIs existed; (c) that proof was required that TPIs had performed services before Walmart paid them; (d) that TPIs had written contracts that included anti-corruption clauses; (e) that donations ostensibly made to foreign government agencies were not converted to personal use by foreign officials; and (f) that policies concerning gifts, travel and entertainment sufficiently addressed giving things of value to foreign officials and were implemented.  Although senior Walmart officials responsible for implementing and maintaining the company’s internal accounting controls related to anti-corruption knew of these issues, Walmart did not start to change its internal accounting controls related to anti-corruption to comply with U.S. criminal laws until 2011.