Legal

Brazil Bribery Charges Cost Walmart $282M

WalMart Will Shell Out $282M To Settle Brazil Bribery Accusations

Walmart will pay a total of $282 million to settle with the U.S. Department of Justice and the Securities and Exchange Commission (SEC), on charges that it bribed an intermediary to obtain construction permits and broke the Foreign Corrupt Practices Act (FCPA), according to a report by Reuters.

The SEC will get $144 million and the DOJ will get $138 million to settle the criminal bribery charges. The settlement was reached on Thursday (June 20) in a Virginia federal court.

An investigation was launched after the New York Times wrote a series of pieces in 2012 outlining how Walmart may have paid for permits to build stores. The DOJ started a wide-reaching investigation of Walmart companies around the world, including India, Brazil, Mexico and China.

Court filings say that from 2009 to 2010, Walmart Brazil intentionally and knowingly fed false information to its parent company, which was aware of the malfeasance. The faulty information was then displayed on Walmart’s financial statements.

Filings also say that Walmart Brazil paid $527,000 to an intermediary in exchange for construction permits. Walmart Brazil would called the intermediary a “sorceress” and “genie” for their ability to magically make permits appear.

The SEC found that Walmart violated the FCPA.

“Walmart valued international growth and cost-cutting over compliance,” Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit. “The company could have avoided many of these problems, but instead Walmart repeatedly failed to take red flags seriously and delayed the implementation of appropriate internal accounting controls.”

Walmart, which did not comment to Reuters, put aside around $300 million to settle charges with the U.S. over allegations of bribing officials two years ago. In June of last year, Walmart sold a majority stake of its Brazilian unit to Advent International. Then, In August, Walmart said it spent around $900 million on costs associated with the investigation, including legal fees and overhauling its compliance system.

In October, Walmart paid $160 million to settle a lawsuit by its investors who weren’t happy with the way Walmart took care of the bribery probe.

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