Wal-Mart shares plunge losing nearly 5% of their value to close at $59.54, the worst day in more than three years, proof that the bribery allegations could take a toll on the company.
This all comes after The New York Times broke the news that Wal-Mart, the nation's largest retailer, is amidst bribery allegations and a very messy attempted cover-up. These allegations could potentially lead to hefty fines and a tarnished reputation. Wal-Mart spokesman David Tovar disagrees.
"If these allegations are true, it is not a reflection of who we are or what we stand for," says Wal-Mart spokesman David Tovar.
Reuters is reporting two democratic lawmakers are launching an investigation into the bribery allegations.
According to The New York Times, executives from Wal-Mart’s Mexican subsidiary reportedly used monetary bribes, of more than twenty four million dollars, to receive building permits to speed up the construction process of new stores. One Wal-Mart learned about the bribes, it stalled an internal investigation into the situation and did not report the problems to the U.S. government. Eduardo Castro-Wright, a Wal-Mart vice president in Mexico, is the man in charge of the illegal operations, is expected to retire in July.
According to the New York Times, top management including former CEO Lee Scott and Current CEO Mike Duke, knew about the accusations and did not handle it properly.
According to Reuters, representative Elijah Cummings and representative Henry Waxman, sent a letter to Wal-Mart CEO Mike Duke, requesting an in-person meeting with company officials.
With the Wal-Mart Home Office in Bentonville, many are concerned about the local impact and what the future holds for the leadership of the world's largest retailer.
Even though this is a black eye on the company, experts say Wal-Mart should bounce back, long term.
"Walmart, I'm sure, will work very hard to maintain its reputation that has been so hard fought over time," says Kathy Deck Bad things happen all over the place, it's how you deal with them that really matters."
At this time, Wal-Mart is not commenting on the allegations.
"The investigation is ongoing and we do not have a full explination of what happened," says Tovar. "It would be innappropriate for us to comment further on the specific allegations until we have finished the investigation."
As for job security, Deck does not expect the situation to impact the local economy.
If the allegations prove to be true, Wal-Mart could face several fines for breaking U.S. laws including the Foreign Corrupt Practices Act.