Wal-Mart’s Good-Citizen Efforts Face a Test
Besides its success in selling goods that range from groceries to televisions, Wal-Mart has also shown a highly developed ability to sell itself.
The country’s biggest retailer has adroitly used millions of dollars in campaign contributions, charity drives, lobbying campaigns, and its work for popular causes like childhood nutrition and carbon emissions to build support in Congress and the White House.
It also uses these methods to increase its “favorable” ratings, especially with liberals. And as Wal-Mart’s top lobbyist explained to investors in 2010, the company thinks the strategy has worked.
“Across the board, our reputation with elected officials is improved, not only here in the U.S. but around the world,” the lobbyist, Leslie Dach, boasted as he ticked off poll numbers that he said demonstrated the company’s improving public profile. That popularity, he said, “makes it easier for us to stay out of the public limelight when we don’t want to be there.”
With controversy building over its role in a Mexican bribery scandal, Wal-Mart’s desire to stay out of the limelight will now be put to a test. To help weather the fallout, Wal-Mart will rely on the relationships it has worked assiduously to develop in Washington during the last decade — relationships that its critics say have insulated it from political threats.
For years Wal-Mart had reliable allies in the Republican Party, while it struggled to develop support among Democrats. But in recent years it has joined with the Obama administration on a number of its initiatives, including President Obama’s health care plan, environmental safeguards and childhood obesity. At the same time, it has aggressively lobbied the administration and Congress on dozens of policies affecting its business operations, including global trade, taxes, immigration, business regulation and waste disposal standards.
Industry experts say its political priorities could now be jeopardized by accusations first disclosed in The New York Times that Wal-Mart had paid $24 million in bribes to Mexican officials and covered up the payments.
“Reputation is very important to Wal-Mart,” said Nelson Lichtenstein, a labor history professor at the University of California, Santa Barbara, who wrote a book on the retail giant. “They put a lot of money into building it. And to the extent that the Mexico situation reinforces a negative narrative out there — that Wal-Mart plays fast and loose with the law and is a big bully — this is a setback.”
The Justice Department is investigating the bribery accusations. Two leading House Democrats, Henry A. Waxman of California and Elijah E. Cummings of Maryland, sent letters last week seeking to determine what role Wal-Mart might have played in lobbying efforts by the Chamber of Commerce and the business community to scale back the Foreign Corrupt Practices Act. That federal law bans bribing foreign officials.
But a number of prominent political figures from both parties are standing by the company.
Representative Darrell Issa, the California Republican who leads the House oversight committee, indicated last week he had little interest in investigating the Wal-Mart affair.
Companies like Wal-Mart should not be called before Congress “just to get headlines,” he said in one interview.
Blanche Lincoln, the former Democratic senator from Arkansas and a longtime backer of her home state retailer, said in an interview that she thought that Wal-Mart could ride out the negative publicity over the Mexico controversy.
“Because they are big, when things happen it’s very visible, but when these things happen, they make a conscious decision to correct what needs to be corrected, and they do it in an amazing and positive way,” she said.
Representative Dan Boren, Democrat of Oklahoma, echoed that view in a phone call he made to a reporter at the request of Wal-Mart executives. “Wal-Mart has built up a lot of good will on the Hill,” Mr. Boren said. “They’ve been a great corporate citizen. I’m confident this will be just a blip on the radar.”
Mr. Issa, Ms. Lincoln, and Mr. Boren, like many lawmakers both Democratic and Republican who have backed the company, all received contributions over the years from Wal-Mart’s political action committee or employees.
In all, Wal-Mart’s PAC and employees donated nearly $1.7 million to federal candidates in the 2010 election cycle — more than double the amount a decade earlier, according to data from the Center for Responsive Politics, a nonprofit group in Washington that tracks campaign data.
Friends in high places
Just six years ago, Republicans dwarfed Democrats in contributions tied to Wal-Mart. Democrats were often seen as hostile to the company, as unions and liberal groups mounted a years-long campaign attacking the company’s labor practices, its treatment of female employees and other workplace issues. But today, the contributions are about evenly split between the two parties, as Wal-Mart has made an aggressive push to attract political support from Democrats and liberals even in the face of the prominent opposition.
Even the company’s critics acknowledge the political inroads it has made.
“Wal-Mart is a huge force in Washington,” said Dan Schlademan, director for the anti-Wal-Mart coalition known as Making Change at Walmart, financed largely by unions.
“They have a powerful voice, they have spent enormous amounts of money to rehabilitate their image, and they’re quite good at overstating the benefits of all the things they’re doing,” he said. “They’re brilliant at it.”
Last year, Wal-Mart spent more than $7.8 million in federal lobbying, using its own staff of in-house lobbyists, powerful Washington firms like Patton Boggs and the Podesta Group, and major trade associations like the Chamber of Commerce and retail groups. But the company’s critics say it has managed to obscure its particular lobbying accomplishments by working through larger trade groups with even broader agendas, making it difficult to determine exactly what role the company itself played.
For instance, Wal-Mart was involved at least indirectly in the formulation of a controversial gun policy that was pushed by the American Legislative Exchange Council, or Alec, a conservative business group to which Wal-Mart belongs.
A Wal-Mart executive, Janet Scott, was the co-leader of a criminal justice committee at Alec that in 2005 unanimously supported strengthening self-defense laws in shooting incidents. Since then, the business association has successfully pushed for passage of so-called Stand Your Ground laws, which have become controversial in recent weeks after the Trayvon Martin shooting in Florida.
Wal-Mart is the country’s biggest seller of shotguns and ammunition.
A spokeswoman for Wal-Mart, Brooke Buchanan, said the Stand Your Ground legislation “may have come up in discussions where some of our members were present” at Alec meetings, “but that was never our main purpose in working with Alec.” Nor has the company ever advocated for the law or taken a formal position on it, she said.
But Lisa Graves, director of the Center for Media and Democracy, a liberal nonprofit group that has researched Alec’s policies, said documents obtained by her group show that Wal-Mart at the very least participated in the passage of the Stand Your Ground policy at the business association through Ms. Scott’s leadership of the criminal justice committee. Moreover, she said Wal-Mart stood to benefit from the laws, because “a policy climate in which people are given expanded rights to shoot” in self-defense could encourage people to buy guns.
The gun issue notwithstanding, the company has made significant inroads with liberals in part because of Mr. Dach, a longtime Democratic operative who was personally hired by H. Lee Scott Jr., Wal-Mart’s former chief executive, to help the company address “global social issues” in 2006.
Since then, the company has taken public positions like supporting Mr. Obama’s individual mandate in health coverage and pledging to reduce the idle time of trucks to help cut down on pollutants. And when the company announced an initiative to stock more healthy foods and fresh produce in its groceries last year the first lady, Michelle Obama — who is leading a campaign against childhood obesity — was there at the side of Mr. Dach to promote the effort.
In his remarks at the 2010 investors’ conference, Mr. Dach highlighted Wal-Mart’s big gains among former antagonists, saying favorable ratings had shot up about 24 points. Over all, the data showed favorable opinions of Wal-Mart outweighing unfavorable ones by 55 points.
“It is my sense that we have kind of turned a corner,” he said.