A grand jury is now investigating allegations that Wal-Mart Stores’ former vice chairman Thomas Coughlin misused between $100,000 and $500,000 in corporate funds.
Coughlin allegedly misappropriated Wal-Mart gift cards for his own use, and allegedly filed fraudulent invoices for personal services from third-party vendors.
Coughlin resigned from Wal-Mart’s board of directors on March 25 as Wal-Mart turned over its internal investigation to the U.S. attorney general’s office for the Western District of Arkansas (March 29 Xtra).
Wal-Mart asked Coughlin to resign from the board following its investigation into “the alleged unauthorized use of corporate-owned gift cards and personal reimbursements that appear to have been obtained from the company through the reporting of false information on third-party invoices and company expense reports,” per a document Wal-Mart filed with the SEC in March. Coughlin retired Jan. 24 as vice chairman of Wal-Mart Stores, but planned to stay on the board until Wal-Mart’s June 3 annual meeting.
Three other unnamed staffers, including one company officer, were fired as a result of Wal-Mart’s investigation. Wal-Mart won’t comment on the details of its own probe, but has said it is cooperating with the grand jury investigation.
It’s unlikely the grand jury investigation will find fraudulent use of third-party invoices between Wal-Mart buyers and suppliers. Supermarket buyers have been known to take kickbacks for doctoring manufacturer invoices. A 1994 FBI investigation of Stop & Shop brought the once-common practice to light; trade promotion accounting has cleaned up considerably since then.
But Wal-Mart’s reputation is “the exact opposite” of retailers making shady deals for personal gain, said one trade-marketing expert. “Wal-Mart is considered a very straight-up, tough but fair organization to do business with,” the expert said.
“Wal-Mart has been so ferociously against [personal perks] that they’ll make an example of someone to show that no one is immune. No old boys’ network is allowed,” added a retail consultant.
A former Wal-Mart VP, Jared Bowen, told the Arkansas Democrat-Gazette last week that Coughlin ordered him to issue $5,100 in gift cards (in $100 denominations) for Coughlin to give to managers as bonuses. Bowen, who was fired March 30 after the scandal came to light, is trying to get his job back, saying he blew the whistle on Coughlin.
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