By Pamela J. Bethel

The latest Wal-Mart news is that the company has been active in a concerted campaign by an arm of the U.S. Chamber of Commerce to weaken the Foreign Corrupt Practices Act (FCPA), which prohibits U.S. companies from bribing officials of foreign governments.

The Washington Post reported on its front page on April 26, 2012, that Wal-Mart, along with many other companies, has been helping to fund the chamber’s efforts to amend the FCPA. This is particularly interesting, the Post reported, in view of current allegations that the retailing giant engaged in a systematic program of payments to Mexican government officials several years ago in order to facilitate its growth in the Mexican market.

The Post says there’s no evidence that Wal-Mart’s participation in the lobbying effort had anything to do with its questionable activities in Mexico, and it’s indeed likely that there’s no connection. Quite often, corporations take actions that they think will make the business climate, at home and abroad, more favorable and less fraught with risk, and that’s what Wal-Mart appears to have done here.

That raises the question of whether the Post story was really worth Page One play. Wal-Mart’s participation in the Chamber lobbying effort, which included many other major U.S. companies, may be more routine than the Post is implying.

However, one thing is becoming clear. In view of the explosive allegations against Wal-Mart and the launch of congressional investigations into its Mexican payments, it’s quite unlikely that any change in the FCPA is in the offing. The Obama administration has in the past aligned itself with supporters of tough FCPA enforcement, and there’s no indication that Lanny Breuer, assistant attorney general for the Criminal Division at Justice, is going to change his mind any time soon.

So this is a good time for companies doing business abroad to be aware that there’s no reduction in sight in the level of scrutiny of overseas business transactions. If there was ever a time to emphasize compliance, this is the time.

By Pamela J. Bethel

Even a carefully designed corporate compliance program will do a company no good if its top executives intentionally decide to ignore the program’s dictates.

That is one of the many lessons that can be gleaned from the Wal-Mart bribery scandal, which was first highlighted in an 8,000-word New York Times article this past Sunday. The ramifications of the scandal are only beginning to become evident.

The article says that several years ago, Wal-Mart, in a push to expand rapidly in Mexico, systematically made payoffs to Mexican government officials that may well have amounted to bribes that violated the Foreign Corrupt Payments Act (FCPA).

One of the most troubling aspects of the story, out of many troubling aspects, is that when the company’s top management first learned of the allegations, its initial response was to kick off an independent internal investigation – exactly what a public company in its position should do – but that Wal-Mart then backed off from that plan and launched a half-hearted “preliminary inquiry” that ended up going nowhere. That “failure” is no surprise, since the probe into the allegedly illegal payments was not independent: senior management had full and direct control over the inquiry. And the inquiry was eventually turned over to a Wal-Mart official who was one of the inquiry’s chief targets.

The Times reported: “Wal-Mart’s leaders had clear guidance about the propriety of letting a target of an investigation run it. . . . On the same day that [a Wal-Mart vice president] was putting the finishing touches on the new investigations protocol, Wal-Mart’s ethics office sent him a booklet of ‘best practices’ for internal investigations. It had been put together by lawyers and executives who supervised investigations at Fortune 500 companies. ‘Investigations should be conducted by individuals who do not have any vested interest in the potential outcomes of the investigation,’ it said.”

Wal-Mart still went ahead and disregarded its ethics office’s advice. As bad as the bribery allegations may have been, the seemingly willful desire to disregard the proper practices for an investigation may have been worse.

Companies that want to avoid Wal-Mart’s fate, in the court of public opinion and possibly in federal court as well, need not only to have a compliance program in place, with a procedure in place for independent internal investigations when they are called for, but also to actually put the compliance program into effect.