Singing in the aisles as Walmart ignores bribe scandal
OH, TO have the buying power of Walmart. It gets you Justin Timberlake, Taylor Swift, Lionel Richie and Celine Dion all on the same stage to entertain 14,000 people at 7am on a recent Friday, in the middle of Arkansas.
Such were the scenes at the retail giant’s annual shareholders’ meeting in Fayetteville earlier this month. It was Walmart’s 50th-anniversary celebration, which may, in part, explain the extravagance of the affair. But it was also, arguably, a hugely successful exercise in diversionary tactics, just weeks after the company was accused of widespread corruption in Mexico – home to its largest foreign subsidiary.
A New York Times exposé on Walmart’s use of bribes to expand its Mexican operation at breakneck speed over the past decade landed the company in hot water and left it struggling to explain why it had seemingly done nothing (except bury it) when this was first brought to the attention of senior executives at company headquarters in Bentonville, Arkansas, back in 2005.
Impressively, chairman Rob Walton (eldest son of the company’s founder, Sam Walton) and chief executive Mike Duke managed to get through the entire four-hour event without mentioning the words “Mexico” or “bribery”.
As Walton got the official part of the meeting under way, he did make reference to the fact that some of the investors and employees present may have something to say about the scandal.
“We may be joined by some folks who want to interrupt our meeting,” he said gravely. “We’re hoping they will respect all of you who want to hear what’s going on and what we have to say . . . but just don’t be surprised if we do have a few interruptions. I just wanted to give you a little heads-up,” he added.
In the lead-up to the meeting, some large institutional investors had signalled their intent to vote against some of the company’s directors, implicated in the Mexico story, who were up for re-election – among them Walton and Duke.
The two men had little to worry about, however, as the Walton family still controls more than 50 per cent of the company’s 3.38 billion outstanding shares (which are currently trading close to a 12-year high – something else to keep the rest of the shareholders happy). Any company-backed initiative is virtually guaranteed the family’s support.
And, in the end, there were no unexpected interruptions – no outbursts, no placards, no protest chants.
Both Walton and Duke did acknowledge the investigation when they spoke, even if somewhat obliquely.
“We’re taking allegations in relation to compliance with Foreign Corrupt Practices Act very seriously,” said Walton. “Let me be clear: acting with integrity is not a negotiable part of this business,” he added.
And that was that.
Later, Duke returned to the subject.
“We have all heard about the recent allegations about the company. Let me be clear: Walmart is committed to compliance and integrity everywhere that we operate,” he said to applause (which was weak by Celine Dion’s standards).
One Walmart employee (one of 5,000 flown in for the event) who is also a shareholder, Jackie Goebel, put a slightly finer point on it as she presented one of three shareholder proposals.
“We have seen what happened in Mexico,” she said, daring to say the country’s name. “When some people are so focused on growth at any cost, they forget our code of ethics. We have all felt the pain, the scandal and the dishonour that this has brought to our company. But this didn’t happen overnight,” she said, garnering brief applause.
Goebel’s proposal on tempering executive pay was ultimately voted down, and all of the directors were re-elected.
When the exact breakdown of votes was released several days later, however, it seemed that Goebel was not alone.
Several of the board’s directors – including Walton and Duke – had received less than 90 per cent of voting shareholders’ support.
Walton has assured shareholders that they are co-operating with the authorities “to find out exactly what happened”.
Perhaps Madonna will be there to help break the news when they ultimately reveal the results of the investigation.
Simon Carswell is on leave