Walmart 2016 Annual Report Download - page 57

55Only Walmart
At that time, the Company recorded expenses of $249 million for the
judgment amount and post-judgment interest incurred to date. The
Company will continue to accrue for the post-judgment interest until final
resolution. However, the Company continues to believe it has substantial
factual and legal defenses to the claims at issue, and, on March 13, 2015,
the Company filed a petition for writ of certiorari with the U.S. Supreme
Court. On April 20, 2015, the plaintiffs filed their response in opposition
and on May 4, 2015, the Company filed its reply brief.
ASDA Equal Value Claims: ASDA Stores, Ltd. (“ASDA”), a wholly-owned
subsidiary of the Company, is a defendant in over 7,000 “equal value”
claims that are proceeding before an Employment Tribunal in Manchester
(the “Employment Tribunal”) in the United Kingdom (“UK”) on behalf of
current and former ASDA store employees, who allege that the work
performed by female employees in ASDA’s retail stores is of equal value
in terms of, among other things, the demands of their jobs to that of
male employees working in ASDA’s warehouse and distribution facilities,
and that the disparity in pay between these different job positions is not
objectively justified. Claimants are requesting differential back pay based
on higher wage rates in the warehouse and distribution facilities and
those higher wage rates on a prospective basis as part of these equal
value proceedings. ASDA believes that further claims may be asserted in
the near future. On March 23, 2015, ASDA asked the Employment Tribunal
to stay all proceedings, contending that the High Court, which is the
superior first instance civil court in the UK that is headquartered in the
Royal Courts of Justice in the City of London, is the more convenient and
appropriate forum to hear these claims. On March 23, 2015, ASDA also
asked the Employment Tribunal to “strike out” substantially all of the claims
for failing to comply with Employment Tribunal rules. On July 23, 2015,
the Employment Tribunal denied ASDA’s requests to stay all proceedings
and to “strike out” substantially all of the claims. On September 2, 2015,
ASDA filed a Notice of Appeal with the Employment Appeal Tribunal
seeking to appeal both rulings. On October 14, 2015, the Employment
Appeal Tribunal denied ASDA’s requests for an appeal. Following additional
argument and proceedings, the issue of “strike out” and the scope of
Employment Tribunal Rules are subject of further appellate review by
the Employment Appeal Tribunal but the request to appeal the stay
issue was denied by the Employment Appeal Tribunal. On March 8, 2016,
ASDA filed a notice of appeal with the Court of Appeals seeking to appeal
the Employment Appeal Tribunal’s decision to disallow an appeal of the
stay issue. At present, the Company cannot predict the number of such
claims that may be filed, and cannot reasonably estimate any loss or range
of loss that may arise from these proceedings. The Company believes it
has substantial factual and legal defenses to these claims, and intends to
defend the claims vigorously.
FCPA Investigation and Related Matters
The Audit Committee (the “Audit Committee”) of the Board of Directors
of the Company, which is composed solely of independent directors, is
conducting an internal investigation into, among other things, alleged
violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) and other
alleged crimes or misconduct in connection with foreign subsidiaries,
including Wal-Mart de México, S.A.B. de C.V. (“Walmex”), and whether prior
allegations of such violations and/or misconduct were appropriately
handled by the Company. The Audit Committee and the Company have
engaged outside counsel from a number of law firms and other advisors
who are assisting in the on-going investigation of these matters.
The Company is also conducting a voluntary global review of its policies,
practices and internal controls for anti-corruption compliance. The Company
is engaged in strengthening its global anti-corruption compliance program
through appropriate remedial anti-corruption measures. In November
2011, the Company voluntarily disclosed that investigative activity to the
U.S. Department of Justice (the “DOJ”) and the Securities and Exchange
Commission (the “SEC”). Since the implementation of the global review
and the enhanced anti-corruption compliance program, the Audit
Committee and the Company have identified or been made aware of
additional allegations regarding potential violations of the FCPA. When
such allegations are reported or identified, the Audit Committee and the
Company, together with their third party advisors, conduct inquiries and
when warranted based on those inquiries, open investigations. Inquiries
or investigations regarding allegations of potential FCPA violations have
been commenced in a number of foreign markets where the Company
operates, including, but not limited to, Brazil, China and India.
The Company has been informed by the DOJ and the SEC that it is also
the subject of their respective investigations into possible violations of
the FCPA. The Company is cooperating with the investigations by the
DOJ and the SEC. A number of federal and local government agencies
in Mexico have also initiated investigations of these matters. Walmex is
cooperating with the Mexican governmental agencies conducting
these investigations. Furthermore, lawsuits relating to the matters under
investigation have been filed by several of the Company’s shareholders
against it, certain of its current directors, certain of its former directors,
certain of its current and former officers and certain of Walmex’s current
and former officers.
The Company could be exposed to a variety of negative consequences
as a result of the matters noted above. There could be one or more
enforcement actions in respect of the matters that are the subject of
some or all of the on-going government investigations, and such
actions, if brought, may result in judgments, settlements, fines, penalties,
injunctions, cease and desist orders, debarment or other relief, criminal
convictions and/or penalties. The shareholder lawsuits may result in
judgments against the Company and its current and former directors
and officers named in those proceedings. The Company cannot predict
at this time the outcome or impact of the government investigations,
the shareholder lawsuits, or its own internal investigations and review. In
addition, the Company has incurred and expects to continue to incur
costs in responding to requests for information or subpoenas seeking
documents, testimony and other information in connection with the
government investigations, in defending the shareholder lawsuits, and in
conducting the review and investigations. These costs will be expensed
as incurred. For the fiscal years ended January 31, 2016, 2015 and 2014,
the Company incurred the following third-party expenses in connection
with the FCPA investigation and related matters:
Fiscal Years Ended January 31,
(Amounts in millions) 2016 2015 2014
Ongoing inquiries and investigations $ 95 $121 $173
Global compliance program and
organizational enhancements 31 52 109
Total $126 $173 $282
Notes to Consolidated Financial Statements