Wal-Mart (NYSE:WMT) has been aggressively expanding around the world as of late, seeking new developments in expanding markets that could offer up a large customer base. However, a recent story out of Mexico shows that not all of Wal-Mart’s expansion has been legal.
And just what did Wal-Mart de Mexico do?
A slew of bribes and aggressive construction efforts has put Wal-Mart stores all over the map, particularly in Mexico, where a contested Wal-Mart is located just moments away from the two famous pyramids of Teotihuacán. The questionable location had actually been zoned for housing only, and various permits had been denied, but through a series of bribes, Wal-Mart de Mexico succeeded in getting a key zoning map changed, some (though not all) of the permits it needed to legally build, and support of local government officials.
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CHEAT SHEET Analysis: Does A-Level Management let extensive criminal conduct tarnish the business?
One of the core components of our CHEAT SHEET Investing Framework asks us to investigate whether A-Level managers are jockeying the horse. No matter how thoroughbred a horse, the jockey is critical to success.
While it would certainly look like the Wal-Mart de Mexico management is getting things done like a champ, its methods are more than questionable, and extensive corruption is a sure sign A-Level Management is absent. Further adding to the damage, Wal-Mart’s global leaders were informed of the bribery, began and ended an investigation without exposing the crimes. Worse still is that it’s been discovered that Wal-Mart de Mexico wasn’t the only place using bribes to expand the Wal-Mart’s presence
So, what does this mean for Wal-Mart’s future?
Wal-Mart is already faced with outrage from shareholders, some of whom are filing lawsuits against the company, and it will likely meet stiffer scrutiny from other countries as it seeks to enter new markets and expand. The company could also face charges for violations of the Foreign Corrupt Practices Act.
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