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Wal-Mart's reputation takes another hit with Mexico bribery case

NEW YORK — In business, you're only as good as your last good deed.

Wal-Mart, the world's largest retailer, in recent years has tried to repair a reputation that's been damaged by decades of criticism and legal troubles. Community activists have blamed it for damaging the neighborhoods where it builds its stores. Labor groups have lambasted it for not treating its workers well. And politicians have called it a poor steward of the environment.

Wal-Mart began doing things like offering employees better health care coverage and working with its suppliers to reduce environmental waste. Now, allegations that Wal-Mart paid millions of dollars in bribes to officials in Mexico threaten to derail its efforts.

The accusations highlight how difficult it is for a company as big and powerful as Wal-Mart to dig itself out of pile of bad publicity. The discounter's low-income shoppers looking for deals aren't expected to flee. But the fallout from the accusations could become a distraction for the company at a time when it's battling growing competition.

The U.S. and Mexican governments reportedly are investigating the chain. The company and top executives are being sued by angry investors. And some shareholders are planning to vote against the re-election of several board members at its annual meeting next month.

"This is a devastating blow to their reputation," says Jonathan Low, co-founder and partner of Predictiv LLC, which advises corporations on their image. "This undercuts all the initiatives they made in many areas."

Wal-Mart says it has an ongoing investigation into the allegations, and it's cooperating with federal authorities. In the meantime, the retailer says it's conducting business as usual.

"We continue to focus on things customers care about like jobs, healthier foods, sustainability and workforce development," says Steven Restivo, a Wal-Mart spokesman. "Our commitment won't change."

The New York Times first reported on the bribery scandal last month. The paper said Wal-Mart failed to notify law enforcement even after its own investigators found evidence of millions of dollars in bribes funneled through its Mexican unit.

If Wal-Mart is found to have violated the Foreign Corrupt Practices Act, which forbids U.S. companies from paying bribes to foreign officials, the company could face fines of hundreds of millions of dollars. Top Wal-Mart executives could lose their jobs or go to jail.

Wal-Mart's reputation takes another hit with Mexico bribery case 05/11/12 [Last modified: Friday, May 11, 2012 8:59pm]
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