HuffPost: Walmart Critics In New York City, L.A. See Opportunity In Mexico Bribery Allegations

Walmart’s bribery scandal in Mexico is turning into fresh meat for its opponents in the United States. Labor unions and activist organizations fighting the big box retailer’s push into New York City and Los Angeles are drawing parallels between the company’s domestic expansion strategies and its alleged illegal tactics in Mexico.

In New York City on Tuesday afternoon, some 50 members of anti-Walmart groups that have long fought the retailer’s move into the region gathered on the steps of City Hall to denounce the company. Labor groups like the Retail Action Project, Alliance for a Greater New York and United Food and Commercial Workers are demanding that the company halt its plans to expand into New York City until the City Council investigates its local business dealings.

“We want to be assured what happened in Mexico doesn’t happen here,” declared Inez Barron, a New York Assembly member whose district includes the area of East New York where Walmart has been pushing to build a store. Behind her, the crowd held up signs with slogans like “Walmart Sucks the Life Out of Communities” and “Walmart bribed its way into Mexico … What will they try next to get into NYC?”

The protest was put together by Walmart Free NYC, an organization of workers, small businesses and elected officials, after news of bribery allegations surfaced on Saturday. “Now we have evidence of what we have been saying all along: that this company will stop at nothing to increase their bottom line!” claimed the organization on its Facebook invitation to the protest.

Walmart is facing investigation by the Department of Justice and Congress over allegations, first reported by The New York Times, that its subsidiary in Mexico engaged in widespread bribery so as to speed its expansion into that country.

In a lengthy statement published Tuesday on Walmart’s website, spokesman David Tovar defended the company against the recent barrage of criticism. “We are confident we are conducting a comprehensive investigation and if violations of our policies occurred, we will take appropriate action,” Tovar wrote.

New York City unions argue that Walmart’s efforts over the past two years to woo politicians with philanthropy and lobbying are simply more sanctioned versions of the influence peddling that occurred in Mexico. “The company spread money around in order to accelerate its entrance into Mexico and flouted laws, regulations, and public procedures,” wrote Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, in a statement on Monday. “Something similar has happened here.” At City Hall on Tuesday, members of Appelbaum’s union and other protestors called for every political donation Walmart has made in the United States to be investigated by the Department of Justice.

Last year in New York state alone, Walmart spent $2.8 million on lobbying — a rise from $113,482 in 2010, according to the New York Public Interest Research Group. As the company pushed to build its store in East New York, it also donated $4 million to New York City’s Summer Youth Employment Program, eliciting praise from Mayor Michael Bloomberg, who called the company “a good corporate citizen.”

At a Monday press conference, Bloomberg was singing a slightly different tune. “I’ve not been a big supporter of Walmart,” he said. “I have been a big supporter of government not telling people whether they can do business here.”

Tuesday’s City Hall protest called not only for a halt to Walmart’s expansion plans in New York City but also for the City Council to demand a response from two Walmart board members who live in New York, Michele Burns and Christopher Williams, who served on Walmart’s audit committee during the company’s internal audit of the alleged bribery in Mexico, according to protestors.

In Los Angeles, anti-Walmart groups are also making allegations about the company’s business practices. James Elmendorf, director of the Los Angeles Alliance for a New Economy, sees similarities between the way Walmart quickly obtained a permit for its much contested store in Chinatown and its rapid-fire expansion in Mexico. In March, Walmart obtained building permits for that Los Angeles store only hours before the City Council was set to vote on an ordinance that would limit the expansion of big box stores.

“Frankly, it’s a pretty interesting thing that the allegations are of bribes in order to sneak through permits,” Elmendorf told The Huffington Post. “Here in Los Angeles, Walmart’s permit was issued more rapidly than anyone expected … We want to see some investigation into this question.”

“We submitted our application for building permits in November 2011 and went through an exhaustive review process with all required departments within the city of Los Angeles,” wrote Steve Restivo, a Walmart spokesman, in an email statement. Walmart says its expansion plans in New York and Los Angeles will not be affected by the allegations of bribery in Mexico.

“Our track record as a good corporate citizen is well-known and in large cities like New York and Los Angeles, residents continue to choose to shop and work at Walmart,” Restivo wrote. “As a result, we continue to evaluate opportunities to make access to our stores more convenient for customers.”

Anti-Walmart groups say they are not surprised by the allegations of bribery in Mexico raised in The New York Times investigative piece first released on Saturday night. The piece claimed that Walmart shut down an internal audit of the alleged bribery so as to cover it up. The article has since prompted a congressional inquiry. A Department of Justice investigation had already been launched last year.

Crain's: Local pols step up anti-Wal-Mart pressure

Some call for City Council hearings to probe the retailers’ New York City business practices, including a full disclosure of the company’s philanthropic spending here.

The pressure is mounting on Wal-Mart Stores Inc. to abandon its long-running plans to enter the New York City market. In the wake of the weekend’s revelations of alleged bribery and cover-up in the retail giant’s Mexican operations, local advocacy groups here who have opposed Wal-Mart’s Big Apple ambitions for years are pressing their advantage, and redoubling their efforts.

Manhattan Borough President Scott Stringer; the city’s public advocate, Bill de Blasio; and Stuart Appelbaum, president of the Retail, Wholesale and Department Store union, all issued statements Monday criticizing Wal-Mart. On Tuesday afternoon, they, along with New York City Comptroller Bill Thompson and dozens of others, plan to throw their bodies behind the effort by attending a rally at City Hall. Demonstrators will call on the Bentonville, Ark.-based retailer to give up its campaign for a New York City store.

“More and more New Yorkers are growing skeptical of Wal-Mart’s plans and promises for our city—and for good reason,” said Matt Ryan, executive director at the Alliance for a Greater New York, an anti-Wal-Mart group and a key organizer of Tuesday’s rally. “Armed with the latest news about Walmart de Mexico’s illegal practices, the city must investigate Wal-Mart’s recent dealings with public officials and developers in its bid to move to New York City.”

Yet Wal-Mart has reiterated that its plans for the Big Apple remain undeterred.

“Our track record as a good corporate citizen is well known and in large cities like New York, residents continue to choose to shop and work at Wal-Mart,” said Steve Restivo, Wal-Mart’s senior director of community affairs, noting the company’s involvement with issues like sustainability and nutrition. “As a result, we continue to evaluate opportunities here to make access to our stores more convenient for customers.”

Anti-Wal-Mart activists are also asking for City Council hearings to investigate Wal-Mart’s New York City business practices, including a full disclosure of the company’s philanthropic spending here. They’re also asking for an investigation into the practices of the retailer’s New York-based board members Michele Burns and Christopher Williams. Both Ms. Burns and Mr. Williams served on Wal-Mart’s audit committee in 2005 and 2006, the same years the alleged bribes took place. Neither immediately returned calls requesting comment.

The retailer is also facing stress from investors. By mid-day trading Tuesday, Wal-Mart’s stock price had fallen another 1.8% to $58.50. That follows a Monday plummet of nearly 5%.

TODAY: Walmart Corruption On Trial At City Hall

Media Release for Tuesday, April 24, 2012

Contact: Raymond Rodriguez, 646-200-5309/305-992-1809, raymond@berlinrosen.com

WALMART CORRUPTION ON TRIAL TODAY AT CITY HALL

Following Reports of Justice Department Inquiry Into Bribery Scandal, Electeds Join With Walmart Free NYC To Demand Walmart Withdraw Plans For NYC Market

New York, NY- Today, following reports of the Justice Department’s inquiry into Walmart’s bribery scandal, elected officials, advocates and members of Walmart Free NYC will demand Walmart halts its expansion plans until an independent investigation is completed and adequate steps are taken to ensure the retailer doesn’t engage in any illegal activity to enter New York City.

Among its demands, the group will call on the NYC Walmart board members, who were members of the retailer’s audit committee at the time of the alleged bribery and cover-up, to explain what they knew and when they knew it- vowing to keep the pressure until they come clean. Walmart Free NYC will also call for the resignation of top executives, Walmart Board Chairman Rob Walton and CEO Mike Duke.

Who: Scheduled elected officials expected: Public Advocate Bill de Blasio, Borough President Scott Stringer, Council members Erik Dilan, Charles Barron, Gale Brewer, Daniel Dromm, Tish James, Brad Lander, Melissa Mark-Viverito, Ydanis Rodriguez

Groups include: Walmart Free NYC, Retail Action Project, NY Communities for Change, Food & Water Watch, Make the Road NY, UFCW Local 1500, RWDSU, United Community Center of East New York

When: Tuesday, April 24th, 2PM

Where: City Hall Steps, New York City

###

Source: facebook.com

Crain's: Despite scandal, Wal-Mart pushes on in NYC

Its shares plummeting and executives reeling in the wake of bribery allegations in Mexico, Wal-Mart Stores Inc. won’t alter its quest for a city location.

Wal-Mart Stores Inc. will likely forge ahead with plans for a New York City store despite heavy fallout from bribery allegations at the retail giant’s Mexican division.

The Bentonville, Ark.-based company is already facing a plummet in the value of its stock following the weekend report by The New York Times alleging years of payoffs of Mexican officials for permits to open stores in that nation. Wal-Mart’s Mexican division has been a source of great growth for the company and is often cited by CEO Mike Duke as a model for the company’s expansion. Wal-Mart is re-investigating the allegations and its compliance with the U.S. Foreign Corrupt Practices Act.

[Greg David on NY: How Wal-Mart may have already blown it in NYC]

One turnaround expert said that any hesitation with plans for a Big Apple store might prove disastrous for Wal-Mart, which has been trying to gain a foothold in the city for years. Most recently, the retailer was eying a 150,000-square-foot parcel in East New York, Brooklyn, owned by the Related Cos.

“This is a crisis of public opinion, and the last thing you want to do is change your business strategy because of it,” said crisis manager Nat Wasserstein of Linwood Associates. He noted that things will be more difficult now for the company, however, as it needs to prove that nothing like the alleged Mexican improprieties could happen here. “They have a credibility issue, and New York regulatory agencies as well as the politicians involved are going to want to make sure that they are squeaky clean.”

A Wal-Mart spokesman said the recent news will not affect the company’s plans for New York City. And on Monday, Mayor Michael Bloomberg reiterated his longstanding support for the company’s right to open up shop in the city.

“I think you let the market decide whether people want jobs or not, whether people want to buy products at different price ranges and different types,” Mr. Bloomberg said at a press conference Monday afternoon to announce New York University’s new tech campus. “I have no idea what Wal-Mart did in Mexico or if any of that stuff is true or not. We’ll have to see. It’s one story in the paper.”

The mayor, referring to the limits of the City Council’s authority, said as long as Wal-Mart isn’t seeking zoning changes “they don’t have to consult with anybody, and that’s the way it should be.”

But labor groups and elected officials immediately jumped on the news in an effort to bolster their campaign to keep Wal-Mart out of the city. Several likely mayoral candidates released statements excoriating the retailer. Said City Council Speaker Christine Quinn, “This is precisely the type of business we do not want in our communities, and I remain committed to fighting against Wal-Mart’s corporate poison entering the five boroughs.”

United Food and Commercial Workers Local 1500 called for the City Council to hold additional hearings on Wal-Mart. It conducted two hearings last year at which Wal-Mart officials declined to speak.

“We have to keep the spotlight on Wal-Mart,” said Pat Purcell, assistant to the president of Local 1500. “The council can’t stop them if they…meet legal requirements, but members should say, ‘I want the people in my community to know just the company we’re dealing with.’ ”

A coalition of labor and community groups planned a rally for Tuesday at City Hall to try to capitalize on the controversy.

Also on Monday, insurer MetLife was looking into whether Eduardo Castro-Wright, Wal-Mart’s vice chairman, should remain on its board, according to a Bloomberg report. He ran the company’s unit in Mexico during the time of the bribery allegations. Other top executives at Wal-Mart also face scrutiny, retail experts theorized.

“Clearly there’s somebody senior that either knew about [the allegations] or should have known about them, and that creates a bigger problem,” Mr. Wasserstein said.

On Monday morning, shares of Wal-Mart sank in value. By 12:30 p.m., they had fallen 4.8% to $59.42.

Other retail stocks were also in freefall, buffeted not just by the Wal-Mart scandal but by concern over the economic situation in Europe. The Jones Group was down 4% in morning trading, while shares of New York & Co. fell 5.2%. The stock price of Liz Claiborne Inc., which will be renamed Fifth & Pacific next month, also tumbled 4%. Overall, the Standard & Poor’s Retail Index was down 1.5%.

Politicker: Quinn Reaffirms Commitment to Stopping ‘Wal-Mart’s Corporate Poison’

After The New York Times uncovered the internal reaction of Wal-Mart’s top executives to an extensive bribery scheme in Mexico, depicting the company in a fairly negative light, a variety of New York City politicians latched onto the report in order to further their arguments against the superstore ever setting up shop in the city. The group of elected officials who have sent out statements on the issue includes three top mayoral candidate in 2013, as well as a congressional contender in Queens, demonstrating the salience of rhetorically torching the company in local politics.

Saying that “Wal-Mart has once again revealed it’s true colors,” Council Speaker Christine Quinn was particularly critical of the company in her statement:

“The corporation’s tactics of bribery, scheming and corruption are the latest in a litany of despicable business practices including discrimination, worker mistreatment and predatory pricing. This is precisely the type of business we do not want in our communities and I remain committed to fighting against Wal-Mart’s corporate poison from entering the five boroughs.

Wal-Mart’s actions in Mexico should be fully investigated and they must be held fully accountable for any laws, American or Mexican, that were broken.”

Public Advocate Bill de Blasio, who was actually first out of the gate in sending out a statement reacting to the report, echoed Ms. Quinn’s thoughts: “New York City cannot open its doors to a company that sanctions bribery and then covers it up as a part of doing business. Walmart is notorious for breaking its promises to communities, but these new revelations show Walmart is just as willing to break federal laws. New Yorkers should be put on notice: there is no tactic too underhanded for Walmart to try in order to open here. If we are going to prevent the loss of thousands of New York City jobs and avert a race to the bottom in retail wages, we need to redouble our efforts to keep Walmart out.”

As did Manhattan Borough President Scott Stringer:

“A company that tries to bribe its way into a community has no place in New York City. Once again Wal-Mart has shown itself to be a bad corporate actor and a bad neighbor, a company whose black marks already include predatory pricing and blatant disregard for the rights of working men and women.”

Meanwhile Assemblyman Rory Lancman, who’s running for congress in in a race that has seen opposition Wal-Mart cited as a key issue in labor endorsements, connected the bribes in Mexico to the company’s surge of charitable contributions to New York City causes:

“This morning’s New York Times story regarding allegations that Walmart orchestrated a $24 million bribery campaign to gain favorable treatment by the Mexican government should be a wake up call for New Yorkers who have witnessed Walmart’s aggressive lobbying effort and recent streak of opportunistic ‘philanthropy’ in our city. Elected officials in New York have an obligation to stand up for workers and small businesses in our city and send Walmart a clear message, that whether it’s through politically-motivated charity donations, campaign contributions or outright illegal bribes, our city is not for sale.”

Capital New York: A Walmart-bribe story set in Mexico cues an outcry from candidates in New York

Local opponents of Walmart are seizing on allegations that the company paid bribes in Mexico for building permits and other government approvals to bolster their argument that opening a store here would be bad for New York.

The union representing retail workers, RWDSU, issued a statement in response to yesterday’s Times story about the alleged bribes.

Minutes later, Public Advocate Bill de Blasio, who was elected to his current office with crucial help from labor and is counting on union support for his mayoral run next year, said New York City isn’t for sale. De Blasio’s Democratic rivals, who are also courting labor, reacted similarly: Manhattan Borough President Scott Stringer criticized the company and City Council Speaker Chrstine Quinn called the allegations the “the latest in a litany of despicable business practices.”

Walmart has spent millions of dollars trying to enter the New York market, and somewhat optimistically joined a local business group long before they were actually close to having a business here.

Read more.

New York Observer: Walmart Calls for Community Input Everywhere But New York

Can a smiley face even stand up? (Courtesy of Consumerist)

There’s laundry list of meetings that Walmart and Related Companies have skipped around the city, according to the Walmart Free New York coalition:

  • Walmart skipped multiple public hearings held by the New York City Council in 2011
  • Related Companies agreed to discuss its Gateway II proposal with the East New York Community Board, only to cancel 20 minutes before the meeting was slated to start.
  • Related Companies refused to meet with community leaders on multiple occasions – not responding to multiple requests via letter and in-person visit.
  • Walmart held a secret meeting in Brooklyn and refused to allow councilmembers and members of the community board to attend.
  • Walmart CEO and company board members won’t grant a meeting with their own associates, even after asked multiple times by OUR Walmart members.

New Yorkers are, once again, disappointed and angry at Walmart. Read the full story.

Walmart NYC: It’s Getting Personal

* It’s getting personal: Walmart opponents are taking their battle to keep the retail giant out of New York City to the doorstep of one of its board members. Walmart Free NYC plans to leaflet outside the Sixth Avenue office of M. Michele Burns, who works for insurance firm Marsh & McLennan, and try to deliver her a letter asking her to meet with Walmart workers. (They’ve tried twice before without success.) Even if she doesn’t respond, the anti-Walmart forces hope to draw enough attention outside her office to get the company’s attention – and put all its board members on notice that they could get the same treatment. Attempts to reach Burns for comment were unsuccessful. - from “Heard Around Town, March 22, 2012,” City and State

What Walmart CFO Charles Holley Won’t Tell You: Walmart Is Not Worth the Investment

For some time, Walmart’s US same store sales have been disappointing. Recently that metric turned positive, but it’s still well below competitorslike Target, Costco and Kroger, and still below where they were two years ago. In fact it appears that Walmart has been losing market share for the past two years. Given that challenging backdrop, one area of potential growth that has been identified as promising is US urban markets, yet to date urban growth has continued to face local community opposition, and the company’s expansion has in fact proceeded very slowly.

While Holley will look to project a positive 2012 economic outlook for the company, please see the below detailed report of economic indicators that suggest Walmart’s recent financial troubles should raise serious concerns for investors.

[Below report released earlier by John Marshall, CFA; UFCW Capital Stewardship Program.]

1. US same store sales lower than expected; still below 2008 levels

  • US comp store sales of 1.5% disappointed analysts and investors, many of whom had expected something closer to 2% or higher. Analysts on average had expected 1.8%.
  • More concerning for investors is that WMT comp stores sales were below competitors such as Target and Costco, and are still in negative territory over the last three years.


(Source: UFCW analysis of company data)

2) US profit smaller than expected; executives lower guidance for 2012

  • WMT’s Q4 EPS of $1.44 disappointed analysts who had expected at least $1.45. Company officials cited macroeconomic challenges and the need to offer lower prices to its core low-income customers, but some pricing studies have indicated that WMT is actually raising prices faster than the competition. (Deutsche Bank, “Grocery Pricing Study,” Feb. 7, 2012. “Wal-Mart’s basket increased the most over the last two months.”)
  • WMT associates across the country have pointed to a different explanation: growing shrink related to customer theft, as staffing hours are cut—a trend that is expected to continue as WMT greeter positions are eliminated.

3) Customer satisfaction declines as WMT continues to “cut its way to growth”

  • Over the last two years, as sales have lagged, WMT executives sought to achieve profit targets by slashing associate hours and reducing staff, leading associates to complain that customer service is suffering. These reports continue to be validated by a consumer surveys, which show WMT’s customer satisfaction to be among the lowest in the entire retail sector.
  • Last year, WMT officials acknowledged problems in getting products from store rooms out onto the shelves, but stated the company had addressed the problem through its dubious “one-touch” program. Curiously, WMT US’s inventory grew significantly in the 4th quarter, consistent with associate reports of continued problems with the inventory system.

4) US market share losses continue for 2nd year in a row

  • Most tellingly, while WMT executives continue to point to economy wide challenges, national retail sales data indicate the company lost US market share to its competition for the 2nd year in a row.


(Source: UFCW analysis of company and Census Bureau data)