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Author: TMFTheSnake Big red star, 1000 posts Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 163  
Subject: Re: Vast Mexico Bribery Case Hushed Up Date: 4/25/2012 3:37 AM
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Cog

You are right, nothing is always the case, but you can't deny that there are many countries around the world (the pious Western countries included) where quite often business can't begin (or continue) without making some contribution to the right person/people.

However, just because it is done doesn't everyone needs to do it. More damning for Walmart is that they didn't attempt to stop it when word reached HQ - instead they apparently covered it up and promoted the man mainly responsible for it.

To your point about overly ambitious execs in foreign lands, I don't know that I'd characterize Castro-Wright as a foreign executive wandering into the Mexican market blind. He is Ecuadorian, and had worked in Latin America for quite a while before joining Walmex.

Interesting to me is that the alleged $40m in bribes and political contributions ramped up while Castro-Wright was around and then dropped off after he left (according to the accounts in the NYT). During that period, close to $2 billion was spent on cap ex and 132 net stores were opened (2001-2004, not including restaurants) - that seems like a pretty strong payoff on your bribing buck.

More, store growth didn't really ramp up until 2005 onwards with real growth starting in 2008. There is a lag between bribe and build, but it shouldn't be more than 2 years in a market like Mexico.

This tells me either Castro-Wright was just bribing because he believed it was necessary (to Cog's point) or there is a lot more to this story than $24m.

Worst case, Walmex found a new system for bribes after Castro-Wright left that the whistleblower wasn't familiar with (he left in late 2004) and the ensuing investigations didn't pick up on. Of course it would appear the investigators were limited in how strenuously they could look. The DoJ may not be as limited.
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