Executive Briefings

Allegation Wal-Mart Covered Up Bribery in Mexico Highlights How Companies Handle Corruption

Wal-Mart's annual meeting next month promises to be a contentious one because of questions over how the retail giant handled bribery allegations at a Mexico subsidiary. Shareholders are concerned about the board members' independence in light of the alleged cover-up of bribery that occurred in 2005 and 2006.

In the meantime, the controversy surrounding Wal-Mart could have a ripple effect on other companies' governance practices by prompting boards to become increasingly concerned over hits to the reputations of the companies they oversee. That translates into possibly tougher questioning of CFOs. "It's audit-committee meeting season for most public companies, and I'd be surprised if there is an audit committee out there not questioning companies on their processes and compliance around the Foreign Corrupt Practices Act," says Dennis Whalen, executive director of KPMG's Audit Committee Institute. (Whalen refused to comment on the Wal-Mart case specifically.)

Even before the Wal-Mart issue came to light, directors have become increasingly concerned over compliance with the FCPA, a 34-year-old law that prohibits U.S. companies from bribing government officials to win business. The reasons for their worry are that the enforcement of the act has risen in recent years and more companies are becoming global in scale.

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Keywords: Legal, Govt. & Regulatory Issues, Business Strategy Alignment, Supply Chain Analysis & Consulting, Global Supply Chain Management, Foreign Corrupt Practices Act, Bribing Foreign Officials, KPMG's Audit Committee Institute, FCPA compliance

In the meantime, the controversy surrounding Wal-Mart could have a ripple effect on other companies' governance practices by prompting boards to become increasingly concerned over hits to the reputations of the companies they oversee. That translates into possibly tougher questioning of CFOs. "It's audit-committee meeting season for most public companies, and I'd be surprised if there is an audit committee out there not questioning companies on their processes and compliance around the Foreign Corrupt Practices Act," says Dennis Whalen, executive director of KPMG's Audit Committee Institute. (Whalen refused to comment on the Wal-Mart case specifically.)

Even before the Wal-Mart issue came to light, directors have become increasingly concerned over compliance with the FCPA, a 34-year-old law that prohibits U.S. companies from bribing government officials to win business. The reasons for their worry are that the enforcement of the act has risen in recent years and more companies are becoming global in scale.

Read Full Article


Keywords: Legal, Govt. & Regulatory Issues, Business Strategy Alignment, Supply Chain Analysis & Consulting, Global Supply Chain Management, Foreign Corrupt Practices Act, Bribing Foreign Officials, KPMG's Audit Committee Institute, FCPA compliance