Wal-Mart bribery case ruins image-building effort

New York: In business, you're only as good as your last good deed.

Wal-Mart, the world's largest retailer, in recent years has tried to repair a reputation that's been damaged by decades of criticism and legal troubles. Community activists have blamed it for damaging the neighbourhoods where it builds its stores. Labour groups have lambasted it for not treating its workers well. And politicians have called it a poor steward of the environment.

Wal-Mart has been doing things like offering employees better health care coverage and working with its suppliers to reduce environmental waste. Now, allegations that Wal-Mart paid millions of dollars in bribes to officials in Mexico threaten to derail its efforts.

The accusations highlight how difficult it is for a company as big and powerful as Wal-Mart to dig itself out of a pile of bad publicity. As history shows, the discounter's low-income customers continue to shop at the retailer even when it's having image problems. But the fallout from the latest accusations could become a distraction for the company at a time when it's battling growing competition.

The US and Mexican governments reportedly are investigating the chain. Wal-Mart's stock is down almost five per cent since the allegations surfaced. The company and top executives are being sued by angry investors. And some shareholders are planning to vote against the re-election of several board members at Wal-Mart's annual meeting next month.

‘Devastating blow'

"This is a devastating blow to their reputation," says Jonathan Low, co-founder and partner of Predictiv, which advises corporations on their image although the firm declines to give examples because of confidentiality agreements. "This undercuts all the initiatives they made in many areas."

Wal-Mart says it has an ongoing investigation into the allegations, and it's cooperating with federal authorities. In the meantime, the retailer says it's conducting business as usual.

"We continue to focus on things customers care about like jobs, healthier foods, sustainability and workforce development," says Steven Restivo, a Wal-Mart spokesman. "Our commitment won't change."

Wal-Mart wasn't always the centre of controversy. After it was founded in 1962, the retailer expanded by keeping costs down and selling items for less than competitors. The company now has more than 10,000 stores worldwide — many of which are the size of two football fields. But as Wal-Mart grows, so does its troubles.