Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle by David Barstow

Two more days, and it would have been a year since I last posted. The story that brought me back and inspired me to add to this pretty much now-defunct blog? A Wal-Mart corruption scandal in Mexico that implicates high-level executives that have been promoted since a corporate investigation.

David Barstow of The New York Times details the incredible cover-up at Wal-Mart de Mexico, Wal-Mart's largest foreign subsidiary, of bribery amounts to obtain building permits throughout the country totaling $24 million—and this investigation, conducted in late 2005 by the company's investigation branch, only went back to 2003. If this wasn't bad enough, Barstow goes a step further to highlight how then-Wal-Mart executives who have since then been promoted to higher positions attempted at every step of the company's investigation to impede its process, cloud the truth and push off the blame.

With Barstow holding the sole byline, and only two contributors listed, the amount of damning information unearthed by the trio's investigative reporting is truly astounding. Each paragraph reads like an accusation—and at times, it seemed almost farcical how intelligent human beings can go about making self-serving decisions, and then have it cemented in email records.

At the center of the scandal is a former executive, Sergio Cicero Zapata, who actually oversaw most of the transactions between the company and "gestores," fixers enlisted to help Wal-Mart expand quickly and extensively by obtaining building permits, among other things. After resigning in 2004, Cicero blew the whistle by approaching Maritza Munich, the then-general counsel of Wal-Mart International who has since left the company, to detail the company's practices.

It's a long read, but definitely worth it, because by the end of it, the main targets of the investigation—Eduardo Castro-Wright and later, Jose Luis Rodriguezmacedo Rivera—gets a hold of the corporate inquiry, and Cicero is blamed as the main mastermind for the bribes.

But, they said, the more investigators corroborated his assertions, the more resistance they encountered inside Wal-Mart. Some of it came from powerful executives implicated in the corruption, records and interviews show. Other top executives voiced concern about the possible legal and reputational harm. 

In the end, people involved in the investigation said, Wal-Mart’s leaders found a bloodlessly bureaucratic way to bury the matter. But in handing the investigation off to one of its main targets, they disregarded the advice of one of Wal-Mart’s top lawyers, the same lawyer first contacted by Mr. Cicero. 

“The wisdom of assigning any investigative role to management of the business unit being investigated escapes me,” Maritza I. Munich, then general counsel of Wal-Mart International, wrote in an e-mail to top Wal-Mart executives. 

The investigation, she urged, should be completed using “professional, independent investigative resources.”        

Doubly entertaining to me is how much of it could probably apply to Cambodia and how the culture of arrogance that permeates major businesses can hinder their ability to make decisions that will likely benefit in the long run.

Line after line of Barstow's reporting reveals how Wal-Mart higher-ups were offered a clear shot to exonerate the company's reputation by taking the steps necessary to weed out corruption—which was then promptly bypassed in order to just perform damage control. 

In short, Willkie Farr [a law firm with extensive experience in Foreign Corrupt Practices Act cases] recommended the kind of independent, spare-no-expense investigation major corporations routinely undertake when confronted with allegations of serious wrongdoing by top executives.

Wal-Mart’s leaders rejected this approach. Instead, records show, they decided Wal-Mart’s lawyers would supervise a far more limited “preliminary inquiry” by in-house investigators.        

I don't know enough about Cambodia's business community to know about what form corruption takes but I do know something of Cambodia's general climate (in a non-weather sense) that tends to encourage "facilitation fees," as they are known here. I don't want to say anything too obvious or incriminating (though I suppose I already have, in so many words) but what I think Barstow's piece could benefit from, perhaps as a Part Two look, is the government agencies that Wal-Mart had to go through in order to get these permits. Where did the $24 million go? To the gestores, sure, but in the end, who were the officials or the agencies palming the money?

This isn't something that is the easiest thing to track, and in and of itself, Barstow's piece is already incredible and ridiculously chock-full of corporate corruption. But this corruption was necessary in order to facilitate the growth of Wal-Mart in Mexico, and it was only possibly because of how that country operates. 

I'm not taking away fault (hell, no)—I'm saying, please widen the investigation in whatever way possible to show how the Mexican government is actually condoning and encouraging something like this to happen. 

One last quote from the piece:

Another person familiar with the thinking of those overseeing the investigation said Wal-Mart would have reacted “like a chicken on a June bug” had the allegations concerned the United States. But some executives saw Mexico as a country where bribery was embedded in the business culture. It simply did not merit the same response.

“It’s a Mexican issue; it’s better to let it be a Mexican response,” the person said, describing the thinking of Wal-Mart executives.

In the midst of this debate, Ms. Munich submitted her resignation, effective Feb. 1, 2006. In one of her final acts, she drafted a memo that argued for expanding the Mexico investigation and giving equal respect to Mexican and United States laws.

“The bribery of government officials,” she noted dryly, “is a criminal offense in Mexico.”          

Seriously, just replace "Mexico" with... well, you know.

Four NYT Journalists Missing in Libya (Update!)

NYT's Media Decoder reported this afternoon that four NYT journalists are missing in Libya: Anthony Shadid and Stephen Farrell, both prominent war reporters; and Tyler Hicks and Lynsey Addario, photojournalists who regularly produce amazing images of war-torn countries.

This news is doubly frightening considering the recent treatment of 3 BBC reporters in the hands of the Libyan military. For 21 hours, they were beaten and subjected to fake executions, but were eventually released. Also, this happened in Egypt a month ago.

When I first read about the NYT reporters, it felt like my heart had dropped to my stomach. I'm especially familiar with Hicks and Addario's photos since I have great admiration for war photographers. They put themselves in the direct paths of tense and life-threatening situations in order to capture a shot that properly showcases a war. Whenever I see their photos, I always wonder what's happening around them – what is not seen in the images captured?

Two weeks ago, Hicks' account of his experience photographing in Libya appeared on the Lens blog. About war photography, he had said:

Conflict is very difficult to capture in a still photograph. Once you take away the sound and the motion, when you’re trying to capture that feeling and that atmosphere, it’s very difficult to translate — what it feels like to be there, the confusion and gunfire and bombs and all these things that envelop you in battle. To take a single photograph of that is a challenge.

It can be so easy to romanticize lives of war reporters and photographers – God knows I'm guilty of that with all the books I've read from war reporters. But then something like this happens and all I can feel is incredible dread. It reminds me that though their work must be exhilarating and fulfilling, that rush can sometimes come at the expense of their safety. They remain in my thoughts.

Update 3/18/11:

Christiane Amanpour interview Qaddafi's son and he said that the four journalists are under government custody and will be released later today!

Obama Steps Up

"The loss of these wonderful people should make every one of us strive to be better. To be better in our private lives, to be better friends and neighbors and coworkers and parents. And if, as has been discussed in recent days, their death helps usher in more civility in our public discourse, let us remember it is not because a simple lack of civility caused this tragedy -- it did not -- but rather because only a more civil and honest public discourse can help us face up to the challenges of our nation in a way that would make them proud."

(The full transcript can be found here.)

Here are some reactions:
Obama's Tucson Speech: Inspiration, but the Tone Surprised Some (CNN)
Fox News was Pretty Gaga Over Obama's Speech Last Night (Business Insider)
Obama Brings It Home (Gail Collins of NYT)

Daniel Schorr, Journalist, Dies At 93

According to The New York Times obituary, Daniel Schorr was denied readmission into the Soviet Union because of his disregard for the Soviet censors, and he was #17 on Nixon's "enemies list" because of his reporting of the Watergate scandal.

Schorr discovered that "Follow the money," was never uttered by Deep Throat; it was actually written by the script writer for the movie! Alicia Sheppard recounts Schorr's efforts to find that infamous phrase in Woodward and Bernstein's book.

A former research assistant of Schorr talks about the invaluable lessons that he took from working with him. Guy Raz, now the host of NPR's Weekend All Things Considered, said that it is because of Schorr that he now believes that to practice journalism, there must be that "demand for excellence and accuracy and fairness and nuance and [the] kind of unwillingness to just take things for face value."

Good friends with Frank Zappa, Schorr was invited onstage to sing at his concert in 1988. He was, frankly, terrible.

Schorr would also sing German opera and Marx Brothers nonsense songs and Edith Piaf before going on air. Please read NPR's Scott Simon's tribute to the end.

(Photo: Schorr works at a press table during the Watergate hearings on June 1, 1973, while on assignment for CBS News. CREDIT: Gjon Mili//Time Life Pictures/Getty Images)

Pulitzer Highlight: Sheri Fink

I just wanted to take some time to acknowledge that the Pulitzer Prize winners for journalism were announced today, and one piece really stands out to me: Sheri Fink won the Pulitzer for Investigative Reporting for her story of a New Orleans hospital and the staff who had to make difficult life-and-death decisions during Hurricane Katrina.

I remember reading "The Deadly Choices at Memorial" last year and being completely floored by how well-researched, well-written, and heart-wrenching it was. It appeared in the weekly New York Times Magazine, and the photos that accompanied it, shot by Paolo Pellegrin, compounded the sense of dreadful desperation faced by the stranded hospital staff during Katrina, when the hospital was cut off from help.

If you have a couple minutes, do take a look at it. I should have written about it when it was first published because it truly is a one-of-a-kind piece. The subject matter is gripping, and the amount of work that Ms. Fink had put into it really shows - she reportedly interviewed 140 people for this story.

Anyway, if you have more than a couple minutes, look through the other winners. I'm currently combing through them to see what I have missed, or had seen the first time around.

"Held By The Taliban" series

The New York Times is currently running a series that is a cross between a journal entry and narrative reporting by David Rohde, a journalist who was captured by the Taliban in November 2008 and was released over 7 months later. There are five parts to it, and (right at this moment that I'm looking at it now) there are only three parts up.

What's interesting to me is that his account is being showcased on page A1, just right before the fold (at least for the installment in Monday's paper.) The formatting of his article is distinctively different from the other stories, with the words spaced more apart and each line is half a double space. I mention this only because this immediately drew my attention, and it was like the editors were announcing that this is not an ordinary article, certainly not one that follows the vein of objectivity. From the very first sentence, I felt like I was reading this on a computer, on a blog of some sort – and not on the front page of the paper.

You can see the difference between Rohde's piece and the other articles below.

This is not a criticism – more like an observation. I really enjoyed the article, and I am really glad that I managed to read it in the paper instead of online. For some reason, even though online news can easily reach new readers, I like the finality behind having something printed on a page. It makes it seem more official and much more important.

And this is important. The column/article (I'm really not sure what word to use for it) allows us an insight to the Taliban and the terrain of Afghanistan. I don't consider myself an expert at all in war news (or any news for that matter... hence, this blog) but I know that reading Rohde's account is going to stay with me more than reading a run-of-a-mill article about the current situation in Afghanistan. That's because instead of making use of numbers and statistics to convey how horrible and desperate the situation is in this "forgotten war," Rohde's personal account is able to transfer that statistical horror into images and voices and people.

In the first installment of this series, titled "7 Months, 10 Days in Captivity," Rohde seems to issue a disclaimer by saying that everything he has written is from his memory, and therefore from his point of view.

What follows is the story of our captivity. I took no notes while I was a prisoner. All descriptions stem from my memory and, where possible, records kept by my family and colleagues. Direct quotations from our captors are based on Tahir’s translations. Undoubtedly, my recollections are incomplete and the passage of time may have affected them. For safety reasons, certain details and names have been withheld.

I thought that Rohde's was brave to admit this, and also in turn, to cover his ass. There are some insane readers of the Times (Have you read any of the letters sent in by readers? There are some close, close readers who really seem to have a vendetta against reporters) and if Rohde's haven't admitted that all that is written is in a first-person view, he would have gotten some pretty scathing emails about how flawed his "reporting" is.

However, his admission did not allay some readers' criticism. Rohde's answered some readers' questions over at the At War blog and the first (like, eight) questions addressed how Rohde was naive about the Taliban, how his depictions show how ignorant he was of them, and how he was stupid and selfish to have gotten captured, along with the Afghan journalist and driver who accompanied him.

Actually, the blog has been updated since I checked it earlier today, and the first questions now seem to actually be from readers who are concerned that Rohde's account does not belong in the hard news section of the paper and website since it does not really broadcast larger issues in terms of policy/decision making in Afghanistan. It is really interesting to see that put in words since I touched upon it earlier except did not really go into the significance of it beyond "Wow, it looks really different." But I do stand by what I said earlier, which is that I like it. Reading Bill Keller's answer to the readers, I think he summed it up pretty well why I do not think it is a "travesty on journalism" that Rohde's account is front page and in installments:

As I hope the series makes clear, this is not a story about David Rohde, it is a story about the character, strength and organization of the people the U.S. is fighting in Afghanistan and Pakistan. It provides detailed insights into the minds and motives of the Taliban’s footsoldiers. It also reveals the extent to which the Taliban has, with impunity, colonized a swath of Pakistan. Yes, it is a hell of a story, but it also adds rich detail to our understanding of the Taliban.

Why, thank you, Mr. Keller, for explaining it so succinctly. Whenever something like this happens, there is always a fear of the reporter becoming the story, and thus hindering the actual importance of the story. However, in this particular instance, I really think that Rohde's first-hand experience has enhanced the image we have of the Taliban in Afghanistan.

Anyway, I really recommend reading this series, and following through to Part 5. This reminded me a little of Kate Webb, a journalist who was captured by the Viet Cong during the Vietnam War for 23 days, and how the short time with her captors made her later reportingof the Vietnam War much more nuanced.