Case Study 6.3 - Walmart de Mexico
The article showed how Walmart’s Mexican division was corrupt during its time of development due to of lack of trust and unethical practices that included pay off of certain corporate peers, the pays offs went towards avoidance of assessments so that the broken labor laws wouldn’t be found out and infringing upon proper work laws. This created a discussion when the U.S government started an assessment to investigate that Walmart had been suspiciously creating improper business contracts in Mexico and Walmart tried to hide the story. Walmart at last stopped and conceded with their oversights. The public made doubts on the structure inside the organization and questioned there initiative of the organization.
1. Identify the ethical transgressions that took place in this case.
2. Why would Walmart’s executive leadership refuse to comply with information requests from U.S. congressional oversight committees? What do you speculate they hope to achieve from this tactic?
3. Is this a “Walmart de Mexico” problem or a “Walmart corporate” problem? Why?
4. Has the FCPA legislation failed in this case? Why or why not? Provide evidence to support your position.
5. With 50 percent of Walmart stock owned by descendants of the company’s founder, Sam Walton, is there any hope of improved governance being achieved through shareholder activism? Why or why not?
6. What steps should the executive leadership of Walmart take to restore investor confidence?
1. Identify the ethical transgressions that took place in this case.
2. Why would Walmart’s executive leadership refuse to comply with information requests from U.S. congressional oversight committees? What do you speculate they hope to achieve from this tactic?
3. Is this a “Walmart de Mexico” problem or a “Walmart corporate” problem? Why?
4. Has the FCPA legislation failed in this case? Why or why not? Provide evidence to support your position.
5. With 50 percent of Walmart stock owned by descendants of the company’s founder, Sam Walton, is there any hope of improved governance being achieved through shareholder activism? Why or why not?
6. What steps should the executive leadership of Walmart take to restore investor confidence?
Answers
1. The ethical issues that happened in this situation included bribery of officials, tax evasions, and breaking specific local labor laws to make the company more profitable. Wal-Mart a highly profitable multi-million brand corporation used these tactics because both the Mexican legal/economic system is very easily corruptible and so they took advantage of that.
2. Walmart would have refused to acknowledge these solicitations for data from the US powers due to the fact that the US framework would have needed energy to examine and re-build the organization for its wrong doing. The case would have received a negative reputation, which would have a bad reaction from their clients as it brought a large loss of customers.
3. As Walmart is a profitable corporation and a largely successful organization I would argue that this is Walmart corporate problem. Walmart has already reached success and this shows an action of greed coming from within the organization. They shouldn’t pay people less because of their background and that’s immoral from a strong corporation like Walmart.
4. Indeed the FCPA had failed in this circumstance. Since 1977 the FCPA had been instrumental to prevent organizations from implementing laws for immigrant workers by assisting these organizations through debasement in political spectrum and executing pay off. Walmart was not the only company who spent more than $24 million towards influences but also in the FCPA they had no assets. Moreover Walmart had received letters from congressmen regarding its negligence on producing data about gifts. Looking at the compensation and gathering.
5. Walmart always worked to give their shareholders the best benefits, and although fifty percent of the organization is controlled by the owners of Walmart, The Walton family, shareholders can have any kind of result on the business' operations. Long showings of frustration, eventually the overseer’s should review and change their business conduct. Seeing how the National Football League, one of America's most prominent organizations is taking a huge toll from unethical choices, Walmart will see similarities and customers can choose to take their business else ware.
6. The thing Walmart needs to do, is to restore investor confidence by disciplinary action Eduardo Castro-Wright, who was the main attribution to all the briberies and unethical acts that went on and, was promoted to vice chairman in 2008 should be punished for his action so that the public will see that Walmart is trying to separate itself from these acts so that it will show where the company’s true values lie and show that Walmart is continuing to hold up their moral values. Walmart must be judged based on ‘Federal Sentencing Guidelines for Organizations’ (FSGO) as it determines the degree of base fine based on the damage or loss caused to the victims. Then culpability score will be calculated where multiples of 4 times the base fine has to be imposed against Walmart as high level staffs were engaged in the bribery as the aggravating factor and there was clear intention of obstruction of justice. The limitation of FSGO is that the rules can hardly be applied in modern organizations as the courthouse mainly adjudicate these issues leading to Deferred Prosecution Agreements. It takes a long time to enforce the guidelines as defendants detour the case around the judges. Moreover many guidelines are often vague which is difficult to understand (Ethics, 2015).
2. Walmart would have refused to acknowledge these solicitations for data from the US powers due to the fact that the US framework would have needed energy to examine and re-build the organization for its wrong doing. The case would have received a negative reputation, which would have a bad reaction from their clients as it brought a large loss of customers.
3. As Walmart is a profitable corporation and a largely successful organization I would argue that this is Walmart corporate problem. Walmart has already reached success and this shows an action of greed coming from within the organization. They shouldn’t pay people less because of their background and that’s immoral from a strong corporation like Walmart.
4. Indeed the FCPA had failed in this circumstance. Since 1977 the FCPA had been instrumental to prevent organizations from implementing laws for immigrant workers by assisting these organizations through debasement in political spectrum and executing pay off. Walmart was not the only company who spent more than $24 million towards influences but also in the FCPA they had no assets. Moreover Walmart had received letters from congressmen regarding its negligence on producing data about gifts. Looking at the compensation and gathering.
5. Walmart always worked to give their shareholders the best benefits, and although fifty percent of the organization is controlled by the owners of Walmart, The Walton family, shareholders can have any kind of result on the business' operations. Long showings of frustration, eventually the overseer’s should review and change their business conduct. Seeing how the National Football League, one of America's most prominent organizations is taking a huge toll from unethical choices, Walmart will see similarities and customers can choose to take their business else ware.
6. The thing Walmart needs to do, is to restore investor confidence by disciplinary action Eduardo Castro-Wright, who was the main attribution to all the briberies and unethical acts that went on and, was promoted to vice chairman in 2008 should be punished for his action so that the public will see that Walmart is trying to separate itself from these acts so that it will show where the company’s true values lie and show that Walmart is continuing to hold up their moral values. Walmart must be judged based on ‘Federal Sentencing Guidelines for Organizations’ (FSGO) as it determines the degree of base fine based on the damage or loss caused to the victims. Then culpability score will be calculated where multiples of 4 times the base fine has to be imposed against Walmart as high level staffs were engaged in the bribery as the aggravating factor and there was clear intention of obstruction of justice. The limitation of FSGO is that the rules can hardly be applied in modern organizations as the courthouse mainly adjudicate these issues leading to Deferred Prosecution Agreements. It takes a long time to enforce the guidelines as defendants detour the case around the judges. Moreover many guidelines are often vague which is difficult to understand (Ethics, 2015).
Ghillyer, A. 2014. Business Ethics Now: Chapter 6, The Role Of Government. United States of America: McGraw-Hill Education
Ethics, (2015). Federal Sentencing Guidelines for Organizations at 20 years. Retrieved from http://www.ethics.org/?q=page/fsgo-federal-sentencing-guidelines-organizations-20-years
Ethics, (2015). Federal Sentencing Guidelines for Organizations at 20 years. Retrieved from http://www.ethics.org/?q=page/fsgo-federal-sentencing-guidelines-organizations-20-years