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    Published on: December 18, 2012

    In a front page, 8,000-word story this morning, the New York Times details a series of bribes that Walmart's Mexico division paid to local officials, concluding that "Wal-Mart de Mexico was not the reluctant victim of a corrupt culture that insisted on bribes as the cost of doing business. Nor did it pay bribes merely to speed up routine approvals. Rather, Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals."

    The story goes on: "Through confidential Wal-Mart documents, The Times identified 19 store sites across Mexico that were the target of Wal-Mart de Mexico’s bribes. The Times then matched information about specific bribes against permit records for each site. Clear patterns emerged. Over and over, for example, the dates of bribe payments coincided with dates when critical permits were issued. Again and again, the strictly forbidden became miraculously attainable."

    Indeed, the story also charges that while Walmart did open an internal investigation after top executives were told by a former Wal-Mart de Mexico lawyer about the patter of bribery, that investigation was closed down despite what is described as a "wealth of evidence."

    The Times story, which is extraordinary in its detail and complexity, can be read in its entirety here, under the headline "The Bribery Aisle: How Wal-Mart Used Payoffs To Get Its Way In Mexico."

    The Times writes: ""Thanks to eight bribe payments totaling $341,000, for example, Wal-Mart built a Sam’s Club in one of Mexico City’s most densely populated neighborhoods, near the Basílica de Guadalupe, without a construction license, or an environmental permit, or an urban impact assessment, or even a traffic permit. Thanks to nine bribe payments totaling $765,000, Wal-Mart built a vast refrigerated distribution center in an environmentally fragile flood basin north of Mexico City, in an area where electricity was so scarce that many smaller developers were turned away."

    Since the Times first reported several months ago on what it described as systematic and systemic bribery by Walmart of local Mexican officials, the world's largest retailer has been dealing with investigations by the US Congress, the US Justice Department and the US Securities and Exchange Commission (SEC) into the possibility that Walmart has violated the Foreign Corrupt Practices Act, which make sit illegal to bribe foreign officials. There also is an investigation taking place in Mexico, and Walmart has launched its own internal probe.

    There is more at stake here that Walmart's Mexico business. By implication, the bribery charges have created awareness and suspicion about how Walmart has conducted itself in other countries, such as India, Brazil and China, which is why Walmart reportedly has spent upwards of $100 million on investigations, anti-corruption training, and the defense against shareholder lawsuits.

    In a response to the Times story, Walmart spokesman David W. Tovar said that the allegations contained in the piece "surrounding events in 2003-2004" have been the subject of an internal investigation conducted by independent members of the company's board of directors for more than a year.

    Tovar said that the company continues to tighten its anti-corruption procedures, is cooperating with the various government investigations, but is not commenting on the details contained in the Times story: "At this point, the investigation is still ongoing and we have not yet reached final conclusions. A thorough and independent investigation will take time to complete. We wish we could say more but we will not jeopardize the integrity of the investigation."
    KC's View:
    "Integrity" seems like a pretty funny word for Walmart to be throwing around at this point.

    And the irony, as has been pointed out here before, is that this level of bribery seems to have been conducted and even condoned by a company with such strict internal rules that one cannot treat one of its buyers or other executives to a soft drink or a beer.

    This is an extraordinary piece of reporting - detailed and extensive, with enormous specificity about people and places and numbers. (Can you spell "Pulitzer"?)

    At this point, it seems to me, Walmart is circling the wagons. It is going to have to admit wrongdoing, but it is going to do its best to delay that moment so it can point to all its more recent anti-corruption activities and say that it has both acknowledged and fixed the problem. This will be important both for purposes of reducing its exposure to criminal prosecution, and reassuring officials in India, China and Brazil that it can live up to its commitments. And it will be interesting to see what executives are called to account for their decisions.

    Sure, there will be people who will say that this is reality, this is how business gets done. But that does not change the fact that the scenario laid out by the Times is one of consistent and knowing acts of illegality.

    And to be honest with you, on all sorts of levels these days, I am getting really tired of people who say that this is just how things are, as if that is some sort of excuse.

    Read the Times story. It is, I think, more than worth the time and effort.

    Published on: December 18, 2012

    by Michael Sansolo

    Like many of you I was surprised to read the news about Jenni Rivera last week. The reason is simple: I never once heard of her until her plane went missing in Mexico.

    I’m betting many of you felt the same. To most of us, the name Jenni Rivera meant absolutely nothing. To me (and maybe to you) Rivera might have been from Mars, the 17th century or the Twilight Zone. I had no idea she was from the Los Angeles area, sold more than 15 million CDs and was featured on television in the US and Mexico.

    In short, she was from our world and another world at the same time and that’s a great reminder of the incredible complexity of the population, competition and marketing today. And here’s the biggest challenge of all: the situation is going to get even more complex and fast.

    We shouldn’t be surprised because this has happened before. In 1995, Selena Quintanilla-Perez was a young woman unknown to many of us when she was shot to death. Except Selena wasn’t unknown. She was an incredibly popular Tejano singer who packed arenas throughout the Southwest. Her life was captured in the wonderful biopic Selena that lays out the challenge of the many worlds that exist side-by-side in the US.

    In one scene, a mall saleswoman condescendingly pushes Selena out of her store only to watch a mob of adoring fans surrounded the singer. In that one scene we get the reminder that the world we know isn’t the only world out there. (No surprise here: This scene and Selena’s story are highlighted in The Big Picture: Essential Lessons from the Movies, the book I co-authored with Kevin.)

    We cannot possibly know all these worlds. None of us can keep track of all the trends, all the population groups and all the world of “superstars.” Frankly, we have too much to do. Everyone has 1,000 cable stations streaming into their homes, 950 of which we will never ever see. No one has time the time or reason to stay current on "Say Yes to the Dress," countless ESPN offerings and Spanish language telenovelas.

    But we have to understand that these multiple worlds are out there and that they grow more important everyday.

    For the past few months I’ve been trying frantically to improve my Spanish skills because of a new project I have in Latin America. To challenge myself, I visit Hispanic stores like Mega Market International in Rockville, Maryland.

    The store is, to put it simply, another world. Inside the crowded and very busy supermarket I see products and foods I’ve never seen before. There are signs, music and chatter that challenge my limited Spanish skills. It isn’t a great store. It should be better lit, cleaner and better organized. Yet, it is effective.

    Here’s the key: It is filled with shoppers doing what shoppers always do: finding products to feed themselves and their families. Just like at any supermarket.

    What blows me away is that this store is less than six miles from my home and within half a mile of many stores my wife and I use. It might as well be another planet far from the people I see at the gym, stores and supermarkets I frequent. To get to Mega I have to figuratively and literally cross a lot of streets. These are crossings that lots of us need to make.

    Last Thursday Bloomberg reported new estimates that minority children will outnumber whites under the age of 18 in 2019. By 2043 the entire population of minorities will combined outnumber the white population in the US. In other words, the time is coming when Mega Supermarket may be a far more powerful competitor than the nearby Giant, Whole Foods, Harris-Teeter and Shoppers Food Warehouse.

    That is, unless all those operators and the suppliers who work with them start crossing into that other world to meet and see these new shoppers and start understanding their needs and habits…and even their love of Jenni Rivera.

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: December 18, 2012

    by Kevin Coupe

    Not sure about you, but to me, this somehow seems about a decade or two late...

    The Associated Press reports that toymaker Hasbro plans to unveil "a gender-neutral Easy-Bake Oven after meeting with a New Jersey girl who started a campaign calling on the toy maker to make one that appeals to all kids ... The classic toy has had about a dozen different color schemes, from yellow to green to teal to silver, since first being introduced in 1963. The most recent iteration, introduced in 2011, is mostly purple with pink accents."

    According to the story, "McKenna Pope, 13, of Garfield, N.J., got more than 40,000 signatures on her online petition at and the support of celebrity chefs including Bobby Flay, who backed her call for Hasbro to make a gender-neutral oven and to include boys in the ads."

    Good for her. And good for Hasbro.

    Better late than never.
    KC's View:

    Published on: December 18, 2012

    Time reports on the results of a new Reuters/Ipsos poll, which says that "as of last week, 14% of shoppers were done, compared to 9% at the same time last year. By now, the proportion of annoyingly organized shoppers who have finished up all of their gift gathering is up to around 18%." However, the same poll suggests that "there’s a larger percentage (28%) of people who haven’t even started their holiday shopping, and a much, much larger group (58%) who said they’re not even halfway done with their lists."

    The National Retail Federation (NRF) says that its surveys show that "the average consumer has gotten 56.5% of his or her holiday shopping out of the way by now (up from 46.5% at this time last year), though only 11% of shoppers report being completely done with their lists."
    KC's View:
    Don't know about you, but I've got just a couple of small fill-in things to pick up, and then I'm done. And to satisfy a certain contingent of MNB readers, I can tell you that I've actually visited some bricks-and-mortar stores as part of the process. (Can't tell you which ones. I have family members who read MNB...)

    Published on: December 18, 2012

    Bloomberg reports that a government panel in Bangladesh has concluded that the fatal fire at a garment factory that made clothing for US retailers that included Walmart was the result of sabotage, and that there was no possibility that it took place because of an electrical short circuit.

    The fire killed more than 100 people. The cause of the fire does not seem to change the fact that poor safety standards apparently made it difficult for workers to escape the blaze.

    The union representing the workers is questioning the panel's conclusion, saying that calling it sabotage makes it possible for the government and factory owners to implicate the workers in the tragedy and avoid responsibility for its occurrence.

    • The Wall Street Journal reports this morning that Walmart has removed from its website a listing for a Bushmaster Patrolman’s Carbine M4A3 Rifle, a semi-automatic assault rifle described as being similar to the one used in the elementary school massacre in Newtown, Connecticut.

    Walmart says that the gun could never be bought online, but only was available from selected stores. It would not comment on why the website listing was removed, and the Journal notes that the gun was still available at some bricks-and-mortar Walmart stores.

    Walmart is the nation's largest seller of guns and ammunition.

    The Journal writes: "Wal-Mart has been criticized in the past by gun-control groups who say it makes weapons too easily accessible. But its work with those groups has prompted criticism from gun-rights groups including the National Rifle Association.

    "Wal-Mart hasn’t sold handguns at its stores since the early 1990s, when it discontinued them except for special orders in Alaska. Seven years ago, the Bentonville, Ark., retailer stopped selling hunting rifles, shotguns and related ammunition at all but a third of its approximately 3,500 supercenter and smaller discount stores, citing diminishing sales.

    "It voluntarily agreed to adopt stricter gun-sales policies in 2008 as part of a pact with Mayors Against Illegal Guns, a group co-founded by New York Mayor Michael Bloomberg.

    "But Wal-Mart quietly began expanding sales of rifles, shotguns and ammunition to hundreds of its stores about two years ago, after its overall U.S. sales slumped."
    KC's View:
    As the Journal correctly notes in its story, companies like Walmart may have to adjust to a changing reality when it comes to gun sales in the US. The wanton slaughter of six and seven year old children at the Sandy Hook Elementary School may be a kind of tipping point when it comes to debate and discussion about Second Amendment rights.

    It has the potential of affecting a lot of companies. For example, the New York Times writes this morning that "the private equity firm Cerberus Capital Management said on Tuesday that it would sell its investment in the gunmaker Freedom Group in response to the school shootings last week in Connecticut. Cerberus acquired Bushmaster — the manufacturer of the rifle used by the gunman in the Newtown attacks that killed 27 people, including 20 schoolchildren — in 2006," and then "merged it with other gun companies to create Freedom Group."

    And I'm also hearing that a number of teachers unions and pension funds will be getting out of any investments in companies that make or sell guns.

    There may be a cultural and political shift happening, and companies are going to have to pay attention.

    Published on: December 18, 2012

    • German conglomerate Joh. A. Benckiser, which earlier this year spent $974 million to acquire the Peet's coffee company, now will spend $340 million to buy Minneapolis-based Caribou Coffee Co. According to the Los Angeles Times story, "Caribou’s independent directors have unanimously approved the Benckiser deal, which would keep the company based in Minneapolis and operated as its own brand."

    • The Chicago Tribune reports that McDonald's is pushing its US franchisees to stay open on Christmas Day - contrary to company tradition - as it looks to boost December sales.
    KC's View:

    Published on: December 18, 2012

    • The Financial Times reports that Tesco CEO Philip Clarke, who has been running the company's UK business since last match when Richard Brasher left the company, seems to be "moving closer to appointing a UK chief executive, with Chris Bush, chief operating officer, emerging as the frontrunner for the role."

    Analysts say that naming a UK top executive would allow Clarke the time to focus on other problem areas in the company, while putting a dedicated executive in charge of the UK, which generates two-thirds of Tesco's annual sales and profits.
    KC's View:

    Published on: December 18, 2012

    • Senator Daniel Inouye, the Democrat from Hawaii who has been representing the 50th state since it was admitted to the union in 1959, died yesterday of respiratory complications, He was 88, and his last word reportedly was "Aloha."

    As Politico writes, Inouye "arrived a half-century ago as the complete Washington outsider yet grew to become central to the Capitol and even its soul. Inouye’s quiet, restrained style led some to underestimate him. But he had a wit and shrewdness, too, combined with a record of genuine heroism and compassion for the underdog, having come of age amid discrimination against Japanese-Americans even as he served bravely in World War II," losing an arm in battle.
    KC's View:
    I first remember becoming aware of Inouye during the Senate Watergate hearings in the early seventies, but I was surprised to read yesterday that when Inouye came home from the war, he was in a Michigan veterans hospital - where another patient was Bob Dole, who was recovering from his own wounds and would go on to become the senator from Kansas. Also in the hospital was Philip Hart, who later became the senator from Michigan.

    That's extraordinary, and the greatest generation defined.

    Published on: December 18, 2012

    ...will return.
    KC's View:

    Published on: December 18, 2012

    • In Monday Night Football action, the Tennessee Titans defeated the (pitiful) New York Jets 14-10.

    • And, R.A. Dickey, the knuckleball pitcher for the New York Mets who won 20 games and the National League Cy Young Award this year, providing fans with a rare bright spot in an otherwise generally dismal baseball season, was traded to the Toronto Blue Jays.

    Dickey, along with catchers Josh Thole and Mike Nickeas, were dealt to the Blue Jays in exchange for catchers Travis d'Arnaud and John Buck, righthanded pitcher Noah Syndergaard and outfielder Wuilmer Becerra.
    KC's View:
    I am depressed. Dickey has been my favorite player on the Mets, and I am not happy about the fact that he has been traded.

    We've been having a big debate about the deal in my house. My son, Brian, who knows far more about this stuff than I do, argues that it is a potentially great business move by the Mets - especially because d'Arnaud was ranked by as the 11th-best prospect in all of baseball and the best catching prospect this past September, and that he is strong both on offense and defense.

    But I think that the Mets may be making a mistake, because Dickey, while a little old for a pitcher, was someone of great character who could be both a positive role model (for other players and fans) and a strong performer. For me, he was someone I would go out of my way to watch ... and there weren't a lot of people like that on the Mets in recent seasons. I'm going to miss him.

    Maybe it'll be a good deal when everything shakes out. But as far as I'm concerned, d'Arnaud better be freakin' Johnny Bench.