Did Wal-Mart make anti-union payments?
Report: Firm's former vice chairman may have used expense payments to fund anti-union activities.
April 8, 2005: 8:48 AM EDT
NEW YORK (Reuters) - Wal-Mart Stores Inc.'s former vice chairman may have used undocumented expense payments to pay for anti-union activities, The Wall Street Journal reported Friday.
Thomas Coughlin resigned from the world's largest retailer in March after Wal-Mart (Research) found what it said was a pattern of expense-account abuses and the use of false invoices to obtain reimbursements.
According to the report, Coughlin last year asked a Wal-Mart employee to approve about $2,000 in expense payments without receipts. The employee said Coughlin briefly mentioned the money had been used for an unspecified "union project."
Coughlin told several Wal-Mart employees that the money was actually being used for anti-union activities, including paying union staffers to tell him of pro-union workers in stores, the newspaper said, citing people familiar with the matter.
If Coughlin did pay union staffers for information, it would represent a criminal offense under U.S. federal law. Wal-Mart has strongly opposed unions since its foundation.
The U.S. attorney for the Western District of Arkansas is investigating the matter, the Journal reported.
A Wal-Mart representative could not immediately be reached for comment.
The Vice Chairman of Wal-Mart is willing to break the law to prevent people from organizing to demand higher wages and better benefits.
Why would he do such a thing?
A March 6 story in the New York Times may shed some light on the issue:
The conventional criticism of Wal-Mart is that it's an insatiable capitalist juggernaut, reaping private benefit at the expense of the public good. The view retains some currency, I suspect, because many of Wal-Mart's critics haven't really shopped there.
The funny thing is that, for quite a while, this view has had the situation almost exactly backward. Instead of producing private benefit at public expense, Wal-Mart has been producing public benefit at private expense. And the equation is likely to become ever more lopsided.
Like the airlines, whose investors generously provide low fares and convenient service while forgoing gains for themselves, Wal-Mart has kindly mustered considerable capital from investors with the goal of providing all kinds of basic goods under one roof at convenient locations and amazingly low prices. These investors must be charitably minded because they aren't the main beneficiaries of Wal-Mart's business.
For several years now, the shareholders, who have more than $200 billion tied up in the company, have not done especially well. Since the end of 1999, Wal-Mart stock is off 23 percent, while Target is up 43 percent and Lowe's is up 95 percent.
The big winners during this period were the juggernaut's customers, who gained by having Wal-Mart drive down the price of consumer goods. Assuming that Wal-Mart investors are more affluent than its shoppers, the system offers a progressive transfer from rich to poor - from capital owners to less prosperous American consumers and hard-working Chinese factory hands. It's like Robin Hood, only with parking.
{SNIP}
WAL-MART'S low cost of labor, meanwhile, appears to be under pressure. Sooner or later, union organizers may succeed at some of its stores, and in any event, the company may have to spend more on wages, benefits and working conditions, if only to improve its public image and to keep the unions at bay. Then there is sheer arithmetic: Wal-Mart is already so big that it simply will not be able to match the hypergrowth of its own past unless it soon employs everyone in the world.
If you don't have much money, Wal-Mart is a godsend, and, in a way, that's the trouble. Wal-Mart's hold on its shoppers is largely mercenary, and therefore tenuous. To me, shopping at Wal-Mart feels like a chore, and Sam's Club is better only if there's no Costco nearby. In other words, I think the juggernaut is vulnerable. It may well be, for the foreseeable future, that it's smarter to buy stuff at Wal-Mart than to buy stock in Wal-Mart. The stock may or may not be a good deal. The stuff is a sure thing.
Here's the irony. Wal-Mart growth has caused the retail giant to paint itself into a financial corner. After having killed small businesses in communities through a slash and burn style of price undercutting, the sheer aggressiveness of Wal-Mart's pricing structure may prove to be unsustainable.
Where does this go from here? I have no idea... Let's hope that people smarter than me figure a way out of this situation.
People cannot afford to stop shopping at Wal-Mart. Wal-Mart cannot afford to drift into insolvency without posing a moderate threat to the world economy.
We should nationalize Wal-Mart.
-The Oklahoma Hippy
(Yes, I was kidding about nationalizing Wal-Mart.)
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