Wal-Mart announced it has now spent over $300 million on FCPA compliance costs. Some FCPA watchers are so indignant by the $300 million figure they have broken it down into FCPA compliance dollars spent per day, while others imply it's an impressive show of compliance remorse.
I think we need to get past the numbers and take a moment to reflect on where Wal-Mart has been and where its board could decide to go.
Over roughly the same period covered by the $300 million cost, Wal-Mart’s sales have been about $1 trillion ($1,000,000,000,000). Those FCPA compliance costs are less than one third of one percent of its sales. And with profits last year of about $17 billion, Wal-Mart will survive its FCPA spending spree.
The world's largest retailer is finally investing in FCPA compliance in proportion to its size. It's playing catch up for a decade of what appears to be FCPA neglect. In a sense, the current costs of compliance can be looked at like accumulated liability for a toxic waste site: First a determination of the origin, size and places of the contamination, then the costs of the clean up and damages.
But even at this preliminary stage of Wal-Mart's FCPA investigation (during which Wal-Mart is always entitled to the presumption of innocence), there are two more numbers that its board may need to confront: the forgotten millions and the forgotten few.
There are millions of unnoticed people around the world held back by corruption. Currently, however, all money recovered in FCPA settlements goes to the U.S. Treasury, while nothing goes to the places where the bribery took place and the populations victimized by what happened.
Under Professor Andy Spalding’s brilliant remediation plan that he described in a series of posts on the FCPA Blog, part of any eventual Wal-Mart settlement could go to build up the local populace and its democratic institutions. Professor Spalding's innovative proposal would be a remarkable realization of FCPA policy -- and world-class leadership that would be forever to Wal-Mart’s credit.
And the forgotten few? They're the compliance professionals and investigators who reportedly did their jobs to warn Wal-Mart of red flags in Mexico but were ignored and thrown into career limbo. They deserve a belated apology and recognition as “Compliance Heroes,” and compensation for career losses. This remedial act would set a precedent for protecting compliance professionals who work on the front lines of anti-corruption.
Wal-Mart’s standing in the court of public opinion hangs in the balance. If the DOJ and SEC investigations pinpoint corruption in the company's recent past, will the story end with disgrace to Wal-Mart's brand and reputation? That depends on what numbers the company's leaders focus on when they look at where they've been and where they now want to go.
Part One of this post is here.
Michael Scher is a contributing editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney. His work for major companies in New York and the Middle East includes military procurements, international trade contracting, supervision of national sales forces and trainings for compliance with related laws, like the FCPA or AML. Miami-based, he assists companies in trainings and work shops and FCPA-related projects or investigations. In addition to English, he speaks French and Hebrew. Contact him here.