Walmart has reached a global settlement with the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) to resolve an investigation into the company’s compliance with the U.S. Foreign Corrupt Practices Act (FCPA).
In the past seven years, Walmart spent more than $900 million on FCPA inquiries and investigations, in which they have failed to sufficiently investigate or mitigate certain anti-corruption risks and allowed subsidiaries in Brazil, China, India, and Mexico to employ third-party intermediaries who made payments to foreign government officials without reasonable assurances that they complied with the FCPA. SEC stated that they have failed to take red flags seriously and delayed the implementation of appropriate internal accounting controls.
Walmart had agreed to pay more than $144 million to settle the SEC’s charges and approximately $138 million to resolve parallel criminal charges by the DOJ, with a combined total of more than $282 million. The amount would not materially impact Walmart’s financial result as the company has disclosed in November 2017, that approximately $283 million is accrued for the DOJ and SEC resolution.
Through the investigation, the company has taken extensive steps to strengthen its Global Anti-Corruption Program through enhancing its anti-corruption compliance policies, procedures, and internal controls in every country in which it operates, under the direction of its Audit Committee and with the cooperation with the DOJ and the SEC.
The enhancements in the Global Compliance Program include hiring dedicated home office and market-level anti-corruption compliance leadership, conducting enhanced monthly and quarterly anti-corruption monitoring across each of the company’s markets, enhancing anti-corruption risk assessments across all international markets, enhancing on-site global anti-corruption audits to test adherence to enhanced controls and procedures, implementing an automated global license management system for licenses and permits and a global donation management system and more.
Efforts taken by Walmart are being recognized by the New York Stock Exchange Governance Services, thus its Global Compliance Program won the title of “Best Governance, Risk, and Compliance Program” in 2016 for Large-Cap companies.
“Walmart is committed to doing business the right way, and that means acting ethically everywhere we operate. We want to be the most trusted retailer, and a key to this is maintaining our culture of integrity.” Said Doug McMillon, the President and CEO of Walmart.
Businesses have to place a higher value on compliance, instead of focusing solely on growth and cutting costs, in order to implement appropriate internal accounting controls.
