Big trouble ahead for retailer Wal-Mart. The firm is reeling from Sunday’s NYTimes which claimed that as far back as 2005, Wal-Mart’s big wigs learned of allegations of widespread bribery of government officials in Mexico by its own peeps but did nothing about it.
At heart is an allegation that the internal review conducted by Wal-Mart at the time was a whitewash. Allegedly conducted by some of the very same people who stood accused of paying up to $25 million in bribes, the NYTimes suggests the firm not only failed to investigate the matter properly but also failed to notify the relevant authorities. In so doing the firm and its management are now potentially exposed to seriously punitive penalties.
What to say to the NYTimes? Priority one in a case like this is to buy time and establish distance between what is alleged and where the company is now. Wal-Mart’s besieged PR commented, “If these allegations are true, it is not a reflection of who we are or what we stand for. We are deeply concerned by the allegations and are working aggressively to determine what happened.”
The PR Verdict: “A” for Wal-Mart’s response, an elegant way to decline comment. As an immediate PR response it established the allegations are unclear, circumstances vague and not what the firm is about.
PR Takeaway: When in doubt buy time and create distance from the allegation. While a legal investigation and fallout could take years, the damage to the stock price, relations with regulators and overall reputation will start hurting immediately. There is very little time. Suspend or remove the implicated management from the day-to-day workings of the firm. The faster Wal-Mart can say that was then, this is now, the better for its stockholders. This is going to be a crisis communications strategy that will have to run and run.
What’s your verdict on Wal-Marts’s response?