Wal-Mart Faces New Probe of Mexico Subsidiary

by Christopher Freeburn | August 16, 2012 12:17 pm

Wal-Mart‘s (NYSE:WMT[1]) Mexican subsidiary may be facing a new scandal[2].

Just months after The New York Times reported on allegation of millions of dollars in bribes paid to Mexican government officials[3], two U.S. congressmen claim that the company also engaged in money-laundering and tax evaision, Reuters notes.

Representatives Elijah Cummings (D-Md.) and Henry Waxman (D-Calif.), senior members of the House of Representatives’ Oversight & Energy Committee, sent a letter to Wal-Mart this week saying records from its Mexico subsidiary showed evidence of financial improprieties.

Shares of Wal-Mart dropped more than 3% in Thursday midday trading (Wal-Mart also reported earnings[4] today).

The company said it was unaware of the new investigation, but was cooperating with ongoing probes of its Mexico unit conducted separately by the Securities & Exchange Commission and the U.S. Department of Justice. However, the congressmen accused the company of failing to cooperate with their investigation.

The bribery allegations and any additional charges put Wal-Mart afoul of the Foreign Corrupt Practices Act (FCPA) and could result in fines. A large number of U.S. companies are currently under investigation[5] by the federal government for possible FCPA violations.

Wal-Mart officials have promised to boost overseas compliance. The company recently hired a former partner at accounting giant PricewaterhouseCoopers to oversee compliance issues.

Endnotes:
  1. WMT: http://studio-5.financialcontent.com/investplace/quote?Symbol=WMT
  2. may be facing a new scandal: http://www.reuters.com/article/2012/08/15/mexico-walmex-idUSL2E8JF2W220120815
  3. bribes paid to Mexican government officials: http://investorplace.com/2012/04/wal-marts-mexican-bribery-scandal-5-facts/
  4. Wal-Mart also reported earnings: http://investorplace.com/2012/08/wal-mart-tops-profit-misses-revenue-estimates/
  5. are currently under investigation: http://investorplace.com/2012/04/overseas-corruption-probes-beyond-wal-mart/

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