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Illegals say Wal-Mart was aware of offenses

They came from Russia, Poland and Lithuania, and their tales of washing and waxing Wal-Mart's floors for seven nights a week sound much like Pavel's.

Last February, Pavel responded to an intriguing Web site that told of cleaning jobs in the United States paying four times what he was earning as a restaurant manager in the Czech Republic.

He flew from Prague to New York on a tourist visa and took a bus to Lynchburg, Va., where a subcontractor delivered him to a giant Wal-Mart.

Pavel began on the midnight shift, and said he worked every night for the next eight months. Pavel, who refused to give his last name, was one of hundreds employed by subcontractors that cleaned Wal-Mart stores across the nation, paying many workers off the books.

Pavel's stay in the United States ended when federal agents raided 60 Wal-Marts on Oct. 23 and arrested him and 250 other janitors as being illegal immigrants. On Tuesday, the company said it had received a target letter from federal prosecutors accusing it of violating immigration laws and saying that Wal-Mart faced a grand jury investigation.

Last month's 21-state raid exposed an unseemly secret about Wal-Mart, the world's largest retailer: Hundreds of illegal immigrants worked at its stores, and its subcontractors are accused of violating overtime, Social Security and workers' compensation law.

Company officials deny having known that illegal immigrants worked in their stores, saying they required their cleaning contractors to use only legal workers.

But two federal law enforcement officials say Wal-Mart executives must have known about the immigration violations because federal agents rounded up 102 illegal immigrant janitors at Wal-Marts in 1998 and 2001. During the October raid, federal officials searched the office of an executive at Wal-Mart's headquarters, carting away boxes of papers, and said prosecutors had recordings of conversations between Wal-Mart officials and subcontractors.

The use of illegal workers appeared to benefit nearly everybody. It benefited Wal-Mart, its shareholders and managers by minimizing the company's costs, and it benefited consumers by helping to hold down Wal-Mart's prices. Wal-Mart's cleaning contractors profited, and thousands of foreign workers were able to earn more than they could back home.

But the system also had its costs _ janitors said they were forced to work seven days a week, were not paid overtime and often endured harsh conditions. Foreigners got jobs that Americans might have wanted. And U.S. taxpayers sometimes ended up paying for the illegal workers' emergency health care or their children's education in U.S. schools.

"We Czechs are willing to sacrifice and work hard, but we definitely weren't earning enough money," said Pavel, 33, in a telephone interview from the Czech Embassy before he was deported Friday. He said he received $380 in cash for his 56-hour work weeks. That came to $6.79 an hour, and he did not receive time-and-a-half for overtime.

In interviews, federal law enforcement officials, cleaning contractors, industry experts and seven illegal immigrants including Pavel who cleaned Wal-Marts said subcontracting allowed Wal-Mart to benefit while enabling it to deny responsibility.

Wal-Mart officials said it made sense to contract out the cleaning work because that enabled store managers to concentrate on what they do best, operating stores that provide low-cost merchandise. Wal-Mart uses about 100 contractors to clean nearly 1,000 of its stores.

Several industry executives said the questionable companies made it hard for legitimate operators to bid low enough to win contracts at Wal-Mart.

"When you don't pay taxes, don't pay Social Security and don't pay workers' comp, you have a 40 percent cost advantage," said Lilia Garcia, executive director of the Maintenance Cooperation Trust Fund, a group set up by California cleaning contractors. "It makes it hard for companies that follow the rules."

After the arrests, Wal-Mart said it was beginning a review to ensure that no illegal immigrants worked in its 3,470 U.S. stores.

"We take every action that we can to make sure our workers are legal workers, and in this case, be assured we will take whatever corrective actions are necessary," said Tom Williams, a spokesman for Wal-Mart, based in Bentonville, Ark.

He said of the target letter, "The notification gives us time to provide the attorney general's office information that supports our position."

Many people, from janitors to federal investigators, assert that Wal-Mart store managers and officials at headquarters knew about widespread use of undocumented cleaners.

"The chief manager of our store knew what was going on," Pavel said. "He knew that we were illegal."

Wal-Mart is not the only retailer to use questionable cleaning contractors. Hundreds of Mexican immigrants have sued three California supermarket chains, accusing them of hiring contractors that never gave a night off, did not pay overtime and often paid less than the minimum wage.

Daniel Kuchar, a 25-year-old Czech engineering student, said he worked every night except Christmas in his 12 months cleaning for two Wal-Mart competitors, Kmart and Target, in Northern Virginia. The companies have policies prohibiting contractors from hiring illegal immigrants. Last March, he won a $7,278 judgment in state court against his contractor, Promaster Cleaning Service, for failing to pay him time-and-a-half for overtime.

"Everybody goes to the United States for the money," said Kuchar, who entered on a tourist visa and has returned to his Czech village.

One subcontractor, Stanislaw Kostek, whose company, CMS Cleaning, cleaned more than a dozen Wal-Marts in New York, Pennsylvania and Virginia, acknowledged that he had hired illegal immigrants.

Kostek described an elaborate network of contractors that served Wal-Mart. There was a contractor above him, he said, that had perhaps 100 stores. This contractor then made individual subcontractors responsible for stores, usually between five and 20.

Wal-Mart paid the contractor $10 an hour per worker, Kostek said, the contractor paid subcontractors $9 an hour per worker and subcontractors paid their employees $8 an hour _ although many workers said they received less than $7.

Industry experts and janitors said the contractors and subcontractors appeared to play a shell game, continually closing down, filing for bankruptcy and reincorporating under different names.

"There is a whole Mafia-like structure," said Richard Krpac, chief counsel for the Czech Embassy. "They advertise on all these Web sites, and they try to erase all of people's doubts about it. If you're without work for two or three years, and you're trying to take anything, you may easily fall prey."