Accusations That Walmart Used Bribery to Quickly Expand in Mexico, and Examples of Bribery I've Seen

This is a blog about overseas corruption, but it does have a local tie-in since we have a Walmart store in town.

There was a lengthy investigative article in the New York Times’ Saturday edition about Walmart’s expanding presence in Mexico. Seems that one out of every five Walmart stores worldwide is down there. In their hurry to expand and maximize profits, Walmart de Mexico bent to local customs and massively bribed government employees and decision makers to obtain quick approvals and permits to build new stores. That would never happen in Dixon, right?

Trouble is, U.S. laws prohibit the bribing of foreign officials and businessmen by American companies seeking approvals or business deals.

The Times article went on to say that when the bribery was brought to the attention of top American Walmart honchos, a cover-up ensued, probably to protect the success of the Mexican operation and to prevent bad publicity here in the U.S. And beyond that, the head of the Mexican operation, under whose watch most of the bribery happened, was promoted and brought to Walmart’s headquarters.

I read the Times online, and was interested to read some of the reader comments following the article. They ranged from stuff like, “Walmart, that giant that sells Chinese merchandise and forces local stores out of business, deserves to be punished,” to “Get real – you can’t do business in Mexico without bribery – period.”

I thought back to some of the bribery I’ve witnessed over the years. Some 40 years ago, when I was bicycling into Mexico from Arizona (with proper paperwork), I was stopped at the border station at Nogales by Mexican cops. At first I thought they were holding me up because they were unused to a bicycle crossing the border. But eventually it dawned on me that they saw the unusualness as an excuse to vacuum some dollars from my pockets. I played innocent, and when they saw I wasn’t going to play the game, they finally let me through.

A few years before that, I was bumming around Southeast Asia, travelling to offbeat places. I crossed the Strait of Malacca on a small cargo boat going from Malaysia to Sumatra, Indonesia. When it arrived at the port in Sumatra, some guys in police uniforms (customs officials) came aboard to check on the cargo. There, they were summarily bribed with merchandise and went on their way.

I’ve seen a less direct form of bribery in the U.S. and it involved a newspaper I wrote for in the Bay Area. I was writing a column about a local Whole Foods store, discussing some pluses and minuses about the company. As part of the column, the company allowed me to come in and interview some of the employees and managers. One of the concerns I wrote about was that the company appeared to be strongly anti-union.

When I submitted my column, my editor soon fired back that he thought my column was too one-sided and negative. I thought it was pretty balanced, and I’d never had such a complaint with several hundred previous columns. I did bend to the pressure and eliminated references to unions. Several days later, Whole Foods began to run full-page color ads in my newspaper (they had never advertised there before). Interesting, how the big boys play.

Could Walmart have succeeded in Mexico without bribery? Probably, but not with the speed of expansion they sought. Of course, if Walmart didn’t bribe people, but their competitors bribed officials to deny Walmart’s building permits, and so on, that would’ve put them at a disadvantage.

One problem in Mexico and other third-world countries is that government employees or functionaries don’t get paid much, and count on bribes to supplement their meager pay (like waiters depending upon tips). For example, one of the reasons wiring money to Mexico became so popular is that sending checks or money orders by mail was unreliable because poorly paid Mexican letter carriers had sticky fingers.

Now to Walmart’s store in Dixon. It’s pretty handy to have such an expansive array of products available, from printer ink to fishing worms to clothing. I don’t feel guilty about shopping there, even though it seems the majority of products (outside of the grocery section) comes from overseas.

It does bother me though, that like Whole Foods, Walmart is strongly nonunion, putting unionized stores like Safeway and Raley’s at a competitive disadvantage.

Talking about Walmart’s employees in Dixon, most mornings management calls a large group of employees together in one section of the store to pass on news and essentially hold a pep rally. There’s some shouting in unison. I wonder how many of the employees dislike this enforced joviality.  

This reminds me of a woman manager I had for a time in the Postal Service, who once brought us all together for a quick meeting in our office and asked, “Don’t you just love coming to work every day?” At another meeting, we were directed to all hold hands and sing, “We Are the World.”

Similarly, it appears to me that at the lowest levels of companies, the companies strive to cultivate in their employees the common virtues of honesty, hard work, company loyalty and devotion to customers. But as one moves up the totem pole through regional offices to company headquarters, such ethos among the top company officers is often sorely missing. If you want to advance to the top ranks in companies such as Walmart, you might have to leave your law-abiding and ethical sensibilities at the door.