Walmart: It’s not the company, it's the compliance system
Tuesday, May 13, 2014 at 7:08AM
Michael Scher in Audit Committee, David Barstow, New York Times, Pulitzer Prize, Society of Corporate Compliance and Ethics, Walmart

The Pulitzer-prize winning NY Times reporter David Barstow famously wrote in 2012 that Walmart was an  “aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals.”

The final resolution of the allegations lies ahead. There is reason to hope that Walmart will finally reveal the full details of its internal investigation of a half-decade of world-wide business, make an ethically-necessary, public apology for any past misconduct, and forge a scaled-up, historic settlement with the DOJ and SEC that makes Walmart an advocate.

Meanwhile, Walmart has just released a report describing its new compliance program, remarkable for its comprehensive approach.

How did Walmart get to this point?

The company's C-Suite and Board did not suddenly do an about face. Walmart was led to this moment by dynamics at work since 2005. It’s the compliance system that moves companies to reconsider what they are doing, no matter how big they are. At Walmart, the compliance system is working and that is a real cause for celebration.

A compliance program has to contain internal checks and balances (noted by pioneering compliance expert Donna Boehme) especially between the C-Suite and the Board, and among the CEO and advisory functions like HR, Legal and Compliance -- essentially a ‘power sharing” redistribution, according to commentator Michael Volkov.

The Rand Center’s 2013 report concerning the C-Suite as a  Crucible of Misconduct explores some of these internal checks and balances.

In addition, there are many outside forces, such as the media and public opinion, that sanction or incentivize company decisions.

It’s easiest to see these dynamics at work by taking Walmart as an example of a company responding eventually to the compliance system of checks and balances. Here are some of the important influences on Walmart from 2005- 2014. 

(Note that Walmart and its executives have not admitted nor been found guilty or liable for any misconduct. They are all entitled to due process, including the continuing presumption of innocence.)

The compliance system of checks and balances is the bedrock of compliance work. This is a moment to be proud of what has been created.


Michael Scher 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.

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