Walmart down on bribery allegations
Fin24 - Apr 24th 2012, 07:51
Walmart Stores shares were down 3.1% in early premarket trading on Monday following an article in the New York Times this weekend alleging that the worldâ€™s largest retailer stymied an internal probe into bribery at its Mexican affiliate, Walmart de Mexico.
BMO Capital Markets analyst Wayne Hood said in a research note that the allegations could hamper the discount chainâ€™s future growth both domestically and abroad.
â€śArticles like this will be used against the company by activists and competitors when it attempts to open stores in the US and abroad,â€ť Hood wrote in a note on Monday.
According to the New York Times article, in September 2005, a senior Walmart lawyer was alerted by a former executive at Walmart de Mexico of the use of bribery to speed up store openings in Mexico.
Walmart then sent investigators to Mexico City and found a paper trail of hundreds of suspect payments totalling more than $24m, but the companyâ€™s leaders shut down the investigation and neglected to notify US or Mexican law enforcement officials, the Times reported.
Citigroup said in a note that, after discussions with Walmart, it believed that the retailer would conduct a â€śthorough and transparentâ€ť review and said any pressure on the stock was â€śan enhanced buying opportunityâ€ť.
Legal and retail experts said the allegations, if proven true, could badly hamper the company and its management for years. They could lead to a time-consuming global probe, substantial financial penalties paid to US authorities, and the departure of some executives.
Walmart shares were trading at $60.50 on Monday before the market open, down from their close on Friday at $62.45 on the New York Stock Exchange.
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