Wal-Mart Stores, Inc. lost US$10 billion of its market value on Monday (April 23) on concerns that bribery allegations in México could cause further losses.
Two US lawmakers said they were launching their own investigation into allegations in a New York Times article that Wal-Mart de México had engaged in a campaign of bribery to build its business. In México, the front-running presidential candidate, Enrique Pena Nieto, and lawmakers also called on local authorities to investigate.
If the allegations are proven, Wal-Mart could face criminal penalties under the US Foreign Corrupt Practices Act (FCPA), which forbids bribes to foreign government officials.
Shares of Wal-Mart de México, which is 69% owned by Wal-Mart and known as Walmex, fell 12% to 37.89 pesos ($2.88). The drop wiped out a 12% year-to-date gain in the second-most-weighted stock on México's IPC index.
COMMENT: The Times reported on April 21, that a senior Wal-Mart lawyer received an email from a former Walmex executive in September 2005 that described how the Mexican company had paid bribes to obtain permits to build stores in the country.
Wal-Mart subsequently sent investigators to Mexico City and found a paper trail of suspect payments totaling more than US$24 million. Unfortunately, the company's leadership shut down the probe and did not notify US or Mexican law enforcement officials until after the newspaper informed Wal-Mart that it was looking into the issue.