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 world’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 chain’s future growth both domestically and abroad.
“Articles like this will be used against the company by activists and competitors when it attempts to open stores in the US and abroad,” 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 company’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 “thorough and transparent” review and said any pressure on the stock was “an enhanced buying opportunity”.
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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