An Interesting Theory on Wal-Mart's Ethics Policy and Alleged Bribery Scandal
April 24th, 2012
April 24th, 2012
Felix Salmon took a look today at Wal-Mart’s ethics policy. Given what came out in the New York Times this weekend about Wal-Mart’s alleged $24 million bribery and cover-up scandal, you might expect Wal-Mart to have a toothless and empty ethics policy for high-level employees. The reality appears to be different. As Felix Salmon explains, an employee named Julie Roehm, senior enough to handle the search for a company to handle a billion dollar account, was fired for allowing that company to buy her dinner. Salmon writes:
As Walmart expert Charles Fishman explains,
Wal-Mart had a kind of unbending almost obsessive adherence to even the trivialist elements of an ethical code. They’re a brutal competitor and everybody acknowledged that, but Wal-Mart was also the company that wouldn’t take a dinner from you, that wouldn’t let you provide a soda if you went to meet them to talk about business, where they wouldn’t join trade associations for many, many years because they didn’t want to pay dues and have a conflict of interest.
We now know, of course, that Castro-Wright was the man at the very center of the Walmex corruption scandal. Which raises the obvious question: did the corruption at Walmex appear despite Walmart’s ultra-strict ethics code? Or did it, paradoxically, appear because the code was so strict?
The point here is that Walmart left, essentially, nothing to its employees’ discretion. It didn’t trust them to do the right thing: it codified everything in a set of rules, and then told them to follow those rules. And you can see how that might have resulted in a kind of Calvinist scale-blindness, where accepting a soda when going to meet a vendor is exactly as bad as greasing Mexican wheels to the tune of 24 million dollars.
This is very interesting to me. Of course, as Salmon points out, Roehm could really have been fired for a number of reasons, only under the pretext of an ethics violation. However, if Wal-Mart does indeed have a very strict and enforced ethics policy, it at least has the means to enforce a proper FCPA compliance program. I can only speculate along Salmon’s lines about whether or not such a strict ethics policy leads to black-or-white, “Calvinist-scale” thinking, where any act in violation of the policy, be it illegal or simply unethical, is weighed as equally wrong.
I think there’s a simpler explanation that could fit here: there’s a different between having a soda bought for you and buying someone a soda. Internally, maybe Wal-Mart did not want its employees to make economically inefficient decisions based on who bestowed upon them the most favor, just like people in Mexico don’t want their government making decisions they wouldn’t otherwise make if an agent from a giant multinational didn’t transfer six figures to their offshore bank account. Their ethics policy may be designed to support what’s good for Wal-Mart, not necessarily to follow any sort of legal or moral code. We shouldn’t expect anything else from a profit-seeking corporation in a competitive marketplace. Enforcing a legal or moral code is what government, using laws like the Foreign Corrupt Practices Act, is for.