How Wal-Mart Got Its Way in Mexico

Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited, an examination by The New York Times found. Part 3 details how deviously Wal-Mart worked at various levels by giving bribes. 


how-walmart-got-its-way-in-Traffic Bribe: $25,900
Wal-Mart wanted to build by the main entrance into Teotihuacán, in a spot already choked with traffic. Wal-Mart de Mexico authorised a $25,900 bribe payment to gain the approval of local traffic authorities, records and interviews show.
There were obvious reasons for traffic regulators to balk at Wal-Mart’s permit request. Traffic, of course, was one of Teotihuacán’s biggest headaches, and a supermarket at the main entrance would only make matters worse. But there was a far bigger complication. The town had recently approved a long-term plan to ease congestion. The plan called for building a bypass road through Mrs. Pineda’s alfalfa field. According to internal Wal-Mart records, Mr. Cicero authorised a $25,900 bribe for the permit, which was issued in less than two weeks. The paperwork approving it did not even mention the bypass road.
A Helpful Mayor
Teotihuacán’s municipal council had just finished its regular meeting on June 11, 2004, when the mayor, Guillermo Rodríguez, made an unusual request. He asked the council members to stick around and meet privately with some people from Wal-Mart. Instructions were given to turn off the video camera used to record public meetings. But the video operator disregarded the instructions, and the camera continued to roll.“They are going to explain what they want to do here,” the mayor told his colleagues.
To build in Mrs. Pineda’s field, Wal-Mart now needed a construction license from Teotihuacán. Construction licenses were issued by Hugo Hernández, the town’s director of urban development. Yet Mr. Hernández had thus far declined to give Wal-Mart a license because it still lacked several approvals  an environmental permit, for example. But Wal-Mart de Mexico had found a friend in Mayor Rodríguez, who now, in private, explained to the council why it was essential to act with speed and flexibility to help Wal-Mart build, regardless of the inevitable opposition. “They say that if we don’t solve this quickly, they will leave,” he told the council members. Wal-Mart, he revealed, had raised the possibility of a donation. “They asked me, ‘What are you going to ask from us?’ I said, ‘Pay your taxes, reach an agreement, help the community.’ ”
Then he summoned Wal-Mart’s team, led by Jorge Resendiz, one of Mr. Cicero’s deputies. Mr. Resendiz got to the point. In exchange for bringing jobs and low prices to Teotihuacán, Wal-Mart wanted something extraordinary. It wanted the council members to let Wal-Mart start construction even though it did not have all the required permits. And it wanted them to do it then and there, in private, without public hearings. Wal-Mart was in a rush to open for Christmas shopping. “Time is precious for us,” he said. “If we don’t start this unit in the coming days, we will have a delay.” Mr. Rodríguez assured Mr. Resendiz that the council would give its approval the next week.
The mayor’s aggressive activism was out of character. In interviews, former aides and colleagues described Mr. Rodríguez as “insecure,” “easily manipulated” and “passive.” He was frequently absent during working hours. “My persistent thought was that I was disappointed by him,” said Mr. Peña, the former mayor who had been Mr. Rodríguez’s political mentor. But according to Mr. Cicero, there was nothing accidental about Mr. Rodríguez’s enthusiasm. Wal-Mart de Mexico, he said, bribed Mr. Rodríguez to secure his support and that of his allies on the town council. The decision to bribe Mr. Rodríguez, he said, was blessed by Wal-Mart de Mexico’s leaders.
Political Bribe: $114,000
Facing certain opposition from local merchants and residents, Wal-Mart de Mexico executives agreed to pay $114,000 in bribes to guarantee the support of Teotihuacán’s mayor and his allies on the municipal council, records and interviews show.
“I didn’t receive any money from Wal-Mart  no money,” Mr. Rodríguez insisted during two lengthy interviews with The Times. But he struggled to explain why he began to spend tens of thousands of dollars in June 2004, the same month he emerged as Wal-Mart’s champion. The spending is described in financial disclosure reports Mr. Rodríguez prepared himself under oath. The reports, obtained by The Times, show that he spent $30,300 to begin building a ranch on a hill overlooking the pyramids. He spent $1,800 more on a used Dodge pickup. He paid cash in both transactions. As mayor, Mr. Rodríguez was paid $47,000 a year. His wife made $23,000 more working for the municipality. His spending spree in June nearly equaled their entire pay for the first half of 2004.
Even more remarkable was what happened six months later. Mr. Rodríguez swore in his disclosure reports that he had no savings as of Dec. 31, 2004. Yet on Jan. 1, 2005, he and his wife spent $47,700 in cash on improvements to their ranch, his reports show.
Before becoming mayor, Mr. Rodríguez had been the town comptroller, responsible for making sure municipal officials completed their financial disclosure reports correctly. Yet in the interviews, Mr. Rodríguez claimed over and over that the amounts he reported were “mistakes” or “approximate figures” or “generalized.” He tried to be precise, he explained. “I now see it wasn’t so.”
But he did not dispute the overall spending pattern. From June 2004 to June 2005, he acknowledged, he spent “approximately” $114,000 building and furnishing his ranch, all in cash.
Wal-Mart’s investigators would ask Mr. Cicero how much Wal-Mart de Mexico had paid to bribe the mayor. About $114,000, he said.
Teotihuacán’s council members met again on June 18, 2004, a week after Mr. Rodríguez first introduced them to Wal-Mart. It was just after 7 a.m. and Mr. Resendiz took a seat up front. Item 7 on the agenda was Wal-Mart.
It was the first and only public airing of Wal-Mart’s plans. The council members spent 15 minutes discussing one of the largest construction projects in the town’s modern history. Mr. Rodríguez announced they were there to give a “favorable or unfavorable opinion” of Wal-Mart’s supermarket. When a council member pointed out that Wal-Mart had not even submitted a formal written request, the mayor waved away the problem. “That’s a detail we omitted,” he said.

Facing certain opposition from local merchants and residents, Wal-Mart de Mexico executives agreed to pay $114,000 in bribes to guarantee the support of Teotihuacán’s mayor and his allies on the municipal council, records and interviews show.

Mr. Hernández, the town’s urban development director, noted that Wal-Mart still did not have several permits it needed before the town could issue a construction license. He urged the council to stick to the rules. Mr. Resendiz objected, saying Wal-Mart did not have time to spare. The mayor pushed for a vote, suggesting that all they were doing was indicating general support while Wal-Mart rounded up its missing permits. He gave no indication that the vote constituted a final approval.
In interviews, council members said they viewed Wal-Mart’s proposal through the prism of lingering resentments toward their public markets. Residents had long complained about vendors inflating prices and rigging scales. They liked the way Wal-Mart challenged the old irritants of the Mexican shopping experience  stores that do not list prices; stores with no parking; stores with musty display cases. The vote was unanimous for Wal-Mart. Days later, construction began.
Getting By the Guardians
In 2004, Wal-Mart de Mexico built a supermarket by the pyramids of Teotihuacán, a cultural landmark in Mexico. The project was controversial from the start, provoking months of protests. In 2005, a former Wal-Mart de Mexico attorney told Wal-Mart executives in the United States about a series of bribes that he said had secured crucial permits and approvals necessary to build the store. Wal-Mart’s leaders did not report this information to authorities, even though the company’s internal investigation corroborated many of his allegations.
The appearance of heavy excavation equipment in Mrs. Pineda’s field quickly aroused suspicion around town. The suspicions stemmed from Teotihuacán’s fraught relationship with the National Institute of Anthropology and History, or INAH, the official guardian of Mexico’s cultural treasures. Because of the pyramids, INAH (pronounced EE-nah) is a major presence in Teotihuacán. Its approval is required to build anything inside the protected archaeological zone. Its officials patrol town looking for signs of illegal construction, and it is not hard to find
stories about zealous inspectors stopping a homeowner from extending a kitchen a few feet.
It was also well known that INAH required excavations to be done with picks and shovels to minimise damage if digging uncovered ancient ruins. So the sight of bulldozers and backhoes stood out, especially when a sign went up announcing that a Bodega Aurrera was coming. Why, residents asked, should Wal-Mart get special treatment? Among those who noticed was Sergio Gómez, an archaeologist and researcher for INAH. Mr. Gómez knew that before the agency issued a permit, it first had to officially “liberate” the plot by verifying that construction would not destroy valuable archaeological remains. That meant conducting a formal archaeological survey, with grid lines and exploration holes.
For any developer, a survey was risky. If significant remains were discovered, it could kill the project, or at least force lengthy delays. Yet Mr. Gómez had not seen any sign of a survey, an odd thing since a survey like this should have occupied a team of INAH researchers and labourers for a good six months. This, too, was a red flag.
Mr. Gómez was concerned enough to follow trucks from the site one day. When they dumped their loads, he could see fragments of pottery and other evidence of ancient remains. “I didn’t need to scratch the ground to see it,” he said in an interview. Iván Hernández noticed, too. He was one of five INAH archaeologists who did surveys to liberate land for construction in the protected zone. He knew every major project in town, but nothing of this one.
Residents were also calling INAH to complain. The calls went to Juan Carlos Sabais, the agency’s top lawyer in Teotihuacán. He would have been the one to review the permit paperwork and prepare the official liberation letter for this plot. “We didn’t have a clue,” he recalled. “People were saying this was Wal-Mart, and we didn’t know a thing.”
Mr. Sabais led a party of INAH officials to the site to find out what was going on. They passed through a small crowd of angry residents. It was July 16, and construction was already well under way. There were several large excavations, one as deep as 16 feet, records show. Workers claimed they had an INAH permit, just not on site as the law required. Mr. Sabais ordered them to stop construction.“The crowd started clapping,” he said.
By the time Mr. Sabais returned to his office, senior INAH officials were calling from Mexico City demanding to know why he had halted construction. Only then, he said, did he discover that Wal-Mart had somehow managed to get a permit without a survey, or a liberation letter.
This bureaucratic miracle, Mr. Cicero would explain to Wal-Mart investigators and The Times, was made possible by another payoff. As Mr. Cicero described it, senior INAH officials had asked for an “official donation” of up to $45,000 and a “personal gift” of up to $36,000 in exchange for a permit. Wal-Mart’s permit was signed by Mirabel Miró, then the agency’s top official in the State of Mexico. According to Ms. Miró, it was Wal-Mart de Mexico that made an improper offer of money. Her chief architect, she said, told her that Wal-Mart had approached him with an offer of a sizable “donation.” He wanted to accept, she said.

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