On Saturday morning (i.e. after the markets closed), the New York Times published a story that said that Walmart had been paying bribes in Mexico. Apparently, they wanted to build stores and build them fast. Other large chains, notably France's Carrefour, left Mexico because they couldn't navigate Mexico's bureaucracy fast enough. Walmart, though, was willing to pay "gestores", essentially middlemen who would (for a 6% fee) take care of paying off the bureaucrats. As a result, they pretty much captured Mexico's retail market. A Wal-Mex employee, disgruntled at being passed over for a promotion, first complained to Walmart's management in Arkansas about the bribes. Walmart, though, buried the resulting investigation and the NY Times reporter sniffed this out after five years. This is big news because paying bribes in foreign countries is as illegal in the United States as it is in France.
What is it about this story that makes me less cynical? On Monday, after the markets opened, Walmart stock fell by $12 billion. Think about it. Hundreds of people knew about the NY Times investigation -- the NY times reporters, their editors, office staff, their sources including the disgruntled employee who sat on this for five years, the SEC, Walmart management. The list goes on. Yet, it was a surprise to the markets. The story did not leak for over 6 months.
The New York Times is based on the same island as the largest, richest hedge funds in the world -- people who would have paid a fortune to learn that this story was in the works. And yet, the newspaper story was a $12 billion surprise.
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