Wal-Mart bribery allegations put focus on Mexican middlemen used to grease bureaucratic wheels

A woman shops in the produce aisle of a Wal-Mart store April 23, 2012, in Mexico City. / Getty Images

(AP) MEXICO CITY - Claims that U.S. retail giant Wal-Mart used payoffs to speed zoning and other permits in its break-neck Mexican expansion is sparking soul-searching in Mexico, where crowded government offices are the working grounds of shadowy facilitators known as "gestores."

Front-running presidential candidate Enrique Pena Nieto told The Associated Press in an interview Monday that "there is a truly critical situation in the country."

He said he thinks an independent governmental anti-corruption commission is needed to root out the bribes and payoffs that many say have become as common as paying a light bill, and sometimes easier.

"This is an endemic vice, a vice that leads us nowhere," Pena Nieto said.

According to a New York Times report, Wal-Mart executives turned to middlemen in the early 2000s to grease the way for building up the company's Mexican subsidiary, which has become its biggest foreign operation.

Mexican watchdog: Probe Wal-Mart's alleged bribes

Whether at least $8.5 million that was apparently paid to gestores actually wound up as bribes for corrupt local officials remains to be seen. The Times also said an additional $16 million went directly to officials.

Wal-Mart Stores Inc. says it is conducting its own investigation, and two U.S. congressmen announced they are opening a probe. The Mexican federal government announced Monday evening that it had no jurisdiction in the case because the report referred only to the involvement of state and city officials.

Mexico's Economy Department said there was no evidence any federal officials were involved, given that decisions on permits and zoning are handled at the municipal level, but said Mexico will cooperate with the U.S. investigations.

Many Mexicans wouldn't be surprised if the claims are true.

A visit to any government office is likely to bring the sighting of a well-dressed man carrying reams of documents who will glide past the long lines, shake hands with the official behind the counter and get ushered into a backroom, where his affairs presumably get a fast-track service. The suspicion is these go-betweens funnel a portion of the fees they charge clients to corrupt officials to smooth the issuance of permits, approvals and other government stamps.

In a country where laws on zoning rules, construction codes and building permits are vague or laxly enforced, the difference between opening a store quickly and having it held up for months may depend on using a gestor.

"Nobody is exempted" from the demands for bribes, said Mexico City security consultant Max Morales, who advises companies on everything from building projects to security against kidnappings. "Even the big American companies are subject to extortion."

There is none bigger than Wal-Mart de Mexico, which is the nation's largest retailer and private employer and opened a store a day last year. Corrupt officials "see money, and they exploit you and exploit you, and the first thing you know they try to close you ... as a way to exert pressure," Morales said.

The watchdog group Transparency International puts Mexico a low No. 100 on its 2011 list that ranks 183 countries by the perception of their level of corruption. On a scale with 10 as the least corrupt, Mexico rates only a 3 -- the lowest for any OECD nation and a tie with countries like Suriname and Indonesia.

The pressure of corruption in Mexico is so great that some companies have reportedly opted to leave.

Morales said security and corruption concerns played a role in the 2005 decision by French retailer Carrefour to sell its operations in Mexico. Asked if that was true, Carrefour's press department responded in an email: "Carrefour Group doesn't comment on this information."

Wal-Mart's competitors in Mexico, the other large supermarket chains, all refused to talk about the scandal. "It is a very delicate issue," said Jesus Antonio Velazquez, spokesman for the Chedraui chain.

The only people willing to comment were operators of small markets and mom-and-pop grocery stores. They said Wal-Mart was able to put stores where they shouldn't have been allowed, and they saw something fishy in the company's rapid expansion that has given it 2,138 stores in Mexico.

"It was so evident," said Alfredo Neme Martinez, who leads a Latin American association of wholesale market vendors. "They would buy three lots on a corner, and open right away."

In a statement, Wal-Mart said the bribery accusations, "if they are true, do not reflect the culture of WalMart Mexico and Central America." It said it would not comment further because of the investigations.

[4780]

Don't companies have to grease palms in the US? Don't drug dealers pay bribes in the US also?

[TimeToEvolve]

Wal Mart sets the standard for sleazy and corrupt American business. Not only do they have no problem being in bed with brutal communist regimes but they set the standard for race-to-the-bottom corporate mentality. Oh and they are too big to be prosecuted like the American Bankster corporations.

[jmn122736]

Greed is a natural part of human nature and it is extremely prevalent in Americans.

Walt-Mart is now a giant enterprise because Sam Walton had the insight to use that natural greed to expand his business. It was basically an honest and good thing in the beginning. By selling at reduced prices and allowing anything the customer bought (which they were not satisfied with) to be returned for a full refund the Walt-Mart chain started to really expand.
At first he didn't make as much profit on an individual item as other stores but his customers increased very fast giving him leverage over wholesalers by buying directly from manufactures and over manufacturers by limiting the product names in his stores to force them to sell at prices other store couldn't get. This was all possible because people simply shopped where they could get the best bargains; a natural form of greed. The destructive results occurred when almost all manufacturing (read jobs) were exported to cheap labor countries.
This is the point where Americans/congress should have passed legislation to prevent this from happening. Some actually tried but as is always the case with greed, too many people/voters didn't want to lose the lower prices for products they needed, so not enough pressure was applied to get anything done, again GREED.
I like to thing that Sam Walton himself would never have allowed his business to contribute so heavily to the destruction of almost ALL American manufacturing jobs through outsourcing, but even if he would have, it would NOT have happened without the greedy approval of the majority of AVERAGE Americans.
The same thing happened with efforts to initiate campaign finance reform. By this time so many members of congress owed their very existence to moneyed supporters that anything proposed to prevent off shoring and/or pass finance reform was rejected.
So many (bribed/bought) congressmen and presidents took over our government and APPOINTED/APPROVED a like number of hand-chosen Supreme Court justices who just recently drove the final nail into the American dream's coffin by making corporations equal to individual citizens. Today NO honest person can even compete for any government office, or have any impact even if they could.
We are receiving exactly what we asked (voted) for; sadly we have destroyed any chance our children can ever have to enjoy the great America we inherited, and they DID NOT even have a say in it

[chipndale610]

I'm not a big supporter of Wal Mart but when it comes to their operations in Mexico, why is anyone really surprised by these reports of bribery. For the past fifty years it has been discussed on many fronts that you can't get anything done in Mexico (and most of Central America) unless you grease some palms. And in recent times, the violence in Mexico has lead to additional payoffs to improve security for your projects. Under these circumstances the big question should be, why the hell would Wal Mart or anyone else want to do business in Mexico.

[arkajun-2009]

Walmart has provided jobs to 250,000 citizens of Mexico who want work and earn a legal living. That's 250,000 less that would probably wind up selling drugs, illegally crossing our borders, filling our jails, and draining our welfare system dry. Greasing palms is the normal way of doing business in Mexico. Our defense department does it every day and us politicians have been greasing palms since 1776.
Quality of life? Walmart donated $467,000,000, mostly in cash, to charitable organizations just in the US last year. Over twice as much as #2 AT&T and over 3 times as much as the beloved General Electric.
What have you given lately?

[jmn122736]

arkajun-2009, Wall-mart,is a corporation that takes in billions (thanks to illegal bribing) and donates a couple of thousand for the simple purpose of making the gullible feel good about them.

[lesserof2evil]

$467,000,000 to charity donations. Proof or it didn't happen?

[NatalieT111]

We the Corporations of the United States, in Order to form a more profitable business model, circumvent or buy Justice, insure global dominance, provide for million dollar bonuses, promote our agenda in D.C., and secure the blessings of Congress to ourselves and our profitability, do ordain and establish this Campaign Contribution to control the United States of America.

[ohitsubob]

Yep. Same sytem used in the U.S. only it's called lobbyists and Congress.