Tag Archives: ethical violations

Walmart bribery crisis–what do you do when you’ve done wrong

The New York Times story revealing Walmart’s alleged bribery of government officials enabling the company to grow very rapidly in Mexico probably has a familiar ring to many in crisis management. The question is: how do you help a client who has done wrong, that is violated the law, ethics, or moral standards and values commonly held by the community or society?

Walmart’s problem here goes far beyond bribery. This is a classic of what of the coverup story. As juicy as the story about foreign bribery is, what makes it so much more interesting to the NYT, and presumably its readers, is the alleged coverup. These events happened in 2005. NYT has hundreds of emails involving top executives and company lawyers fretting over it. But the NYT reports:

In December, after learning of The Times’s reporting in Mexico, Wal-Mart informed the Justice Department that it had begun an internal investigation into possible violations of the Foreign Corrupt Practices Act…

In other words, according to the NYT the company knew about the violations, had intense discussions about what to do, but did not report to the Justice Department, nor come clean with the public or media about the dirty dealings until forced to by the NYT investigation.

The allegations are that company real estate officials bribed Mexican government officials to get approvals to place Walmart stores over Mexico. Walmart is huge in Mexico, employing over 200,000 people and is the country’s largest private employer.

The company’s response is measured, focused and on the one hand, strong. They noted (complained) that the story reports on events that happened over 6 years ago. They say they took independent action to investigate. They state their commitment to fully comply with FCPA. They provide some specific details on how they are insuring future compliance. And they commit to deal appropriately with anyone determined to have violated.

In others, they admitted to no wrong doing and stated commitments and actions. But, given what is at issue here, it is a very weak response. What about the implied cover-up? Why not an explanation for the delay? Why complain about the NYT dredging up old accusations when it is news because it has not been reported before, and why mention this in the context of an implied coverup?

It seems some rules about crisis communication have evolved quite clearly in the past few years. One main one is, if you’ve done wrong, fess up. Don’t obfuscate, duck and weave. If senior leaders knew about the very serious potential problems in Mexico way back in 2005, then I believe Mr. Tovar should have said “we would have met our own standard for honesty, integrity and legality if we had fully and independently investigated when these allegations first appeared and if warranted, turn them over to the government for investigation.”

When facing a client who has done wrong, I tell them that whatever they have done wrong to accept responsibility, show they are remorseful, and demonstrate that by taking action that rectifies the harm done. If they haven’t done wrong, then clearly explain why the accusers are wrong in their suggestions or allegations. If, as is often the case, there is a mix of wrong doing and over-wrought accusations, then the explanation of where the accusations are wrong must done with humility and contriteness given that at least some are accurate.

If the NYT article is wrong, if the accusations of bribery and worse, of cover-up are overwrought, Walmart has done little to convince they are being treated unfairly. If the accusations are valid (which we must consider that given the lack of rebuttal), then Walmart has to come much further in accepting responsibility and admitting they violated our trust.