Wal-Mart's new controversy: Taps head of scandal-ridden division as new CEO

Current head of Walmart International, which drew ugly headlines over alleged bribery, will soon run entire company

Published November 25, 2013 8:22PM (EST)

Protesters gather outside a Wal-Mart Neighborhood Store for a peaceful demonstration Thursday, Sept. 5, 2013, in Chicago.                                   (AP/Charles Rex Arbogast)
Protesters gather outside a Wal-Mart Neighborhood Store for a peaceful demonstration Thursday, Sept. 5, 2013, in Chicago. (AP/Charles Rex Arbogast)

Wal-Mart announced Monday it would tap the current head of its international division to take the reigns of the company in February. The promotion for Walmart International CEO Doug McMillon comes amid a wave of strikes by U.S. Wal-Mart employees, and follows investigations by the Department of Justice, the Securities and Exchange Commission, and the New York Times into alleged bribery by Wal-Mart abroad.

Walmart International has drawn unwelcome headlines since the New York Times reported in April 2012 that it had “found credible evidence that bribery played a persistent and significant role in Wal-Mart’s rapid growth Mexico,” and that “after leaning of The Times’s reporting in Mexico, Wal-Mart informed the Justice Department that it had begun an internal investigation into possible violations of the Foreign Corrupt Practices Act…” In a December 2012 follow-up feature, the Times reported that Wal-Mart headquarters had “a wealth of evidence” substantiating allegations of crimes, but in 2006 shuttered an internal investigation and “authorities were not notified.” The Times' David Barstow and Alejandra Xanic von Bertrab also wrote in December that an investigation then underway by Walmart had so far revealed “indications of bribery in China, Brazil, and India.”

“This leadership change comes at a time of strength and growth at Walmart,” Board Chairman Rob Walton said in an e-mailed statement. “The company has the right strategy to serve the changing customer around the world, and Doug has been actively involved in this process.” In a statement from the union-backed labor group OUR Walmart, Maryland employee Tiffany Beroid offered the opposite explanation for the change at the top: “Walmart has been heading in the wrong direction, and it’s a testament to the pressure the company is feeling that they’re changing leadership at this moment.”

I’ve reported, Democratic Congressmen Henry Waxman and Elijah Cummings wrote in January to Walmart CEO Mike Duke, who like McMillon helmed Walmart International before being promoted to run the whole company, and charged that “Contrary to Wal-Mart’s public statements,” uncovered e-mails “appear to show that you were personally advised of the allegations in October 2005.” A company spokesperson told me in January that Wal-Mart had “provided extensive documentation” to the DOJ and SEC, “as part of our ongoing cooperation with the appropriate law enforcement agencies on this matter.” The Mexico allegations concern the period when Duke ran Wal-Mart International, but were brought to light years after McMillon took over in 2009.

Wal-Mart did not immediately respond to an inquiry regarding what role McMillon played in the company’s response to the scandal.  In April, the Associated Press reported that a judge had described Wal-Mart’s attorneys' approach to document disclosure as “persnickety and narrow,” and ordered them to release additional info to shareholders regarding the issue. Forrester Research analyst Sucharita Mulpuru-Kodali told USA Today, “Doug McMillon is the head of international, so if the Mexico bribery thing were such a big deal he wouldn’t be the CEO now.”

Today’s announcement comes four days before the “Black Friday” protests planned by OUR Walmart, a group closely tied to the United Food & Commercial Workers union. Some retail employees are out on strike today in St. Paul, Tampa, and Miami, the latest in recent weeks to mount one-day work stoppages in the lead-up to this Friday’s larger action. “I know a lot of my co-workers, they want to speak up and say something, but they’re afraid that Wal-Mart will retaliate against them and fire some of them,” Tampa striker Jaime Martinez told Salon. Workers plan to hold protests at three DC-area Wal-Mart stores Tuesday.

“We’re happy to see Mr. McMillon acknowledge the hard work of associates in his statement this morning, and we hope that this appreciation translates into improving jobs for Walmart workers,” said OUR Walmart’s Beroid. But Workers Rights Consortium Executive Director Scott Nova, who has slammed Wal-Mart’s approach to worker safety in its international supply chain, expressed little optimism that McMillon would bring a different philosophy to his post. “As the head of Walmart’s non-U.S. stores, [McMillon] never deviated from the company’s strategy of holding down costs by using factories that ignore worker rights and worker safety,” Nova said in an e-mail to Salon. “Will he chart a different course in his new post? Only if pressure from workers, unions and labor rights advocates compels him.”

By Josh Eidelson

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Bribery Congress Democrats Doug Mcmillon India Labor Mexico Unions Wal-mart