Wal-Mart in Denial of Bribery Allegations

Image Source: Daniel Aguilar, Getty Images

Wal-Mart’s top executives are finding themselves in hot water after the New York Times published a story in April that revealed nearly a decade’s worth of corrupt practices in their Mexico stores. Wal-Mart de Mexico bribed government officials in order to obtain permits to construct Wal-Mart stores at a pace so rapid, that it’s competitors would not be able to keep up. After being tipped off of the alleged bribery in 2005, Wal-Mart opted to launch a small-scale investigation into the issue rather than hiring outside investigators to conduct a larger investigation. Wal-Mart investigators concluded that there was a lack of evidence to support any claims of bribery. However, after the organization learned that the Times was planning on publishing a story about the scandal, Wal-Mart announced to the Justice Department that it plans to re-launch the investigation.

Based on the Master List of Reputation Repair Strategies, provided by the Institute for PR, Wal-Mart is guilty of using the strategy of denial. The Institute for PR defines denial as a crisis manager “asserts there is no crisis.” Wal-Mart executives chose to neutralize the problems they found after initial investigations rather than take disciplinary action against the employees committing the corrupt behavior. They dismissed the major problem in various ways during the past decade.

During the initial investigation, Wal-Mart’s team of special investigators discovered 441 payments to gestors, or individuals hired to initiate bribes with foreign officials. It was also found that top executives of Wal-Mart de Mexico were well aware of the multiple gestor payments that totaled nearly $24 million. These executives chose to omit this information from investigation reports that were sent to the Wal-Mart headquarters in Bentonville, AR. Wal-Mart eventually closed its internal investigations in 2006, and no employees faced disciplinary action until word got out about the New York times article. In fact, some of the executives who were well aware of the corrupt behavior were promoted after the investigation. By withholding information from headquarters and ignoring the blatant evidence they had, Wal-Mart chose to deny any wrongdoing rather than taking responsibility for it.

Bribery in Mexico occurs more often that one would think. Perhaps this issue was ignored for such a great deal of time because it is a common business practice in the country. Mexican economists have labeled this a “scandal in the United States,” rather than a scandal in Mexico. However, for an organization that is known for it’s high moral standards, this behavior completely goes against the organization’s views. The reputation repair strategy that Wal-Mart used was in no way shape or form the correct strategy to use.

Instead of being open and transparent about the issue, the organization chose to ignore it completely and attempted to withhold information from its publics. Wal-Mart had no plans to bring this information to its publics, nor were they going to discipline the individuals guilty of committing the corrupt behavior until the New York Times published its story and exposed Wal-Mart’s unethical behavior. Any action in the aftermath of the Times’ article appears insincere.

Wal-Mart is certainly no stranger to bad publicity, and needs to implement better strategic communications plans. What Wal-Mart should have done was use the reputation repair strategy of an apology once they first began investigating the issue. Instead of covering its actions up and pushing this issue to the side, being up front and honest about its wrongdoings would have ultimately been the best practice for the organization.

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