Posted Apr 23, 2012 10:33 pm CDT
It’s easy to see why the feds have been reluctant to enforce the controversial gatekeeper provisions of the Sarbanes-Oxley Act, which require individuals such as corporate attorneys to report company wrongdoing up the chain of command to the audit committee.
Attorney-client privilege issues, for one thing, could create evidentiary problems, plus it’s necessary to prove state of mind, Reuters reports in a news analysis piece.
However, a blockbuster New York Times article over the weekend handed a potential Foreign Corrupt Practices Act case against the world’s biggest retailer to the Department of Justice on a silver platter, and the public nature of the allegations against Wal-Mart Stores Inc. could put the DOJ under pressure to make an example, the news agency notes.
Reportedly, Wal-Mart Stores Inc. did everything right, as in-house lawyers relayed allegations of bribery involving construction of stores for a Mexican subsidiary up the chain of command and an outside law firm was brought in to recommend a more extensive investigation, the Reuters article recounts. But then, instead of having Willkie Farr & Gallagher proceed, the company sent the investigation back down the line, and, the Times says, sought to cover up the issue rather than address it and disclose to shareholders.
Although it’s never happened before, “this could well be the first certification case” concerning FCPA exposure that wasn’t disclosed, Thomas Gorman of Dorsey & Whitney told Reuters. “Sarbanes-Oxley puts a lot of pressure on companies to do the right thing . It’s somewhat surprising to see these allegations about a major company.”