Wal-Mart’s Mexico Operations Probed By Attorney General (NYSE: WMT)

In Mexico, the attorney general’s office launched a preliminary investigation into whether Wal-Mart Stores bribed officials to expand its business.  A New York Times report revealed a pattern of suspicious payments made to various authorities in Mexico totaling around $24 million.  It is believed that the payments were intended to overcome any objections to Wal-Mart’s rapid expansion plans in Mexico.

The attorney general’s office announced that it had started a probe to determine if a criminal investigation into Wal-Mart’s actions was warranted.  The U.S. Department of Justice has also opened a criminal probe against Wal-Mart over potential violations of the Foreign Corrupt Practices Act.  The Foreign Corrupt Practices Act is a U.S. law that forbids bribery of foreign officials.  No formal complaint has been lodged against the company yet.

Wal-Mart’s Mexico subsidiary released a statement saying that it would fully cooperate with the Mexican authorities’ investigation.  The company said in the statement that steps have been taken to ensure all requests from investigators to review permits issued to the company for building and operating its stores in Mexico will be met and that the company will unequivocally cooperate with the Mexican authorities and make all these records available in compliance with Mexican laws

The comptroller’s office in Mexico has begun checking Wal-Mart’s federal paperwork and permits obtained to open and operate stores in Mexico.  Federal agencies in Mexico issued more than 300 concessions, permits, and authorizations to Wal-Mart over the last six years, according to public records.  Wal-Mart is Mexico’s biggest retailer.

Shannon O’Neil, a Latin America expert at the Council on Foreign Relations, said, “The federal government is now taking responsibility and getting involved, I think that’s good.”  A full-blown investigation would be a test for the attorney general’s office, she added.  She said, “(It) has had a difficult time building strong cases, particularly in the securities realm.”

The mayor of Mexico City, Marcelo Ebrard, said that authorities in the capital would conduct a thorough investigation of the newspaper’s allegations.  Ebrard told reporters in Mexico City, “We’ll see what this investigation brings, what other information we can get — and if we establish any irregularity, we’ll have to act.  We’re checking store by store, everything. There are all kinds of different permits, land use, construction authorization, there are licenses.”  Wal-Mart’s stock has plummeted by billions of dollars since the announcement of the scandal.