The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Monday, September 30, 2013

Strategic CSR - Bribery

The Wall Street Journal’s Risk & Compliance Journal ( is interesting and informative, and demonstrates the increasing importance of compliance-related issues today. The risks are multiplied for multi-national firms working across cultures. As the article in the url below indicates, Walmart’s exposure to bribery is increasingly apparent following its Mexico scandal, while the changes it is making in response are beginning to affect performance overseas:
“Three years ago Wal-Mart Stores Inc. set out to be India's top retailer by 2015. … Today, Wal-Mart's advance on India is barely moving. The company opened just five wholesale stores in the country last year – well below the 22 planned. This year, Wal-Mart plans to open eight locations, a person familiar with the company's plans said. Part of the reason lies in what people in the industry say is India's labyrinthine process for developing commercial real estate and operating stores. But one of the biggest reasons has been a compliance crackdown at Wal-Mart.”
As a result, the consequences for firms (especially for those that are trying to operate with integrity) are growing. A recent newsletter from the WSJ’s Risk & Compliance Journal (summarizing events at a Dow Jones Compliance Symposium) provides some compelling examples of how firms can become enmeshed in convoluted situations that break U.S. law. This has greater consequences for these firms today because this law is increasingly being enforced more stringently by federal agencies:
“Susan Angele, the former global deputy general counsel at the The Hershey Co., said that in Japan, it’s customary to give cash gifts at funerals to the bereaved family. Of course, if one of the family members is a government official, such payments could qualify as a bribe under the U.S. Foreign Corrupt Practices Act. Angele said that guidance on the FCPA, recently released by the DOJ and SEC, provided no clues on how to avoid insulting a grieving family. ‘You do the best you can’ in such situations, she said.”
“Jonathan Drimmer, assistant general counsel for Barrick Gold Corp. , said he ran into trouble with Saudi Arabia’s ‘value-based billing’ system. The company had inherited a $125,000 service contract in the country, he said, but was surprised when it received a $1 million tab from the contractor. Drimmer said outside lawyers told him that Saudis regularly throw out contracts and charge what they think is the actual value. ‘I said, ‘we’re a multinational, we can’t do that,’’ Drimmer said. ‘The lawyer said, ‘well they can take you to court for not paying, and they’ll probably win.’’”
Take care
David Chandler & Bill Werther
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Wal-Mart's Path to Power in India Hits Its Limits: The Lawyers
By Megha Bahree
April 2, 2013
The Wall Street Journal
Late Edition – Final