Walmart Strike: Protests Fade, But Corruption Investigation Spells More Trouble For Walmart

Impact
By Lilly O'Donnell

Wal-Mart’s inadequate treatment of its employees was highlighted over the last week with a Black Friday strike and much internet debate. And now, right as things are calming down and going back to normal for the goliath retailer, a corruption probe into several of Wal-Mart’s foreign subsidiaries and joint ventures is keeping the company in the hot seat a little longer.

In a November 15 Securities and Exchange Commission filing, Wal-Mart disclosed investigations into potential violations of the U.S. Foreign Corrupt Practices Act in Brazil, China and India, among other markets.

There’s little detail available about exactly what kind of corruption is being investigated, although Wal-Mart’s Mexico subsidiary was apparently already under investigation for payments made to local officials to speed up store openings. 

The retailer has apparently suspended several employees in India, including the CFO of Bharti Wal-Mart, the joint venture. A spokesman for the company told CNN Money that the suspension of the CFO was related to the investigation, but declined to provide any more detail. 

The probe comes not only at a bad time for Wal-Mart, but at a bad time for India’s ruling Congress Party amid rampant corruption investigations into all kinds of foreign businesses, according to The Washington Post.

Wal-Mart really tried to sweep the Black Friday protest, releasing a statement the next day about how great their sales were and how little they were impacted by the strike. They probably hoped that the buzz would die down and everything would go back to normal, but with this corruption probe they can’t seem to stay out of the spotlight and away from scrutiny.

No one relatively small scandal will take down a giant like Wal-Mart, but it will be interesting to watch and see whether several small scandals can have a cumulative effect on the company’s reputation, or whether, under increased scrutiny, they will be forced to clean up their act a little.