(Why) Is the Walmart Case Taking So Long?

So this might not be the most important question in the world, but I’ve been wondering why the U.S. Government’s investigation into Walmart’s alleged violations of the Foreign Corrupt Practices Act (or, more accurately, FCPA violations committed by Wal-Mart’s Mexican subsidiary, Walmex) has yet to produce a final settlement.

A quick and somewhat simplified recap (for those among our readers who don’t obsessively follow every FCPA case in the pipeline): In April 2012, two New York Times reporters broke a blockbuster story about how Wal-Mex had been systematically paying bribes to scores of Mexican officials to get permits for new stores (often circumventing local environmental protection and historical preservation regulations in the process), and—perhaps even more damningly—about how Walmart’s senior leadership, upon learning of the bribery allegations from an internal whistleblower and preliminary internal investigation, had decided to cover up the problem and reject its own compliance department’s calls for a thorough investigation. (Walmart tried to get out in front of the story by including a disclosure of possible FCPA problems in its December 2011 FCPA filing, though that disclosure downplayed the seriousness of the issue.) The original New York Times story, along with a follow-up story published in April 2012, netted the two reporters a Pulitzer Prize. Those reports, along with Walmart’s December 2011 disclosure, prompted the Department of Justice Securities & Exchange Commission to begin investigating Walmart for FCPA violations.

That was back in April 2012. It’s now three and a half years later, and there’s still no resolution of the case; the investigation is still ongoing—something that has prompted grumbling in some quarters about both the length and cost of the investigation (see here and here). Why is this taking so long?

This is a question I’ve heard several people raise at various conferences and meetings. I don’t have any good answers, but I thought I’d throw out a few hypotheses: Continue reading

Troubling Signs of a Resurgent Anti-FCPA Lobbying Campaign

One of the biggest stories in anticorruption enforcement over the last two decades is the surge in enforcement of the U.S. Foreign Corrupt Practices Act. This development has not only been greeted with enthusiasm by anticorruption advocates, but has had bipartisan political support, at least within the executive branch (the enforcement surge began under President George W. Bush, and has continued through President Obama’s administration). But not everyone has been happy about aggressive FCPA enforcement. About five years ago, the U.S. Chamber of Commerce and its allies launched a coordinated lobbying assault on the statute and on the U.S. government’s enforcement practices. The Chamber not only published a report (“Restoring Balance”) advocating significant limitations on the FCPA’s scope, but it convinced (and/or paid) a number of other “experts” to take up the cause, writing op-eds, testifying before Congress, and lobbying in other forums. (The Chamber seemed to deliberately prefer to hire ex-DOJ officials to make its case, most notably former Attorney General Michael Mukasey.) These editorials and presentations, perhaps not surprisingly, tended to recite the same Chamber of Commerce talking points.

But this concerted, coordinated lobbying effort basically went nowhere. Why not? Well, there were probably a number of reasons, including the vigorous resistance of the Department of Justice, the intrinsic weakness of many of the Chamber’s arguments, and the difficulty of getting anything through the U.S. Congress. But another major factor was the Walmart corruption story, which the New York Times broke in 2012 (see here and here.) The allegations involving Walmart’s conduct in Mexico were so shocking that any appetite there might have been in Congress for “reforming” (that is, weakening) the FCPA quickly dissipated. Although FCPA critics continued to advocate changes to the statute and current enforcement practices, the concerted, orchestrated push for FCPA “reform” faded away.

But now there are signs that it’s back. Maybe I’m over-reading the limited evidence, but I think a new campaign for FCPA reform may well be underway—and anticorruption advocates should may attention and be ready to fight back. Continue reading

The Economist Gets It Badly Wrong on Anti-Bribery Law

Last week, The Economist published an op-ed entitled “Daft on Graft,” which argued that the enforcement of transnational anti-bribery laws like the U.S. FCPA and U.K. Bribery Act is “becoming ridiculous,” with costs that are “spiraling beyond what is reasonable,” and that we are now witnessing “a descent into investigative madness.”

If I spent all my time responding to poorly-reasoned claptrap that looks like it was written either by a shill for business lobbyists or by someone who didn’t know much about the topic, I wouldn’t have time to do anything else. But when such claptrap appears in a widely-read, well-respected publication like The Economist, I can’t just let it pass. I know, I know—it may be unfair to beat up on a short op-ed, a format that doesn’t lend itself to in-depth analysis or nuance. But still, even by the standards of op-eds in popular periodicals, this is pretty bad. The diagnosis of the problem is shrill, one-sided, and hyperbolic, and the proposed reforms are either already in place, or misguided.

Maybe the best way to approach this is to consider each of the op-ed’s four proposed “reforms” to anti-bribery law enforcement one at a time: Continue reading