WalMart… always low prices?

With the WalMart scandal only surfaced last  Saturday (and in a foreign publication, the New York Times), so it’s still filtering through the Mexican media and the meaning (if any) it will be given is still a work in progress.

Artwork by Ramona Creel

In both the U.S. press, and in the Mexican based English-language web community, there are two quasi-defenses of WalMart, which attempt to relegate the scandal to a non-event in Mexico, or simply dismiss it as nostagia for a Mexico that no longer exists.

Leaving aside comments of the “WalMart sucks” variety, and the question of WalMart’s effects for good or ill on U.S. retailing and manufacturing, the U.S. (and English language) commenterati were heavy on claiming that a “culture of bribery” in Mexico means that nothing is going to be done about the actions of WalMart de México S.A.B. de C.V.   True enough, on Monday, the Federal Prosecutor’s office said they weren’t prosecuting or investigating WalMart… at this time.

That was taken by some to mean no prosecutions or investigations are likely, but with AMLO (who has made government honesty a campaign issue) and Peña Neito (who tries to present himself as an honest politician) both already demanding investigations, there is likely to be pressure to at least investigate.  After all, one is shocked, shocked to discovery bribery… when it reflects badly on one’s opponents.

Of course Josefina Vásquez Mota has avoided the issue… so far… given that it is her party (and that of the present administration, PAN) that controlled the federal government during the time frame of the bribery (2002-2005).   There is little likelihood that PAN will control the legislature after the elections, and every chance they not even be the main opposition party.

At the state level and municipal level (where one assumes most bribery took place), I expect new administrations will be looking for scapegoats, and will find them.

These investigations will happen, even if one accepts the idea that Mexico has a “culture of bribery“… the favored “meme” of the U.S. media in downplaying possible Mexican reaction.  Even if that were true — the U.S. media mistaking “gestoría” for some sort of … in the words of the usually wrong Mark Stevenson of the Associated Press… “shadowy facilitators”… instead of just the facilitators we are (although I’m certain some are “shadowy”) — it ignores two things.

First:  “shadowy facilitators” exist in the United States under all kinds of names… lobbyists, consultants, promoters, lawyers, agents… who push through projects, and skirt the law.  The point is that WalMart knew they were paying bribes, and laundered the payments through their facilitators (or gestors). The gestors were just the bag-men.  WalMart executives were the guys doing the bribery.

Second:  Bribery in the United States is often of the “legal” variety… political campaign contributions (and a candidate in any single large statewide election receives more in what would be considered bribes in Mexico than all Mexicans supposedly pay in illegal bribes in any given year), being the most obvious example.  We have no idea at this point who was bribed, although a good guess would be municipal planning officials.  Without comparison to the actions of WalMart compared to other companies — like Soriana or Chedrui or Ley or Comercial Mexicana (all Mexican owned “big box store” companies) there is no basis for saying this was a widespread, acceptable practice in that industry, or that it’s an accepted business practice in general.

The second “defense” — or excuse — we read, is that nostalgia for the old patterns of commerce is causing faux-outrage.

I admit I prefer the mom-n-pops — as much because they create middle-class values (although not always middle-class consumption levels) — and seed people who have a stake in the survival of their community into every neighborhood and ranchito in the country.  They have owners… where the big box stores have workers and consumers, and no real stake in the community beyond their own property line.  But even assuming turning a society of small-scale capitalists into proletariat (which is what consolidated shopping does, to put it in Commie terms),  it doesn’t let WalMart off the hook.

Soriana, Chedrai, Comercial Mexicana, Ley have yet to be heard from.  Were they locked out of markets because of WalMart bribery?  Comercial Mexicana went into bankruptcy trying to compete with WalMart and is in reorganization?  Was it driven into bankruptcy because of unfair competition?  Even corporate apologists have a hard time justifying things like that.

One thing not well explained in foreign coverage of the WalMart scandal is that Walmart de México S.A.B. de C.V. is not just WalMart stores and Sam’s Clubs … it is several smaller chains of supermarkets like Bodega Aurrerá and Superama, clothing shops like Suburbia, and VIPS restaurants (think Denny’s or Tim Horton’s for those of you north of the Rio Bravo).  Some of these existing chains were bought, and others acquired through hostile takeovers.

One of the few initiatives the  Calderón Administration pushed through without significant opposition from PRI or PRD or both was new anti-trust laws.  Of course, the administration has been going through contortions to avoid taking on the biggest monopoly of them all (Televisa), which openly backs Enrique Peña Neito, preferring to go after Carlos Slim who is quite capable of defending himself (and smart enough to diversify and could divest himself of more market percentages without any substantial losses… a few billion here isn’t going to hurt him one way or the other).  WalMart may be the largest single non-governmental employer in the country, but it doesn’t have the political clout of Televisa and the Azcárraga clan, nor of Slim.

With competitors, WalMart isn’t quite a monopoly, but it might fit the definition of a trust that needs busting.  And, let’s not forget Mexican nationalism.  There’s some pride in having the Latin America’s most powerful communications firms under Mexican ownership.  WalMart is considered a foreign company (never mind that Walmart de México is, at least on paper, Mexican)… in the public mind, it’s a gringo.

There may not be immediate effects from the WalMart scandal, something the foreign press and English-language commentators seem to presume should follow; there might be SOME effect on the national elections; but there will be repercussions.  Porfirio Diáz supposedly said, “In México, nothing ever happens… until it happens.”  Exposure of  the WalMart bribery scandal  happened, and now that it has happened, what happens next is still to happen.  But it will happen.