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Walmart Bribery Report Provokes Little Outrage In Mexico

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MEXICO CITY — Allegations that U.S. retail giant Wal-Mart used bribes to speed its break-neck Mexican expansion are sparking some soul-searching in Mexico, but not the outrage that the scandal has provoked in the United States.

While Wal-Mart says it is probing the allegations and U.S. Congress members are demanding answers, Mexican authorities say they have nothing to investigate.

The charges have, however, focused fresh attention on Mexico's long-entrenched culture of bribery, a place where crowded government offices remain the working grounds of shadowy facilitators known as "gestores." Although Mexicans are aware such payoffs occur, most would prefer to pretend it doesn't exist.

Wal-Mart's bribes in Mexico "are a scandal in the United States," Luis Miguel Gonzalez, editorial director of El Economista newspaper noted in a Monday column. "Here we live in a different way. Over there, there are expressions of indignation ... In Mexico authorities take more than 50 hours to react" to the first news reports that made the charges.

Eduardo Bohorquez, the director of the watchdog group Transparency Mexico, agreed there was a striking difference between the United States, where investigations have been launched by congressmen and, reportedly, the Justice Department, and Mexico, where authorities seemed eager to find reasons not to investigate.

"The enormous difference is the reaction," Bohorquez said. "State and local officials (in Mexico) are clear that there will be unequal enforcement" in the two countries.

Whether at least $8.5 million that was apparently paid to gestores actually wound up as bribes for corrupt local officials remains unknown. The Times also said an additional $16 million were paid directly to local governments.

Wal-Mart Stores Inc. says it is conducting its own investigation, and two U.S. congressmen announced they are opening a probe.

The Mexican federal government, however, announced Monday evening that it had no jurisdiction in the case because the report referred only to the involvement of state and city officials with authority over permits and zoning decisions.

State-level governments in the state of Mexico and Mexico City also appeared to duck the issue, saying they had not opened any investigation because none of their officials were specifically mentioned in the allegations.

But the corruption scandal does sting. "This is an endemic vice, a vice that leads us nowhere," front-running presidential candidate Enrique Pena Nieto told The Associated Press in an interview Monday. "There is a truly critical situation in the country."

The candidate of the Institutional Revolutionary Party said an independent governmental anti-corruption commission is needed to root out the bribes and payoffs that many Mexicans say are as common as paying a light bill, and sometimes easier.

In the case of Wal-Mart, The New York Times said executives turned to middlemen in the early 2000s to grease the way for building up the company's Mexican subsidiary, which has become its biggest foreign operation.

Wal-Mart said it had put in place new protocols to ensure that allegations of corrupt practices outside the U.S. were investigated thoroughly, and had hired two compliance officers with responsibilities for Mexican and worldwide operations to ensure that anti-corruption laws were being followed.

Many Mexicans wouldn't be surprised if the claims are true. According to a survey of Mexican households by Transparency Mexico, bribes paid by individuals, not including corporations, amounted to something like $2.4 billion in 2010. Households reported average bribes were about $12 apiece; the poorest families reported paying the equivalent of about 28 percent of their income in bribes.

A visit to any government office is likely to bring the sight of a well-dressed man carrying reams of documents who glides past the long lines, shakes hands with the official behind the counter and gets ushered into a backroom, where his affairs presumably get a fast-track service. The suspicion is these go-betweens funnel a portion of the fees they charge clients to corrupt officials to smooth the issuance of permits, approvals and other government stamps.

In a country where laws on zoning rules, construction codes and building permits are vague or laxly enforced, the difference between opening a store quickly and having it held up for months may depend on using a gestor.

"Nobody is exempted" from the demands for bribes, said Mexico City security consultant Max Morales, who advises companies on everything from building projects to security against kidnappings. "Even the big American companies are subject to extortion."

There is none bigger than Wal-Mart de Mexico, which is the nation's largest retailer and private employer and opened a store a day last year. Corrupt officials "see money, and they exploit you and exploit you, and the first thing you know they try to close you ... as a way to exert pressure," Morales said.

Transparency International puts Mexico a low No. 100 on its 2011 list that ranks 183 countries by the perception of their level of corruption. On a scale with 10 as the least corrupt, Mexico rates only a 3 – the lowest for any OECD nation and a tie with countries like Suriname and Indonesia.

The pressure of corruption in Mexico is so great that some companies have reportedly opted to leave.

Morales said security and corruption concerns played a role in the 2005 decision by French retailer Carrefour to sell its operations in Mexico. Asked if that was true, Carrefour's press department responded in an email: "Carrefour Group doesn't comment on this information."

Wal-Mart's competitors in Mexico, the other large supermarket chains, all refused to talk about the scandal. "It is a very delicate issue," said Jesus Antonio Velazquez, spokesman for the Chedraui chain.

The only people willing to comment were operators of small markets and mom-and-pop grocery stores. They said Wal-Mart was able to put stores where they shouldn't have been allowed, and they saw something fishy in the company's rapid expansion that has given it 2,138 stores in Mexico.

"It was so evident," said Alfredo Neme Martinez, who leads a Latin American association of wholesale market vendors. "They would buy three lots on a corner, and open right away."

In a statement, Wal-Mart said the bribery accusations, "if they are true, do not reflect the culture of WalMart Mexico and Central America." It said it would not comment further because of the investigations.

Bohorquez said bribery is not necessarily part of Mexico's culture, noting laws against the practice exist on both sides of the border. The difference is real enforcement and the lack of a truly nationwide anticorruption policy in Mexico, he said.

"This is not in the genetic code of Mexicans, nor is it a cultural attribute," he said. "The explanation of culture and genetics doesn't apply in this case."