Mike Scher talks to the feds
Wednesday, November 6, 2013 at 8:28AM
Michael Scher in Asia, China, Extraordinary Sanctions, FCPA Guidance, India, Latin America, Rand Center for Corporate Ethics and Governance, Retaliation, Walmart

To the Department of Justice and the Securities and Exchange Commission:

The open-letter draft published on October 23, 2013 generated extraordinary interest among compliance professionals and other readers in the United States and in Latin America, India and China -- countries directly affected by the Wal-Mart investigation. Many sent in their observations and support for the letter.

For example, a compliance officer (CO) working in Asia asked for recognition and protection:

"A CO will not stand up against the huge pressure to maintain compliance standards if he does not get sufficient protection under law. Most COs working in overseas operations of U.S. companies are not U.S. citizens, but they usually are first to find the violations. Since the FCPA deals with foreign corruption, how could the DOJ and SEC not protect these COs?"

The letter below speaks for these compliance professionals and readers, incorporating their specific ideas and their commitment to the goals of the FCPA.

Over the past months, fourteen of my FCPA Blog posts examined the importance of the Wal-Mart investigation to the compliance profession and to global anti-corruption work. These posts discuss the following points:

Against this background, the final letter is submitted by the open-posting below and by mail. We look forward to your response and to continuing this discussion as the Wal-Mart investigation proceeds.

                                                         *     *     *

November 6, 2013                                                      
Office of the Assistant Attorney General
Criminal Division
U.S. Department of Justice
950 Pennsylvania Ave.
Washington, D.C. 205300
Office of Enforcement
U.S. Securities and Exchange Commission
100 F Street
Washington, D.C. 20549
Re: Wal-Mart Investigation
To the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”):
This letter expresses the concerns of many compliance professionals and others about the DOJ and SEC’s Wal-Mart investigation. An open-letter draft published on the FCPA Blog on October 23rd invited comments and suggestions from compliance professionals and readers in America and in other countries. The response in the compliance community indicated extraordinary interest and support for the concerns in this letter. Notable were the observations from compliance officers working in Latin America, China, and India, countries affected by the Wal-Mart activities discussed below.
To be clear at the outset, the rights of Wal-Mart and all involved persons to due process, including the right to the presumption of innocence, should be respected and upheld during the investigation. Further, the right of the public to inquire into matters of public interest through our regulatory authorities, and to exercise rights of free press and freedom of association, should also be respected.
As to the ongoing investigation, the DOJ and SEC have allowed Wal-Mart to proceed by voluntary disclosures, as opposed to responding under subpoena. Wal-Mart is effectively investigating itself. Given the investigation’s lack of transparency to the public, can the DOJ and SEC explain why the investigation is adequate, and will you assure the public that the complete record will be released even if there is a case-closing settlement?
While all the facts are under investigation, the final disposition should address the allegations already in the public record. The public has been informed by, among other sources, Pulitzer prize-winning investigative journalism by the New York Times, ongoing media reporting, Wal-Mart’s regulatory filings and press releases, Congressional Committee announcements and several judicial proceedings.

From this public record, the DOJ and SEC should resolve the following:

I write for myself but also on behalf of the many compliance professionals and members of the public who are concerned by the direction and scope of the Wal-Mart investigation. We look forward to answers to these questions and a continuing public discussion.

Michael Scher


The author is a contributing editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney for international transactions. He is affiliated with ethiXbase, the owner of the FCPA Blog. He can be contacted here.

Article originally appeared on The FCPA Blog (https://www.fcpablog.com/).
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