Walmart shares drop on Mexico scandal
Fin24 - Aug 17th 2012, 08:18
New York - Shares in Walmart Stores Inc, the world's largest retailer, were under pressure on Thursday as Congress pressed on with an investigation of alleged bribery in Mexico.
Shares declined 3% after markets opened. Walmart's second quarter report fell short of analyst's expectations, adding to the downward pressure. The company said its earnings were $4.02bn, a 5.7% rise over the same period last year. Revenues were up 4.5% to $114.3bn
According to members of Congress, an investigation into alleged tax evasion and money laundering has expanded beyond Mexico to Walmart operations in five other countries. The challenge to Walmart to come forth with more information was contained in a letter to Walmart this week from Representatives Elijah Cummings and Henry Waxman.
In April, a New York Times investigation showed that bribery played a significant role in the rapid growth in Mexico of the US-based superstore. Local Walmart managers allegedly paid money to skip over permit rules in its rush to expand in Mexico.
The article triggered a multi-faceted investigation in the US. Under US law, it is a crime for American companies and their subsidiaries to bribe foreign officials.
Walmart's chief financial officer Charles Holley told reporters on Thursday that the company would pull back its expansion plans overseas as a result of the investigations into the Mexico allegations. He noted this would apply especially to its operations in Brazil and China.
Walmart owns 51% of SA company Massmart Holdings [JSE:MSM].
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