Wal-Mart's U.S. expansion plans imperiled by Mexican bribery allegations; numerous cities revisiting retailer's development proposals

Cindy Allen

Cindy Allen

May 1, 2012 – Industry Intelligence

LOS ANGELES , April 30, 2012 () – The fallout from alleged bribes in Mexico has now imperiled Wal-Mart Stores Inc.’s expansion plans in the U.S., The New York Times reported April 29.

Domestic opposition to the company’s recent expansion efforts in large cities include:

        • In Los Angeles, groups opposed to Wal-Mart’s attempts to build a store in Chinatown have cited the bribery scandal in a supplement to an appeal that they filed to revoke the company’s building permit.

        • New York City Councilman Erik Dilan, the head of the housing and buildings committee, has said that the commitee will investigate a land-use transfer for a location that Wal-Mart has been eyeing in Brooklyn.

        • Opponents to Wal-Mart’s plans to build three possible stores (located in Roxbury, Somerville and Watertown) in the Boston area have demanded that Wal-Mart provide full financial disclosure for contributions made to community leaders, elected officials and local organizations.

Janney Montgomery Scott LLC analyst David Strasser said that the worst fall-out from the bribery scandal may be that “[i]t gives more power to [Wal-Mart’s] critics.”

Wal-Mart, long a subject of criticism from environmental groups, labor unions, and local community groups, has waged a concentrated effort over the past few years to improve its image via such means as positioning the company as a seller of fresh, healthy groceries; devising a plan to reduce its energy consumption; and meeting with activists in an effort to improve its health care and labor records.

In recent years, Wal-Mart, having largely exhausted its domestic expansion opportunities in rural and suburban areas, has turned to large urban areas. In an effort to smooth its expansion efforts, Wal-Mart has frequently made a series of donations to local nonprofit organizations and politicians.

Those donations are now coming under scrutiny. Professor Warren of Columbia noted that the perception that Wal-Mart is buying off politicians could potentially spread to other cities, which would make it more difficult “for politicians to accept campaign contributions from Wal-Mart.”

Wal-Mart spokesperson Steven Restivo said that the company would not alter its domestic expansion plans or its donation policies in light of the ongoing bribery investigation.

Since 2007, Wal-Mart’s foundation has given nonprofits in New York state more than US$13 million. In 2011 alone, the company gave Republican political committees in New York nearly $200,000.

The primary source of this article is The New York Times, New York, New York, on April 29, 2012.


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