Obama, Using Wal-Mart, Has a Chance to Redeem Himself

Enron and the Wal-Mart Mexican bribery scandal don't have very much in common, but they share the same stench of moral turpitude at the highest levels of the executive suite. No amount of spin-doctoring and crisis management is going to make this one go away. If Wal-Mart thinks that it can make its south-of-the-border horror show evaporate with an SEC disclosure and a press release, it's got another thing coming.

This is not a one-day story that only the New York Times is going to follow. Expect Congress to jump on the bandwagon as well. I can just see Capitol Hill piling on even in the Republican-controlled House of Representatives, with Wal-Mart execs sweating it out in front of the cameras in Capitol Hill hearing rooms, being chastised by the likes of Gary Ackerman. Wal-Mart's share price will continue to be hammered as everyone involved takes a chunk out of Wal-Mart's hide.

After all, even before this all happened, Wal-Mart was hardly the most warm and fuzzy of companies. Its thuggish behavior toward suppliers and employees is the stuff of legend, even though the atrocious publicity has died down from the feverish heights of a few years ago. They don't call it the "Bully of Bentonville" for nothing.

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Frantic counter-spin from Wal-Mart notwithstanding, it seems evident from the Times coverage that the company acted at the highest levels as if the FCPA was a stop sign at a deserted country intersection, to be driven past without stopping since no cop was likely to be within sight. Wal-Mart execs didn't seem to care that the FCPA authorizes criminal penalties that can be steep -- with potential penalties of as long as 20 years in prison for violators.

Well, why should they have? Wal-Mart execs knew perfectly well that bribing foreign officials wasn't likely to land them in the hoosegow. Obama's Justice Department -- surprise, surprise -- hasn't shown much stomach when it comes to criminal prosecutions of FCPA transgressors. When General Electric settled Securities and Exchange Commission charges in 2010 of committing bribery in Iraq, the Justice Department was conspicuously absent from the proceedings. The reason given at the time was an excruciatingly hair-splitting one -- that the bribes went to Iraqi ministries and not to actual officials in Iraq. Makes you wonder: Who staffs ministries in Iraq. Giraffes?

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