What Business Can Learn from Wal-Mart

For many, Wal-Mart will simply bring to mind giant stores where people can buy anything and everything; however it’s not their versatility that is putting them in the news at the moment. The New York Times recently exposed the retail giant’s latest indiscretions which are really proving to executives around the world about what not to do.

Recently, the New York Times brought to light Wal-Mart’s history of bribing Mexican government officials to secure market domination. Not only that, but other evidence has indicated that Wal-Mart also lobbied to dilute the U.S. Foreign Corrupt Practices Act (FCPA), an act put in place to prevent payment to foreign officials to obtain or retain business. All in all, Wal-Mart now seems to be in violation of Mexican anti-bribery laws, the FCPA and the U.K. Bribery Act.

While this is bad enough for Wal-Mart as it stands, the scandal simply grows larger as evidence also suggests that Wal-Mart’s top executives knew about the corruption and swept it under the rug. If they have violated the FCPA, these executives would now be subject to criminal penalties. The FCPA, U.K. Bribery Act and other similar laws around the world are proving that governments are becoming increasingly strict when it comes to corruption.

Corporate securities lawyer, Ben Kerschberg, wrote in a recent article that executives and board directors around the world need to learn from Wal-Mart’s misfortune, and, need to remember that they themselves are liable for not only their own actions, but those of their employees as well. He outlines five basic lessons which those in the business world can learn from this scandal:

1. Adopt a zero tolerance policy and make it known

Kerschberg says that Boards of Directors need to have formal Codes of Ethics or Conduct which point out that they have no tolerance for corruption.

2. Don’t make it worse for yourself

Wal-Mart’s top executives allegedly knew about the corporate corruption and then buried the evidence and counsel of their internal investigator. Kerschberg states that they should have rather focused on the initial problem and reported itself before further damage was done.

3. Put someone in charge

Have an investigations officer work with compliance and legal to root out and report suspected violations. Having an objective third party as part of the process would also be a wise idea.

4.     Make sure employees know they can blow the whistle

Employees can play a large role in uncovering corruption in large corporations where the top brass can’t see everything; however, Kerschberg also states that employees need to know that their career won’t be in jeopardy should they uncover any wrongdoings.

5.     Risk management

The problem with globalisation is that companies are spreading out into markets which may have a reputation for corruption. Companies need to assess these risks and handle them as required.

The business world is tricky enough as it is, but throw in the bribery rampant in many countries around the world and many companies don’t know how to escape the risk. Wal-Mart is proving just how important it is to deal with the reality of bribery and avoid it with strict standards, or face possible jail time.

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