When you build a public company, it's different th
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When you build a public company, it's different than running your own business. There are many costs involved, like filings and much more. It's double difficult and costly when trying to run one in another country. We all know what goes on in the developing world and that adds cost. Just look at Walmart in Mexico..
MEXICO CITY (AP) – Claims that U.S. retail giant Wal-Mart used payoffs to speed zoning and other permits in its break-neck Mexican expansion are sparking soul-searching in Mexico, where crowded government offices are the working grounds of shadowy facilitators known as "gestores."
Front-running presidential candidate Enrique Pena Nieto told The Associated Press in an interview Monday that "there is a truly critical situation in the country."
He said he thinks an independent governmental anti-corruption commission is needed to root out the bribes and payoffs that many say have become as common as paying a light bill, and sometimes easier.
"This is an endemic vice, a vice that leads us nowhere," Pena Nieto said.
According to a New York Times report, Wal-Mart (WMT) executives turned to middlemen in the early 2000s to grease the way for building up the company's Mexican subsidiary, which has become its biggest foreign operation.
Whether at least $8.5 million that was apparently paid to gestores actually wound up as bribes for corrupt local officials remains to be seen. The Times also said an additional $16 million were paid directly to local governments.
Wal-Mart Stores says it is conducting its own investigation, and two U.S. congressmen announced they are opening a probe. The Mexican federal government announced Monday evening that it had no jurisdiction in the case because the report referred only to the involvement of state and city officials with authority over permits and zoning decisions.
State-level governments in the state of Mexico and Mexico City also appeared to duck the issue, saying they had not opened any investigation because none of their authorities were specifically mentioned in the allegations.
Eduardo Bohorquez, the director of Transparency Mexico, said there was a striking difference between the United States , where investigations have been launched by congressmen and, reportedly, the Justice Department , and Mexico, where authorities seemed eager to find reasons not to investigate.
"The enormous difference is the reaction," Bohorquez said. "State and local officials (in Mexico) are clear that there will be unequal enforcement" in the two countries.
Many Mexicans wouldn't be surprised if the claims are true. According to a survey of Mexican households by Transparency Mexico, bribes paid by individuals, not including corporations, amounted to something like $2.4 billion in 2010. Households reported average bribes were about $12 apiece; the poorest families reported paying the equivalent of about 28% of their income in bribes.
A visit to any government office is likely to bring the sight of a well-dressed man carrying reams of documents who will glide past the long lines, shake hands with the official behind the counter and get ushered into a backroom, where his affairs presumably get a fast-track service. The suspicion is these go-betweens funnel a portion of the fees they charge clients to corrupt officials to smooth the issuance of permits, approvals and other government stamps.
In a country where laws on zoning rules, construction codes and building permits are vague or laxly enforced, the difference between opening a store quickly and having it held up for months may depend on using a gestor.
"Nobody is exempted" from the demands for bribes, said Mexico City security consultant Max Morales, who advises companies on everything from building projects to security against kidnappings. "Even the big American companies are subject to extortion."
There is none bigger than Wal-Mart de Mexico, which is the nation's largest retailer and private employer and opened a store a day last year. Corrupt officials "see money, and they exploit you and exploit you, and the first thing you know they try to close you … as a way to exert pressure," Morales said.
The watchdog group Transparency International puts Mexico a low No. 100 on its 2011 list that ranks 183 countries by the perception of their level of corruption. On a scale with 10 as the least corrupt, Mexico rates only a 3 — the lowest for any OECD nation and a tie with countries like Suriname and Indonesia.
The pressure of corruption in Mexico is so great that some companies have reportedly opted to leave.
Morales said security and corruption concerns played a role in the 2005 decision by French retailer Carrefour to sell its operations in Mexico. Asked if that was true, Carrefour's press department responded in an email: "Carrefour Group doesn't comment on this information."
Wal-Mart's competitors in Mexico, the other large supermarket chains, all refused to talk about the scandal. "It is a very delicate issue," said Jesus Antonio Velazquez, spokesman for the Chedraui chain.
The only people willing to comment were operators of small markets and mom-and-pop grocery stores. They said Wal-Mart was able to put stores where they shouldn't have been allowed, and they saw something fishy in the company's rapid expansion that has given it 2,138 stores in Mexico.
"It was so evident," said Alfredo Neme Martinez, who leads a Latin American association of wholesale market vendors. "They would buy three lots on a corner, and open right away."
In a statement, Wal-Mart said the bribery accusations, "if they are true, do not reflect the culture of WalMart Mexico and Central America." It said it would not comment further because of the investigations.
But Bohorquez said that bribery is not necessarily part of Mexico's culture; laws against the practice exist on both sides of the border; the difference is weak enforcement, and the lack of a truly nation-wide anticorruption policy in Mexico.
"This is not in the genetic code of Mexicans, nor is it a cultural attribute," he said. "The explanation of culture and genetics doesn't apply in this case."
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