From the article:

"But even as employees frequently raised alarm, the company’s top leaders did little to prevent Walmart from being involved in bribery and corruption schemes."

Which means the "top leaders" knew of the problem, and choose to ignore it. It would be a different story if they put real effort into self policing and there was evidence they pushed the guilty contractors/etc but again:

"The plea agreement, which was technically related to the company’s improper record-keeping, ... Federal regulators said Walmart looked the other way as subsidiaries on three continents paid millions of dollars to middlemen who helped the company obtain permits and other government approvals from July 2000 to April 2011."

Which sounds more like a coverup to me.

As an individual citizen, if I intentionally failed to file my taxes properly, report crimes I knew of, or even fire a housekeeper or other low level employee I knew had been committing crimes that benefited me you can be sure I would be getting more than the equivalent of a parking fine.

That is why people are demanding someone be held responsible. It seems those that are reaping the rewards and knew of the crimes are simply being given a free pass.

So the part right before your quote says: “For more than a decade, Walmart used middlemen to make dubious payments to governments around the globe in order to open new locations, United States prosecutors and securities regulators said in a settlement agreement on Thursday.”

The parts you quote are the NYT reporting the prosecutor’s allegations as fact. But the passage you quoted also explains everything you need to know about why nobody went to jail.

“The plea agreement, which was technically based on the company’s improper record keeping....”

Wait—so Wal-Mart did all these bad things (they must have, the NYT reported them as fact), but the plea agreement is “technically” based on “improper record keeping?”

If you actually read the facts section of the SEC submission linked from the article, it’s a real snooze fest. There were issues here and there, people were fired, several rounds of compliance programs were instituted, etc. But little to substantiate the prosecution narrative recounted as fact by the NYT. There is a reason Wal-Mart spent a billion dollars investigating this case but the government agreed to settle for less than $300 million—once prosecutors dug in, there wasn’t much of a story there.

I’ll also add:

> As an individual citizen, if I intentionally failed to file my taxes properly, report crimes I knew of, or even fire a housekeeper or other low level employee I knew had been committing crimes that benefited me you can be sure I would be getting more than the equivalent of a parking fine

The IRS’s response to people who intentionally don’t file tax returns—unless the conduct is really outrageous—almost always is to just tell them to file, and pay the deficiency with interest. Except in special circumstances, such as lawyers reporting on other lawyers, ordinary individuals don’t have an obligation to report crimes they’re aware of. Finally, unless it can be argued that you encouraged your housekeeper to commit crimes, or somehow facilitated them, I don’t think there would be anything illegal about not firing him either. Like, you probably can’t criminally prosecute someone for accepting gifts from someone they know is a drug dealer and purchased the gifts with ill-gotten money.

But that is how this works, the Government has a hard time proving intent without a smoking gun. The Walmart execs are smart enough not to incriminate themselves with any emails/phone calls. So the government has a fairly strong case, but Walmart gets to plea agreement which wipes one of the main pieces of evidence (effectively the bookkeeping coverup) in exchange for paying the fine and closing the case.

Both sides are happy, no one at walmart goes to jail, they pay some trivial fine, and the prosecutors get a raise and a bullet point on their resume. The public gets to see justice in action...

If you don’t have good evidence of intent, you don’t have “a fairly strong case.” Intent is the lynchpin of criminal law, especially when you’re trying to hold someone liable who didn’t do the actual illegal act. You know what gets you a gold star as a prosecutor? Putting people in prison. The guy who put Raj Rajaratnam in prison is now a partner at one of the top law firms.

You know there's a difference between what is most likely true and what's provable in court, right? It's perfectly reasonable to see all the facts, many of which aren't permitted to be considered by a jury, and then say, "wow,these laws are messed up, they let the powerful people get away with crimes. We should change that and hold them accountable."

Likewise, it's not logically consistent to say " well, yeah it looks really bad but because a court can't prove it, I'm going to advocate they they are morally innocent. " Moral and legal aren't the same thing.

> Moral and legal aren't the same thing.

Correct, but you shouldn't go to jail for immoral behaviour.

> It's perfectly reasonable to see all the facts, many of which aren't permitted to be considered by a jury, and then say, "wow,these laws are messed up, they let the powerful people get away with crimes. We should change that and hold them accountable."

The IRS does this, and it's horrible, but the accountability comes in the form of an increased tax obligation and not jail time.

Going to jail for doing something that was legal, but has become illegal after the fact, isn't something that benefits anyone but the ruling class, and isn't something that I would advocate for.

My dude/tte, please look at who you're trying to educate about law.

Let's just say employees raise alarm and they're intentionally ignored to sweep things under the rug, I feel it'd be incredibly easy to claim that nothing happened due to improper record keeping

Also, if Walmart wasn't in the wrong then why would they agree to a $330M settlement?

A $330 million settlement for a company with a $500 billion per year business. That's a business nearly the size of Poland's entire economy. It's a very small settlement. It's entirely plausible that what they did was not as bad as what the mob would like to believe, and that also they're not innocent.

“$500 billion per year business” is a sort of meaningless term, especially in retail, when you compare to the fine.

Walmart’s operating income was “just” $22M with a final net income of “just” $6.7B (in the ballpark of large tech company quarterly profits).

It’s still true that a $330M settlement is then just 5% of their annual profit (and thus looks like that’s how the number was chosen), but comparing to their $500B revenue isn’t directly meaningful (though it is for your Polish GDP, sort of!).

> But little to substantiate the prosecution narrative recounted as fact by the NYT.

I think you missed the part where they settled.

> There is a reason Wal-Mart spent a billion dollars investigating this case but the government agreed to settle for less than $300 million—once prosecutors dug in, there wasn’t much of a story there.

Wouldn't that rather suggest that they feared they could be liable for much, much more than a billion, and they jumped at the chance to make it all go away for just a "paltry" $300 million?

>If you actually read the facts section of the SEC submission linked from the article, it’s a real snooze fest. There were issues here and there, people were fired, several rounds of compliance programs were instituted, etc. But little to substantiate the prosecution narrative recounted as fact by the NYT. There is a reason Wal-Mart spent a billion dollars investigating this case but the government agreed to settle for less than $300 million—once prosecutors dug in, there wasn’t much of a story there.

Of course. What do we think Walmart level players are? Amateurs? Those kind of jobs never leave much paper trail or proof...

As the PM in one of the most corrupt governments in a small country used to say, to brush off allegations of bribery and other corruption against members of government, "Let he who has proof take it to the prosecutors"...

As in "yeah, good luck trying to prove what we did"...

(Only 2 decades later, when that party had declined, and their influence wasn't as strong, would several top officials, ex ministers etc, end up in jail for those things. Had it still be going strong, there would not be anything done...)

I'm not an apologist for Walmart, kind of the opposite actually, but in a lot of places bribes are not seen as malicious or corrupt just unspoken rules.

A friend of mine from Nepal said something along the lines of "bribes are just a lubricate to an intentionally slow and unorganized bureaucracy". Places like China, India, Vietnam, & Taiwan all have pretty well know backdoor policies of this.

Its a bit old but https://www.forbes.com/sites/richardlevick/2015/01/21/new-da... and https://www.nytimes.com/2019/06/14/business/china-ge-siemens... are both good read for this.

I've also known of UN project directors who had to convince governmental ministers that the UN's no bribe policy was not just a bargaining method.

The FCPA (the law Walmart violated) specifically allows such "lubrication" bribes, where you're basically just paying a lowly government official a small amount to do his/her job a little faster. The forbidden bribes happen when you pay a higher-level official to make a decision in your favor that they otherwise might not have made. Huge difference in the eyes of the law.

I've worked somewhere that the policy was you don't pay bribes. You hire a local company capable of navigating the nuances of the local permitting process.

And what happens when your consultant bills you for a big but vaguely described fee?

I am sure that everyone involved knows what it is about. Eventually they will get caught and squeal. The local guys have immunity from local prosecution but FBI is a different story.

Usually a leader's family member or a trusted person will create a consulting business and help you "navigate" local rules and obtain permits. As soon as money is exchanged a phone call is made and you're untouchable. You call it a bribe, they call it their money. Just like their salary, bribes are part of their compensation.

Say, Russia, can close any business, any time they want. It's impossible to comply with all their rules and regs (by design) and even if you could, no court will rule in your favor. So...enter middlemen.

Top leaders knew the problem and they will use bribes again, or close shop. Very simple is a lot of countries. Pay up or go home.

Yeah but should the US be using taxpayer resources on this at all?

The result of policing kickbacks is a kickback?

Overhead cost

> Holding the CEO liable for employee misdeeds is like holding teachers responsible for teenagers getting into fights or having sex.

This analogy doesn't hold for a lot of reasons, but the most obvious is that teachers don't get to choose their students. CEOs can (and should) fire employees that don't live up to their ethical responsibilities.

A better analogy:

Holding the CEO liable for employee misdeeds is like holding a principal responsible for teachers getting into fights or having sex.

Or, whatever problems teachers cause

When teachers end up physically fighting among themselves often, yes principal is responsible. Absolutely. Principal should have deal with the problem when it appeared first time. Principal is responsible for school culture.

But, teachers are allowed to have sex.

A betterer analogy:

Holding the CEO liable for employee misdeeds is like holding a principal responsible for students getting into fights or having sex.

Just like the principal doesn’t choose the students, management often only hires their direct subordinates. The principal/CEO could expel students/employees directly, but it’s often met with opposition, more the further down the hierarchy they reach.

Should my local Walmart’s store manager be arrested because the cashier he hired was pocketing money from the till?

What about if he knew the cashier was stealing the money, was intentionally ignoring it, and maybe even cooking the books a little, to cover for that employee? Does lit change if the manager was benefiting from the theft in some way?

That sounds a lot closer to what happened.

Show me in the SEC filing where it suggests Wal-Mart’s executive leadership did anything like that: https://int.nyt.com/data/documenthelper/1331-walmart-sec-set...

It notes in there that they were aware their anti-corruption policies were inadequate, but then it took them like 7 years to really get a handle on it. There is certainly benefit gained by execs letting business growth continue, people rarely get promoted or bonuses for stifling growth. There is often little incentive for ethics, and their slow response seems to reinforce this notion.

Did you read it? The bits I just read do nothing to invalidate the basic story here.

Try page 6...

Nice bits all over from walmarts own investigation:

"The final report that was sent to Walmart in December 2004 omitted references, contained in earlier versions, to MXN $45.6 million (approximately USD $4 million) paid to one of the gestores that Mexico Subsidiary Lawyer A alleged was corrupt."

Then there pieces where it talks about how the invoices are just lump sums rather than properly broken down and employees are claiming the the money is being given to the MX government officials..

"Investigator circulated a report concerning the Mexico Subsidiary allegations that stated that laws had been potentially violated, and recommended several additional investigative steps."

"Walmart did not follow the investigators’ proposed action plans. On or around February 7, 2006, Walmart tasked Mexico Subsidiary Lawyer B with leading the remainder of the investigation."

Of course none of this is going to be an email that says "hey this contractor is paying the government to speed up our permits, lets keep doing business with them."

No its all just looking the other way and doing the minimum to follow the letter of the law and using back channels to cut out the really incriminating parts.

As to the first quote, you’re omitting the very next sentence: “While the draft report stated that the transactions reviewed were reasonably appropriate, complied with documentation and classification standards, and were compliant with local policies, legislation and generally accepted accounting principles, it also described “unusual” and “facilitating” payments made in connection with Mexico Subsidiary’s use of gestores.”

Note that the SEC filing specifically quotes the term “facilitating.” “Facilitating” payments—paying officials to do a non-discretionary duty faster—is not illegal under the FCPA. Bribery under the FCPA only includes payments to induce officials to exercise discretion in your favor.

That example isn't relevant here because a cashier pocketing money hurts the company.

The behavior you want to penalize the company for is a cashier quietly doing something illegal that helps the company - and the only reason they would do that is if the company is expecting performance out of them that is difficult to achieve without illegal behavior.

A classic example of this is the Wells Fargo fake account scandal. Managers who set impossible quotas for their salespeople, such that the salespeople felt compelled to steal their customers identities, should be arrested for identity theft, yes.

If a manager knows about an employee bribing a fire inspector, that's equivalent...since the topic is having a priori knowledge of bribery and failing to act (not the bribery itself) and not the simple case of wholesale theft, which is already a crime.

> In a company with a million employees, it’s guaranteed

So then the CEO had to know this behavior was occurring. Did the CEO and management attempt to do anything about it or did they just maintain plausible deniability, knowing that not having a guilty mind was sufficient to prevent management from being liable?

If the NYT, an external organization, was able to uncover this behavior, why couldn't Walmart have had its own internal investigators tasked with maintaining ethical behavior?

We're not asking for the CEO's heads because they broke the strict letter of the law. We're saying that not breaking he law is the bare minimum the CEO should be responsible for.

Your defense of Walmart's CEO rings hollow for me because it's exactly the argument I'd expect from a lawyer.

Not every company behaves this way, even others with millions of employees. Feel free to call me naive and tell me the others just haven't been caught yet.

>> So then the CEO had to know this behavior was occurring.

Why does this naturally follow?

Because it is their responsibility and constructed ignorance is not an excuse for "mere mortals" it is reasonable to demand the same standard apply to them.

A bartender can't claim they didn't know the cient they served from behind a screened conveyor belt was too drunk. Thus the law should either allow the same sort of bullshit loopholes for all (a real headache) or they should be held to the same standard.

rayiner said it was guaranteed, not me. I was just following up on his claim.

Why do you think that there's no guilty mind here?

I do agree that there is a distinction between a company committing a crime because some individual is screwing things up against the policy of the company and a company committing a crime because it sets out to commit crimes. I don't agree that because a company has no brain that it cannot have a guilty mind. If it incentivizes thousands of its employees to do illegal things, including by putting them in situations where illegal behavior is usual and expecting the usual results, that's on the company.

How do you hold an immortal, amoral entity that can’t be thrown in jail accountable, then? Trivial fines amounting to 0.1% of EBITDA are not the answer.

You increase the fines to the point it becomes a fiduciary requirement to behave properly.

If fines are low, companies will continue to behave poorly because it may be profitable to do so.

Companies (even purely algorithmic ones) are not amoral because they are directly impacted by the ethical and unethical behaviors that they choose. So they are not “unconcerned” with the morality of their actions.

Versus for example “technology” which is amoral, because it is itself a tool unaware of the purpose for which it is even being used.

Of course companies are also not immortal, companies “die” all the time.

However, companies certainly can and do act unethically, particularly when there are economic incentives to do so.

A 0.1% of EBITDA fine to Walmart would be hundreds of millions of dollars. They would certainly care about that, and they likely have teams of people who work to ensure compliance for a whole host of regulations which could result in fines at that order of magnitude.

.1% of EBITDA is a “cost of doing business” if it makes them .1% + X. Even if it doesn’t, it’s an annoyance. It doesn’t hurt any more than you or me getting a parking fine. You have to make it really, truly hurt the bottom line, because that’s the only language they speak.

Even then, it's not even a cost of 0.1% EBITDA. It's a cost of 0.1% * p, where p is the probability of actually being caught. How many companies behave unethically because they know full well the will likely get away with it.

Companies are profit-seeking automatons. They evolve and change in response to their environment, but as entities they are not encumbered by human moral impulses or other embarrassments.

Humans operating within companies may experience moral impulses, but the company as an entity constantly urges its humans to act amorally in service of its profit-seeking.

Financial paperclip maximizers, you might say.

Like we do now: you hit it in the pocketbook with massive fines.

Also, the CEO may not go to jail, but the local people actually doing the bribery should.

That’s the problem: we’re not doing that.

Per the friendly article, Walmart has spent over $1 billion total on this (fine, legal fees, investigation), which is a noticeable number even by megacorp standards.

Legal and investigative fees are not “massive fines.” Those are optional. They could have admitted guilt 10 years ago and not had to pay them.

And, speaking of 10 years, they had that long to spread that billion dollars over. They’ve probably made $300B in that time. $1B is a drop in the bucket.

1 billion is pittance to Walmart

Hold them/the company responsible.

They should have internal policing. When there are billions at stake, I don't understand why these kind of things aren't torn open by lawyers.

This is a conventional view of culpability of corporate officers. It is, however, not the least bit aspirational or innovative. People demanding that CEOs be put in prison are for the most part misunderstanding the legal system, but they are also looking clear-eyed at a system that rewards extra-judicial risk-taking by corporate officers. The fines that come with negligence are typically undersized compared to the deterrent effect that the public expects. (The public also remains unaware at the enormous auditing burden that comes with fines from government agencies).

The solution for corporations and officers to avoid legal consequences is to have standard compliance programs in effect. Failing to account for the inevitable misdeeds of agents is similar to the teacher who leaves his classroom for hours and is surprised to see his students engaged in misconduct.

Yes, reporting the misdeeds of contractors has been part of every companie's yearly legal training i've worked for in the past couple decades. The fact that those reports apparently weren't acted upon means that the upper mgmt is responsible.

Of course the whole thing puts companies in a bad place, the law itself is highly problematic. That is why whole thing just sounds like the usual US government trying to get its cut.

It's the Rumpelstiltskin scenario. If someone is spinning gold from proverbial flax you should goddamn well ask how they're doing it before you start agreeing to things.

Or put less fancifully, receiving stolen goods is a crime. Where's the line between 'too good to be true' and assuming willful ignorance in a corruption case?

There's also the case of the executives claiming responsibility for all of the success of the company. If the success is theirs, not ours, then the rest of us don't want them to cherry pick. The failure and corruption is theirs too. It's a package deal.

If you want to talk about fixing the quasi-feudalist state we are moving toward and start thinking of companies more like a team, working together, then I'd love to discuss shared responsibilities as part of that reconciliation.

> The touchstone of criminal law is a guilty mind.

Corporate structures are designed to obfuscate decisions by executives which lead to misdeeds by underlings. Carrie Tolstedt, who designed the Wells Fargo incentive systems which led to the creation of umpteen bogus accounts, ended her career tens of millions of dollars ahead, even after clawbacks.

Since it is impractical to hold individuals accountable because it is so difficult to see inside their minds, the collective corporate entity should be punished. Maleficent companies like Wells Fargo should be dismantled.

Also, narcisists and sociopaths don't feel guilt the way the rest of us do.

And what do you find disproportionately represented in the board room?

I refuse to believe that the solution to this is to throw our hands up and just accept that things like this will continue to happen. If large, multibillion-dollar corporations have such a hard time with complying with the law, and if we can’t seem to find a solution to that, then maybe we have to question the utility that these entities actually serve modern society. Maybe they shouldn’t exist at all if they’re hotbeds or criminal activity.

>I suspect people cynically demanding that CEOs be put in jail haven’t really dug into the facts of this or other FCPA cases. Holding the CEO liable for employee misdeeds is like holding teachers responsible for teenagers getting into fights or having sex.

Or, you know, like putting in jail the person directly responsible both for the deeds and the culture that promoted them...

How are the people demanding CEOs to be jailed cynical? I'm really confused by why you chose that word.

The CEO should be jailed for bribes in Mexico, Saudi Arabia, Russia etc. The CEO should be jailed for Walmart hiring "illegals" with fake Social Security cards in California. (example) The CEO of this 500 BILLION company, with 2.2 Million employees, should be jailed for not making a store in Ohio wheelchair friendly. The CEO should be jailed for signing off on the gazillion pages long financial statement that took 100 lawyers and accountants to prepare.

etc etc etc. Unless the CEO knew or directed them to do so, he is one person with 24 hour days like all of us. And Walmart has thousands and thousands of top level managers to manage all aspects of his business.

No employee is breaking laws in an effort to further the objectives of a company in a vacuum. A CEO is absolutely not absolved of crimes committed in the name of the company, especially over the span of a decade.

> No employee is breaking the law...

That's absolutely absurd. Would a teenaged cashier be absolved of all guilt for murdering a troublesome customer? But the CEO should be held accountable?

If I literally cannot break a law as long as I'm working for a company, then why don't bank robbers get a job at Walmart first and claim robbing banks was for the benefit of Walmart? How could you ever convict anyone if the excuse "my boss implied that this might possibly be beneficial" gets you off Scott free?

People are always responsible for their own actions. As an extreme example, the nazis were all "just following orders". Do you think they are guilty and should be held accountable for their actions, even though someone else asked them to do what they did?

> murdering a troublesome customer

This furthers the interests of the company?

Getting rid of a troublesome customer that wastes employees time and scares off other customers is definitely in the interest of the company.

calling the cops and charging him with trespassing next time, might be a better way to do this ;)

GP isn't saying that employees can't break the law. They're saying that if an employee breaks the law for the benefit of the company, it's probably because they know the company will reward them for it somehow.

> People are always responsible for their own actions.

Leaders also bear some responsibility for the actions of those within their purview. Why do CEOs get paid so much? Because they get credit (and blame) for the aggregate actions of everyone in the company.

Responsibility isn't zero sum. If the CEO orders a cashier to murder someone, they're an accomplice. If your boss knows you're robbing banks at work and says nothing, they're an accessory.

Let's flip the Nazi analogy around. The foot soldiers should certainly be held accountable for their actions. But — given that all he did was ask others to carry out his wishes — should Hitler?

You've not read the comment I responded to.

> No employee is breaking laws in an effort to further the objectives of a company

That's am absolute statement that employees are not to be held accountable.

> Responsibility isn't zero sum.

I totally agree. Doing a bad thing is bad. Ordering someone to do something bad is bad. Absolving someone who did something bad to fulfill your own twisted worldview is also bad.

Yes I have. The full sentence, emphasis added:

> No employee is breaking laws in an effort to further the objectives of a company in a vacuum.

In other words: "in a vacuum" (i.e. without any influence or incentives from the company), employees will not break the law for the benefit of the company (as opposed to their own benefit). It's describing their behavior, not absolving them of guilt.

Sure they can. There might for example be sales people who are operating in countries where bribes are common and despite clearly stated no bribes policies they will still bribe or behave unethically to win deals and further their career/compensation.

If it is reasonable to think that the leadership should have known about it then sure they can be blamed as well but often that is not something that is reasonable to expect.

Except in the US it's legal via lobbying.

I thought part of the reason for the enormouse CEO paychecks was they were ultimatly responsible for things like this?

After they took the money, they want to say "even thought i was paid to run the company, i had no idea this was going on?" not sure it works that way.

So are you just against FCPA cases in general then? I think it's one of the most important laws in the US and its extraterritoriality reduces corruption everywhere in the world.

I think the FCPA is tremendously important. But I don’t believe in bending basic principles of criminal law just because we’re mad at corporate CEOs.

But isn't the main reason they get all the big money that huuuge responsibility?

Your opinion would make more sense if teacher’s yearly bonus would be directly sized based on how much unprotected sex his students are having.

No, he can’t make them have less sex if they want to. Yes he also gets paid more if they do.