Walmart, the “Creative Corrupter” in Mexico

New Orleans     Let’s not mince words here.  The detailed review of Walmart’s activity in Mexico in the New York Times is a picture of a criminal conspiracy of a rare order and a culture in total control recognizing no laws or morality in its quest for commercial dominance.

The Times’s examination reveals that Wal-Mart de Mexico was not the reluctant victim of a corrupt culture that insisted on bribes as the cost of doing business. Nor did it pay bribes merely to speed up routine approvals. Rather, Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals.

During out campaign in Florida several years ago, to force their expansion to be accountable to the community, we were able to stop the construction of 33 consecutive proposals by the company to build superstores.   In a number of cases they wanted to site in Florida’s fragile wetlands areas and our protest and attention to the bureaucratic norms of land use regulation saved the day.  In Mexico, Walmart simply spent $765,000 USD in bribes to get around environmental issues for one store location.  We would raise the issues of congestion, including winning support in Orlando from the police chief about crime concentration and traffic problems, but in Mexico another example offered by the Times found that payments of $341,000 USD allowed them to build without “a construction license, or an environmental permit, or an urban impact assessment, or even a traffic permit.”  Stunning!

The well-known fight by the community to prevent the building of a Walmart in the shadow of the renowned pyramids of Teotichuacan now turns out to have been lost because Walmart paid sufficient bribes to literally change the zoning map between the time the city planning commission developed the plan and when it was published as required in the papers.

The Times obtained four different copies of the new zoning map as it existed on the eve of the vote. All four, including two found in the town’s urban development office, confirm that housing was the only kind of development allowed on Mrs. Pineda’s field. There is no record of Wal-Mart seeking a last-minute change, and nine officials closely involved in drafting the plan all said in separate interviews that they were certain Wal-Mart made no such request.

“I would remember,” said Humberto Peña, then the mayor of Teotihuacán. “And if they would have asked that, my answer would have been no.”   After two years of painstaking work, Mr. Peña and the municipal council unanimously approved Teotihuacán’s new zoning plan on Aug. 6

The next day Mr. Peña sent the new map to the state’s Office of Urban and Regional Planning, a bureaucratic outpost of roughly a dozen employees in Toluca, the State of Mexico’s capital. The office’s main job was to verify that local zoning plans fit the state’s development goals. It also handled the critical final step — arranging publication of completed plans in the state’s official newspaper, the Government’s Gazette.

If the council’s vote seemingly dashed Wal-Mart’s hopes for Teotihuacán, Wal-Mart de Mexico’s executives certainly acted as if they knew something the rest of the world did not.  On Aug. 12, records show, they asked Wal-Mart’s leadership in the United States to approve their plan to spend about $8 million on a Bodega Aurrera in Mrs. Pineda’s field. The request was approved by Wal-Mart’s international real estate committee, made up of 20 or so top executives, including S. Robson Walton, the company’s chairman.  The committee’s approval, records show, was contingent on obtaining “zoning for commercial use.”

By law, the state Office of Urban and Regional Planning could not make zoning changes on maps it reviewed. If there were problems, it was supposed to send the map back to the town for revisions. Teotihuacán’s plan, however, was quickly approved and then sent to the Government’s Gazette on Aug. 20.   It typically took the Gazette a few weeks to publish a new zoning plan. Only then did it become law.

The Times found evidence of that change on a computer disc stored in a shoe box inside the Office of Urban and Regional Planning. The disc, created by a senior official in the office, held a copy of Teotihuacán’s zoning map as it existed on Aug. 20, the day it was sent to the Government’s Gazette.  The biggest hurdle was Teotihuacán’s zoning map. It clearly prohibited commercial development where Wal-Mart wanted to build. Wal-Mart de Mexico authorized a $52,000 bribe payment to have the map altered, records and interviews show.

original map

In the original map, the plot’s zoning designation, H500A, allowed only houses to be built there.  On the map, the zoning on Mrs. Pineda’s field had been changed to allow a commercial center.

altered map shows zoning change to E-T-M

“One thing I am sure of — this was altered,” Alejandro Heredia, a partner in the consulting firm that created Teotihuacán’s zoning map, said when he was shown that Aug. 20 map. “It was surgical work,” he said, adding, “It would be quite a gift to someone who wanted to do something here.”

It was a safe bet that a single small change would not be noticed by Teotihuacán’s municipal council. Because of term limits, the entire council left office after the Aug. 6 vote. A new mayor, Guillermo Rodríguez, was sworn in with a new council on Aug. 17. In interviews, Mr. Rodríguez and members of the new council said they had no idea Wal-Mart had its eye on Mrs. Pineda’s field when they took office.

“They must have had to bribe somebody in order to make the illegal legal,” Mr. Rodríguez said when he was shown both the Aug. 20 map and the map approved on Aug. 6.  The formal order to publish Teotihuacán’s new zoning plan was received by the Government’s Gazette on Sept. 11, 2003. The next day, internal Wal-Mart de Mexico records show, Mr. Cicero authorized five bribe payments totaling $221,000. According to the internal records, the bribes were for obtaining zoning changes to build five supermarkets. One of the payments, for $52,000, was for the Bodega Aurrera in Teotihuacán, Mr. Cicero said in an interview.

There can only be one conclusion:  Walmart has to be stopped!

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