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The Cost of Doing Business?

April 24, 2012

I heard about this one earlier in the morning… something about staying in a hotel that makes me want to wake up or something.  Anyway, let’s discuss the “cost of doing business,” in modern terms.

Reps. Elijah Cummings (D-Md.) and Henry Waxman (D-Calif.) are seeking an in-person meeting with company officials this week to address the allegations that employees of Wal-Mart de Mexico (Walmex) made a series of illicit payments to local government officials in Mexico prior to 2006, Dow Jones Newswires reported.

Executives at both Wal-Mart and its Mexico unit learned of the allegations as early as 2005 but rebuked internal investigators in an attempt to prevent the matter from impeding the company’s aggressive growth strategy, according to an article published in The New York Times.

The company at hand is Walmex, the Mexican subsidiary (though that might not be the right technical term) of Wal-Mart.  The specifics appear to center around bribe money paid by the company to municipal localaties to build stores faster.  Let’s be clear, this is wrong.  Many people might say that this is the cost of doing business in certain countries.  If you want to get ahead, you have to spread the wealth to the right uncles to get things moving.  Um, no.

Working in a global high-tech company, we get consistently reminded that we are a US-based company, and we play by a corporate code that does business above-board.  Sure, it might be easier to make things happen under the table, but that’s not the way an exemplary company should behave.  I’m surprised that Wal-Mart, a company that I’ve seen up close once or twice, would let something like this happen, and I’m especially surprised if they actually blocked the investigation.

Not so surprising:

The Mexican government said late Monday it sees no need to itself investigate the retailer, with the office of President Felipe Calderon saying in a statement that, if the accusations are true, then the issue is a local matter as bribes for construction and other permits would have been paid to municipal or state officials, DJ reported.

So our US government , which has its warts but at least tries to exemplify the American standard, is willing to dig into the matter but the Mexican government isn’t?  Interesting.  They might “closely follow” the investigation, but where’s the accountability to ensure that business is done properly?

A company can only be as good as its worst employee, and a culture that lets any legal nicety go to the wayside in the interests of business is something that starts the downward trend towards what most Hollywood writers think all businesses are.  I would hope that Wal-Mart will take this a little more seriously, or the eventual consequences to its business will extend well beyond a simple call for a minor investigation.

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One Comment leave one →
  1. April 24, 2012 9:59 pm

    What’s interesting here is that Walmart (or Walmex) is alleged to know how to bribe, whic is no easy thing. Doing business in a culture where bribing is commonplace has its difficulties.

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