Walmart Settles Over $282 Million But Costs Pile Up
Federal investigations on Walmart's alleged involvement in bribery and corruption reportedly cost the global chain over $900 million in costs. The American retail giant has agreed to pay $282 million to settle the case but probe costs prove the severity of the issue.
According to CBS News, the federal investigations on Walmart's bribery case that stem back to 2012 have already cost over $900 million and despite the expenses that piled up over the last six years, the company is "pleased" to have settled the issue.
Court documents revealed that Walmart's Brazilian subsidiary funneled over $500,000 to obtain government permits to run business in the country. Corruption took place between 2009 and 2010.
Due to the secrecy of the Brazilian subsidiary's move, the parent company's filing with the U.S. Securities Exchange Commission (SEC) turned out to have loopholes and flaws, which then led to the federal government's probe.
The SEC accused Walmart of allowing its subsidiaries in different countries to hire "third-party intermediaries" who then bribed government officials in foreign lands.
"Walmart valued international growth and cost-cutting over compliance," chief of the SEC Enforcement Division's FCPA Unit, Charles Cain, said of the matter. He said corrupt decisions could have been avoided but the company "repeatedly failed" to control internal accounting.
Amid increased scrutiny over the parent company's ability to control activities in its subsidiary offices, CEO Doug McMillon said Walmart is still "committed to doing business the right way."
McMillon added that the firm has revamped its policies and procedures to prevent similar issues from happening in the future. He said implemented changes will allow for Walmart to have a "strong Global Anti-Corruption Compliance Program."
Meanwhile, the company revealed in a Worker Adjustment and Retaining Notification dated June 12 that it will be laying off 569 employees under the finance and accounting department in the North Carolina office.
According to FOX Business, the layoffs will be effective September 13 and will run through January of next year. The move came as a shock to some industry analysts who have been watching the firm's every move ever since investigations about the Brazilian arm kicked off.
Walmart will reportedly start outsourcing finance services from Genpact, a New York-based financial services provider. It is unclear if all finance specialists in the company will be removed from their posts or if some will be retained.
A Walmart spokesperson said the decision didn't come easy as it would affect "friends and associates we care about deeply." The spokesperson added that the company still appreciates all the contributions each employee made for the purpose of growth.