Walmart built itself into the largest brick and mortar retailer in the United States, and then later, the world. However, a corruption inquiry now stretching across international borders suggests that the company’s zeal to grow in Brazil may have led it to run afoul of the law.
Federal prosecutors in the United States are now investigating whether bribes were paid in Brazil to secure government permits for Walmart stores, according to the Wall Street Journal. The investigation is still in its early stages, and allegations of wrongdoing remain unproven. Even so, the inquiry shows that the globalization of business has renewed efforts to foster international cooperation among government regulators and prosecutors.
Walmart’s history in Brazil dates to 1995. Construction of U.S.-style “superstores” failed to win over many Brazilian consumers, so the retail giant later acquired two already established Brazilian retail chains to bolster its presence in the country. But even with that larger store footprint, Walmart has struggled to gain dominance in the Brazilian retail market.
The investigation into Walmart’s practices in Brazil centers on $500,000 that U.S. prosecutors believe was paid to an unnamed individual who was hired to obtain permits for two stores in Brasilia, the Journal reported, citing an investigative document. The document says that prosecutors have evidence of Walmart employees discussing the hiring of this person, a woman believed to have previously worked in a government position who was also able to easily secure permits. According to the document, U.S. prosecutors also told Brazilian officials that they have evidence that Walmart made payments indirectly through other contractors.
The Journal says the U.S. investigation is an outgrowth of an inquiry that initially focused on Mexico. The Justice Department is also investigating possible corruption involving Walmart in China and India, Reuters reports. Walmart’s only comment has been that compliance with anticorruption laws is “a key priority.” So far, the U.S. Justice Department is not commenting on the Brazilian inquiry, but officials have said that recently improved cooperation with foreign prosecutors has helped them gain access to witnesses and information.
Brazilian government officials have been working with their counterparts from the United States. Lawyers from the U.S. Justice Department and the Securities and Exchange Commission, as well as federal law enforcement and tax authorities, traveled to Brazil to interview witnesses with the help of Brazilian prosecutors. The Walmart inquiry suggests that companies that operate in Brazil should now expect that anticorruption efforts will become international matters.
