* Compliance officer to oversee officers in other markets
* Company will not say when post was created
* Castro-Wright resigns from MetLife board
* Wal-Mart shares fall 3 pct
By Brad Dorfman
April 24 (Reuters) – Wal-Mart Stores Inc said on
Tuesday it has appointed a global officer to oversee compliance
with a U.S. law that forbids bribes to foreign officials as it
grapples with a bribery scandal that has led to more than $10
billion being cut from its market value.
The move is one of the steps the world’s largest retailer
has taken in the past year to manage issues related to the U.S.
Foreign Corrupt Practices Act, a 1970s law that forbids bribing
foreign officials.
Wal-Mart shares closed 3 percent lower, adding to declines
from Monday that wiped $10 billion from the company’s market
values.
Wal-Mart spokesman David Tovar declined to say when the post
was created or who was named to fill it. The person appointed
will report to the general counsel for Wal-Mart’s international
unit.
On Saturday, the New York Times reported that a senior
Wal-Mart lawyer received an email from a former executive at
Wal-Mart de Mexico in September 2005 that described
how the Mexican affiliate, known as Walmex, had paid bribes to
obtain permits to build stores in the country.
According to the Times, Wal-Mart sent investigators to
Mexico City and found a paper trail of suspect payments totaling
more than $24 million. But the company’s leaders shut down the
probe and did not notify U.S. or Mexican law enforcement
officials until after the newspaper informed Wal-Mart it was
looking into the issue, the Times reported.
The lawyer also identified Eduardo Castro-Wright as the
driving force behind years of bribery. Castro-Wright became CEO
of Walmex in 2003 and moved on to other senior roles with the
company. He is set to retire on July 1.
On Tuesday, MetLife Inc, the largest U.S. life
insurer, said Castro-Wright had resigned from that company’s
board.
“Over the past weekend, I notified you of recent events that
will require my immediate and personal attention,” Castro-Wright
said in a letter to MetLife CEO Steve Kandarian, a copy of which
was filed with securities regulators.
Castro-Wright could not be reached for comment.
The Times said Wal-Mart knew about its reporting last year,
so the timing of when the new global compliance post was created
and other steps were taken raises the question of whether they
were done in response to the Times story.
Wal-Mart said the global compliance officer will oversee
five FCPA directors in international markets, including a
compliance director in Mexico.
Wal-Mart has said it began an investigation into its FCPA
compliance last fall. It said it disclosed the probe to the U.S.
Department of Justice and the Securities and Exchange Commission
and declined to give any more details or to make executives
available for comment.
A source familiar with the matter said the Justice
Department has been conducting a criminal investigation into the
bribery for months.
Wal-Mart shares have been hit over the past two days, both
because of concerns about the cost of the company’s own
investigation and defense and potential substantial fines if the
allegations are found to be true, as well as concerns that
further violations could be found.
“What’s impacting the stock is … the risk of potential
fines and penalties resulting if the accusations prove to be
true, and then, on top of that, any increased risk of contagion
to other geographies,” UBS analyst Robert Carroll said.
The decision to appoint a global compliance officer could
factor into whether the Department of Justice forces the company
to hire DoJ-approved FCPA monitor down the road, or how long the
company would need to keep the monitor, said Paul Pelletier, a
former supervisor in the Justice Department’s Fraud Section,
which prosecutes FCPA cases. He is now at the law firm Mintz
Levin.
Wal-Mart shares closed $1.78, or 3 percent, lower at $57.77
on Tuesday on the New York Stock Exchange. That follows a 4.7
percent drop on Monday that more than erased the stock’s gains
for the year. Walmex shares were down 1.82 pesos, or 4.8
percent, at 36.07. That stock fell 12 percent on Monday, wiping
out its year-to-date gains.
