Walmart agrees to pay $282 million to settle Brazil unit corruption claim
By Nandita Bose WASHINGTON (Reuters) - Walmart Inc has agreed to pay a total penalty of $282 million to settle charges by the U.S. Justice Department and the Securities & Exchange Commission that its Brazilian unit violated the Foreign Corrupt Practices Act. The retailer will pay more than $144 million to settle charges by the SEC and approximately $138 million to resolve parallel criminal charges by the U.S
By Nandita Bose
WASHINGTON (Reuters) - Walmart Inc has agreed to pay a total penalty of $282 million to settle charges by the U.S. Justice Department and the Securities & Exchange Commission that its Brazilian unit violated the Foreign Corrupt Practices Act.
The retailer will pay more than $144 million to settle charges by the SEC and approximately $138 million to resolve parallel criminal charges by the U.S. Department of Justice, according to court and regulatory filings.
The settlement with the Justice Department was reached on Thursday in a federal court in Virginia.
The department launched an investigation against the retailer after a series of New York Times articles in 2012 described bribes that Walmart allegedly paid in Mexico to obtain permits to build stores there.
The reports spurred a wide-reaching Justice Department investigation of the behavior of Walmart subsidiaries across the globe, including in Mexico, Brazil, China and India.
According to court filings, from around 2009 to 2010, Walmart Brazil knowingly led its parent to maintain false records, which then made it into the company's consolidated financial statements.
Specifically, Walmart Brazil and its employees recorded $527,000 in payments to an intermediary for assistance in acquiring construction permits as a payment to certain construction companies, the court filings show.
The intermediary's ability to obtain licenses and permits quickly "by sorting things out like magic" earned the middleman the nickname "sorceress" or "genie" within Walmart Brazil, the court filings said.
A separate investigation by the U.S. SEC also found that Walmart violated the FCPA in Brazil.
"Walmart valued international growth and cost-cutting over compliance," Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit, said in announcing the investigation and fine.
"The company could have avoided many of these problems, but instead Walmart repeatedly failed to take red flags seriously and delayed the implementation of appropriate internal accounting controls."
Walmart did not immediately respond to requests for comment.
Walmart set aside nearly $300 million to settle charges with the U.S. government over international bribery allegations in 2017.
In June 2018, the retailer sold a majority stake in its Brazilian operations to private equity firm Advent International.
In August that year, the company said it had spent about $900 million on legal fees and other costs stemming from the investigation, including a global overhaul of its internal compliance system.
A few months later, in October, the retailer, without admitting wrongdoing, agreed to pay $160 million to settle a class action by investors unhappy with the way Walmart handled the foreign bribery investigation.
(Reporting by Nandita Bose in Washington; Additional reporting by Sarah Lynch in Washington and Jonathan Stempel in New York; Editing by Chizu Nomiyama, Jeffrey Benkoe and Sonya Hepinstall)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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