June 20, 2019

Walmart settles FCPA investigation

On June 20, 2019, the US Department of Justice and the Securities and Exchange Commission announced that they had reached a settlement with Walmart Inc., resolving investigations into potential violations of the Foreign Corrupt Practices Act by the company’s subsidiaries in Brazil, China, India, and Mexico.  Walmart Inc. entered into a three-year non-prosecution agreement, agreeing to pay a $137.96 million penalty to the DOJ.  Walmart’s Brazilian subsidiary, WMT Brasilia S.a.r.l., pleaded guilty and agreed to forfeit $3.6 million and to pay a fine of $724,898.  The DOJ agreed that the amount to be paid by WMT Brasilia will be deducted from the penalty imposed on Walmart.  Walmart also agreed to pay $144.7 million in disgorgement and interest to resolve the SEC investigation.  As part of the resolution, the company will retain an independent compliance monitor for a term of two years. 
In calculating the DOJ penalty, the DOJ gave Walmart a 25% reduction off of the bottom of the US sentencing guidelines for the company’s conduct in India, China and Brazil, and a 20% reduction for the conduct in Mexico.  The DOJ said Walmart did not receive a larger deduction because Walmart did not voluntarily disclose and, with respect to the Mexico investigation, failed to provide documents and information to the government in a timely fashion.  The DOJ also said Walmart did not receive a larger  deduction because Walmart did not “de-conflict” an interview; specifically, Walmart conducted an interview as part of Walmart’s investigation despite a request from the DOJ that the DOJ interview the individual first.  

According to the non-prosecution agreement, from July 2000 to April 2011, Walmart’s subsidiaries in the four named countries had inadequate internal accounting controls.  Walmart had insufficient gifts, travel, and entertainment policies, failed to obtain adequate accounting documentation for payments made to third parties, and failed to conduct sufficient due diligence.  As a result, Walmart paid third-party intermediaries without reasonable assurances that certain transactions were consistent with their claimed purpose or with the prohibition against making improper payments to government officials.  During the relevant time period, Walmart also did not sufficiently investigate whistleblower allegations of corruption and failed to improve internal controls after findings of issues in internal audits.

DOJ press release | SEC press release | NPA | SEC Order |

 Criminal Information (WMT Brasilia) | Plea Agreement (WMT Brasilia)