The Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”) announced on June 20, 2019 that Walmart, Inc. (“Walmart”) agreed to pay a combined total of $282.7 million to resolve the years-long investigation into the retail giant’s violations of the Foreign Corrupt Practices Act (“FCPA”). The investigation stemmed from allegations that Walmart paid third-party intermediaries in Brazil, China, India, and Mexico to obtain licenses and permits without proper assurances as to where payments were going and that it had insufficient global anti-corruption internal controls despite numerous red flags.
In addition to paying $138 million in criminal penalties and $144.7 million in disgorgement and prejudgment interest, Walmart entered into a three-year non-prosecution agreement and agreed to hire an independent compliance monitor for two years.
The outcome of the Walmart investigation should remind all U.S. companies that:
- Serious consideration should be given to the decision of whether to self-report. The SEC noted that it considered Walmart’s self-disclosures, cooperation, and remedial efforts in determining the terms of the settlement.
- Lack of a comprehensive anti-corruption program may come at an enormous cost. Walmart reports that it has spent more than $900 million in investigation costs and compliance enhancement, which includes development of an improved compliance program and hiring additional ethics and compliance officers.
- Willful blindness is not justifiable. Charles Cain, chief of the SEC enforcement division’s FCPA unit, said that Walmart “could have avoided many of these problems, but instead [it] repeatedly failed to take red flags seriously and delayed the implementation of appropriate internal accounting controls.”
- All companies and industries are subject to prosecution for FCPA violations. Although many investigation targets in recent years have been in the oil and gas or healthcare industries, this settlement with one of the world’s largest retailers evidences the fact that no U.S. company operating abroad is beyond the scope of FCPA enforcement.
Heather Hatfield represents clients in corporate investigations, white-collar crime investigations and defense involving the Foreign Corrupt Practices Act (FCPA), complex contract disputes, oil and gas litigation ...
Blake Runions assists clients with broad range of business disputes and investigatory matters, including partnership disputes, internal investigations, and commercial litigation.
Prior to joining the Firm, Blake worked in the ...
Jamie Godsey represents public and private corporations, partnerships, and small companies on a broad range of complex business and commercial litigation. Her experience includes a wide variety of matters such as contractual ...
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