LITTLE ROCK - Wal-Mart Stores Inc. escaped criminal charges but agreed Friday
to pay $11 million, a record fine in a civil immigration case, to end a federal
probe into its use of illegal immigrants to clean floors at stores in 21 states.
A dozen contractors who actually hired the laborers for work inside stores for
the world's largest retailer agreed to plead guilty to criminal immigration
charges and together pay an additional $4 million in fines.
"This case breaks new ground not only because this is a record dollar amount
for a civil immigration settlement, but because this settlement requires Wal-Mart
to create an internal program to ensure future compliance with immigration laws
by Wal-Mart contractors and by Wal-Mart itself," said Michael J. Garcia,
assistant secretary for U.S. Immigration and Customs Enforcement.
"We plan to use this settlement as a model for future cases and efforts
in worksite enforcement," he said.
Wal-Mart received a target letter from a grand jury in Pennsylvania and was
the subject of an October 2003 raid spanning 21 states and 60 stores. The raids
led to the arrest of 245 allegedly illegal immigrants.
Wal-Mart, which has 1.2 million domestic workers, had pledged its cooperation
in the investigation.
"We are satisfied that this is being settled as a civil matter," Wal-Mart
spokeswoman Mona Williams told The Associated Press from the company's Bentonville
headquarters. "Despite a long, thorough and high-profile investigation,
the government has not charged anyone at Wal-Mart with wrongdoing."
Federal officials said the fine money would go to the Treasury Forfeiture Fund
and will be spent on "promoting future law enforcement programs and activities
in this field by U.S. Immigration and Customs Enforcement."
Williams said the government can spend the money for training and initiatives
that "help make sure service companies or anyone else can't prey on undocumented
"We think the money will be well spent," Williams said.
Williams, in a conference call later, made reference to Wal-Mart's "ongoing
partnership with the government" and said the company is making a number
No longer does Wal-Mart employ outside contractors to clean its floors. Companies
that do contract work for other chores will have stricter rules to follow to
win those contracts, and upper management will have to approve contracts of
more than $10,000, Williams said.
"We've put stronger internal controls in place so hopefully nothing like
this would happen again," Williams said.
The probe began in 1998 and ended with the big raids on Oct. 23, 2003.
Among those arrested in the raids were eight people who worked for Wal-Mart
itself. Williams said the eight had been hired from floor cleaning companies
as Wal-Mart began to clean its floors with its own workers. Williams said those
workers had documents that appeared to be valid and said the law prevented the
company from challenging those documents.
"We were between a rock and a hard place," she said.
Williams said no executives or mid-level managers knew the contractors had hired
illegal immigrants, a statement reflected in the consent decree.
Workers picked up in the October raids came from 18 different nations, including
90 from Mexico, 35 from the Czech Republic, 22 from Mongolia and 20 from Brazil,
officials said. In all, two separate investigations resulted in arrests of 352
illegal immigrants contracted as janitors at Wal-Mart stores. Officials say
a third of the workers have been deported to their home countries. Lawyers for
some of the workers claim they worked as many as seven days a week, were not
paid overtime and did not receive injury compensation.
An employer can face civil and criminal penalties for knowingly hiring illegal
immigrants or failing to comply with certain employee record-keeping regulations.
Once investigators moved in, Wal-Mart told its executives to preserve documents.
Federal agents didn't wait and took boxes from the office of a mid-level executive
at the company's Bentonville headquarters. That executive still works for the
company, Williams said.
About a year before the raids, Wal-Mart had started to bring the work in-house.
The company said it had used more than 100 third-party contractors to clean
more than 700 stores nationwide. At present, the company has 3,703 stores in
the United States.
Wal-Mart Stores had sales last year of $288.19 billion.
States in which the raids occurred include: Alabama, Arizona, Arkansas, Connecticut,
Delaware, Kentucky, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey,
New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee,
Texas, Virginia, and West Virginia.
Wal-Mart shares fell 88 cents to close at $51.45 in Friday trading on the New
York Stock Exchange.