Walmart Inc., a Delaware corporation with its principal place of business in Arkansas, was a global retailer whose shares were registered with the SEC and traded on the New York Stock Exchange. Walmart operated in many countries through a variety of subsidiaries.
WMT Brasilia S.a.r.l. was a wholly-owned subsidiary of Walmart and was a majority-owner of Walmart's wholly-owned subsidiary in Brazil ("Walmart Brazil").
According to the documents in this case, in 2009 and 2010, Walmart Brazil failed to implement sufficent internal controls in its operations in Brazil. Specifically, Walmart Brazil used a Brazilian construction firm despite the firm having failed a preliminary round of vendor due diligence, and during the time period, the construction firm made improper payments to government inspectors. Furthermore, it knowingly and willfully caused Walmart to maintain certain records, which did not, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Walmart. Specifically, Walmart Brazil indirectly hired a third-party intermediary, despite numerous red flags, whose ability to obtain licenses and permits quickly earned her the nickname “sorceress” or “genie” within the company. This intermediary subsequently made improper payments to government inspectors in connection with the construction of a Walmart Brazil store. Walmart Brazil falsely recorded $527,000 in payments to the intermediary as payments to certain construction companies, including the construction firm above, and these false records were consolidated into Walmart's financial records. In all, Walmart Brazil earned approximately $3,624,490 in profits from stores built under this scheme.
On June 20, 2019, the DOJ filed a single count Information in the Eastern District of Virginia against WMT Brasilia alleging violations of the books and records provisions of the FCPA. On the same date, the company entered into a plea agreement with the DOJ. Under the terms of the settlement, WMT Brasilia agreed to pay a criminal fine of $724,898 and to forfeit $3,624,490. However, this penalty was incorporated into the $137 million settlement that Walmart reached with the DOJ in a parallel proceeding.
In a related administrative proceeding initiated on June 20, 2019, the SEC ordered Walmart to cease and desist violations of the books and records and internal controls provisions of the FCPA. The SEC further ordered Walmart to pay disgorgement of $119,647,735 plus prejudgment interest of $25,043,437 and to report on the status of the company's remediation and implementation of anti-corruption-related compliance measures for a term of two years.
