Walmart of Mexico: Corrupt to the Corporate Bone
One expects many Mexicans to be corrupt because there is so much corruption there. It is inherent in parts of their government, whole city and town governments are sometimes in the drug cartel's circle of friends via bribery. Drug cartels own large portions of border cities that Mexicans avoid and police seldom venture into. Many Mexican-Americans now avoid traveling to Mexico to see relatives because of the society. They avoid taking a car fearing they will be stopped by gunmen for a bribe to continue. Many Mexicans are law-abiding but corruption is Mexico's middle name.
One would not expect an American corporation to allow an affiliate, in this case, Walmart de Mexico, to be corrupt to the bone. One would think, there might be some oversight by the American home office. Guess not.
Walmart wanted to build a mammoth store within 10 miles of the pyramids in Teotihuacan, Mexico, however, the zoning in that city prohibited it. Yet, had at HQ in Mexico City, 30 miles away, the execs there decided to bribe the local city officials to the tune of $52,000. The city zoning director took the bribe and created a new zoning map allowing Walmart to build their store that previously prohibited commercial development that close. They would pay another $150,000 in bribes to others. This was the was the way to get the store built. Was Walmart in the USA unaware of this, no. Their attorney's had been told this is how the store was built in the location they wanted. It was not the only time Walmart de Mexico bribed city officials to build a store in a location that was formerly prohibited. The bribes also went to civic leaders to show favor in the process and in debates.
In all, Walmart de Mexico used bribes 19 times. Walmart paid $341,000 in bribes to get a store built in a densely populated area of Mexico City without a construction license, environmental permit, traffic permit or urban impact assessment. They also paid $765,000 in bribes to build a cast refrigerated distribution center in a flood basin north of Mexico City where even small developers had been denied for lack of electricity.
Walmart America knew of the local protests by Mexican citizens who opposed many of the proposed construction sites, especially at the Teotihuacan location. These occurred in 2004. They were so loud that Mexican authorities started to investigate them which found no wrongdoing. Were they also bought? Probably. But, Walmart America knew that Walmart de Mexico was under suspicion of breaking Mexican law, yet kept quiet.
The U.S. Justice Department is now looking into conduct for possible violations of the Foreign Corrupt Practices Act, which makes US corporations and their subsidiaries liable for bribing foreign officials.
Walmart has declined comment. They are still keeping quiet, as before.