Will
DOJ Give a Deep Discount to Wal-Mart?
By Phil Mattera in the Dirt Diggers Digest
The
Justice Department has a lot on its plate these days, but it has apparently
found time to cook up a deal that would save Wal-Mart hundreds of millions of
dollars. According to Bloomberg and the Wall Street Journal,
DOJ is offering the giant
retailer the chance to settle a foreign bribery case for $300 million, an
amount far less than the penalty of up to $1 billion the Obama Administration
was seeking in the long-running negotiations to resolve the matter.
I
suppose we should be grateful that DOJ is not letting Wal-Mart off the hook
entirely, given that Donald Trump once described the Foreign Corrupt Practices
Act as a “horrible law.”
Moreover, there has been
speculation that Trump’s own business dealings may be vulnerable to FCPA prosecution
in places such as Azerbaijan.
Attorney General Jeff Sessions has gone out of his way to affirm the commitment of his department to enforcing the FCPA, yet this is the same person who just involved himself in the firing of FBI Director James Comey after promising to recuse himself from the probe of the Trump campaign’s Russian ties.
It
could be that Sessions intends to go on bringing FCPA cases but with reduced
settlement amounts.
That would be at least a partial victory for companies like
Wal-Mart, whose FCPA problems first gained widespread attention after the New
York Times published a 2012 investigation of widespread bribery in
the company’s Mexican operations.
In response, the company launched its own examination
of possible misconduct in countries such as Brazil, India and China.
Given
Wal-Mart’s size and prominence, a large penalty would be appropriate to send a
message to the corporate world about the consequences of corrupt practices. The
$1 billion amount reportedly sought by the Obama Administration would have been
the largest single FCPA penalty ever imposed.
Instead,
the reported $300 million settlement amount would not even rank among the top
ten, according to the list maintained by the FCPA Professor
blog.
That list, topped by Siemens at $800 million and Alstom at $772 million,
is dominated by foreign companies, including some such as VimpelCom (now known
as Veon) and Snamprogetti (now part of Italy’s Saipem) that are hardly
household names.
Giving
a deep discount to a domestic behemoth would raise questions about the
enforcement of a law that is meant to fight corruption worldwide.
DOJ’s
decision on what to do about the Wal-Mart FCPA case will provide an important
clue about how it intends to deal with corporate crime in general.
The Obama
Administration struggled to find the best way to deter business misconduct, and
if nothing else increased penalties in major cases to unprecedented levels.
Imposing a relatively small penalty on Wal-Mart would reverse that trend and
signal to corporations that they have less to worry about from the Trump
Justice Department.