05/30/2012 11:31 am ET Updated Jul 30, 2012

Walmart Bribery Probe Prompts Executives To Emphasize 'Integrity' At Employee Rally

* Wal-Mart international executives cheer on employees

* Talk of Mexico bribery scandal largely avoided

* Wal-Mart shares end day 0.4 pct lower at $65.44

By Jessica Wohl

FAYETTEVILLE, Ark., May 30 (Reuters) - Top executives of Wal-Mart Stores Inc did not directly mention a Mexican bribery scandal at an employee pep rally on Wednesday, but asked their international workers to focus on "integrity" as a core value.

The world's largest retailer has been under fire from shareholders and activists after the New York Times reported in April that management at Wal-Mart de Mexico, or Walmex, allegedly orchestrated bribes of $24 million to help it grow quickly last decade and that Wal-Mart's top brass tried to cover it up.

Chief Executive Mike Duke was among the senior Wal-Mart executives allegedly aware of the situation, according to the Times. He is now a main target of disgruntled shareholders, who would like to see him and others removed from the board.

Wal-Mart has repeatedly said that it would not comment on the specific allegations until investigations are completed.

Executives on Wednesday sidestepped specific mention of the allegations in Mexico, the company's first and largest international market. They referenced integrity as one of the core values at a company where employees cannot even accept a free cup of coffee from a vendor. They also underscored the importance of complying with local laws and told employees to report any possible wrongdoing.

"It's doing the right thing, every single day," Duke told international workers gathered at the University of Arkansas' Barnhill Arena.

His comments on Wednesday echoed remarks he made on Wal-Mart's recorded earnings call on May 17, when he said that "acting with integrity is the essence of our corporate culture."

Doug McMillon, president and CEO of Walmart International, said it was up to every employee - from new associates to top executives - to guard the company's principles.

"If you see something in your business that you don't think is right, you need to say something," McMillon said.

Scot Rank, president and CEO, Walmart Mexico and Central America, may have come the closest to directly commenting on the allegations, without specifically mentioning bribery.

"Over the years we have faced difficult and challenging times in Mexico and Central America. These events have united us even more, they have motivated us to continue, to continue pursuing excellence, and work with respect and integrity," Rank said at the end of the Mexico and Central America unit's presentation.

Wal-Mart shares, which have more than rebounded from the 8.2 percent drop in the days following the New York Times Mexico story, are trading near all-time highs. The stock ended 0.4 percent lower at $65.44 on Wednesday.


Wal-Mart's focus in China, the world's fastest-growing major economy, will be on expanding the right way, said Scott Price, president and CEO of Walmart Asia.

"We have to be compliant, we have to follow every rule, every regulation in the country," Price said.

Shareholders, including some of the largest U.S. public pension funds, have called for Duke, former Wal-Mart Stores CEO Lee Scott, Chairman Robson "Rob" Walton and others to be ousted from the company's board in the wake of the Mexico scandal. But such efforts have little chance of succeeding because the family of founder Sam Walton controls roughly half of Wal-Mart's shares and votes.

"They need to step down so we can restore the trust in Wal-Mart," said Angela Williamson, who said she was fired by Walmart U.S. three weeks ago after missing work at a Florida store due to her own illness and needing time to take care of a sick family member.

Williamson, who is not a shareholder, is in Arkansas trying to convince employees with company stock to vote their shares against directors believed to be involved in the Mexico scandal.

The bribery issue is being investigated by a number of government agencies in Mexico and the U.S. Department of Justice and the U.S. Securities and Exchange Commission. Wal-Mart is also conducting an internal probe.

More than 1,300 international employees traveled to northwest Arkansas for this week's events, which culminate in Friday's annual shareholders meeting. The largest international group came from Massmart, the South Africa-based retailer Wal-Mart acquired last year.

During Wednesday's meeting, as in previous years, a selection of top international employees were given "Integrity in Action" awards.

Integrity has been proclaimed as part of the Wal-Mart way of doing business for some time. In a memo entitled "Integrity" sent to employees on April 23, two days after the Times report first ran, Duke said: "We will do what's right - not just what is legal - and our actions will show the utmost integrity at all times."

Despite the bribery allegations, this year's celebration is still expected to be an upbeat affair. Wal-Mart is marking 50 years since Walton opened the first Walmart store on July 2, 1962, and at Wednesday's meeting representatives from Chile played a video of employees in that country singing "Happy Birthday."