Business and Society 9th Edition by Archie Carroll,Ann Buchholtz

Exercise 4

The Beast of Bentonville Bows to Local Customs
In 2012, it was revealed that Walmart, frequently referred to as the "Beast of Bentonville," Arkansas, had bowed to local custom and paid significant bribes in Mexico in efforts to open new stores there. Walmart's Mexican subsidiary, Walmex, was accused of at least 19 instances of paying off local officials to get stores opened in favorable locations. One estimate was that the company paid $24 million in bribes to sidestep local regulations and obtain construction permits for new stores.
Many of the markets that Walmart seeks to penetrate are in developing countries such as Mexico. In many if not most of these markets, corruption is widespread and commonplace. In these countries, bribery is not seen as a serious crime but rather a "way of doing business." One expert observed that in Mexico "the bulk of retailers pay bribes." According to Transparency International, Mexican firms are the third most likely to have to pay bribes, just after Russia and China.
The really bad news for Walmart is the accusation that top executives knew what was going on as early as 2005 and tried to keep it quiet. One report is that e-mails document that CEO, Mike Duke, was aware of the company's actions and that this contradicts earlier claims by senior officials that they were not aware of the bribes being paid. A Walmart spokeswoman has indicated that the company is cooperating with the Securities and Exchange Commission investigation and that the company is committed to having "a strong and effective global anticorruption program everywhere we operate…"
The Walmart bribery accusations are extremely intricate and complex and external and internal investigations are ongoing. One observer has said that what Walmart did in Mexico was mostly grease payments rather than bribes and had the company not tried to cover it up it might have been cleared of FCPA violations.
1. Is it possible for a sprawling corporation such as Walmart to do business in developing countries and not fall victim to local customs such as bribery?
2. What is a company such as Walmart to do when the countries in which it chooses to locate are rife with corruption? Should the company seek to impose U.S. standards whether the locals accept them or not?
3. In a multinational corporation such as Walmart, is it possible that company officials in Bentonville were unaware of what was going on in Mexico?
4. Do your own research on the Walmart bribery accusations and determine which of its activities were "bribes" and which were "grease payments." Be prepared to give examples of each.