Friday, September 29, 2006

Wal-Mart Offers Up Classic Bait-and-Switch: $4 Generic Offer is Less Than Meets the Eye

Wal-Mart Offers Up Classic Bait-and-Switch: $4 Generic Offer is Less Than Meets the Eye, Says NPCA
9/28/2006 4:57:00 PM

To: National Desk, Health and Medical Reporters

Contact: Carol Cooke of National Community Parmacists Association 703-838-2686

ALEXANDRIA, Va., Sept. 28 /U.S. Newswire/ -- The National Community Pharmacists Association (NCPA) today warned patients, consumer advocates and health policy experts to look closely at the program recently announced by Wal-Mart to begin offering a limited number of generic prescription medications for $4 for a 30-day supply in the Tampa, Fla., area. The 291 drugs on the Wal- Mart list include many older medicines, multiple versions of the same medicines and no choices for a number of key health conditions.

"What happens to patients who walk into Wal-Mart thinking that they will be able to get their medications for $4, only to be told that the medicine they need is not on the list and will cost much more?" said NCPA Executive Vice President and CEO Bruce Roberts, RPh. "That is the classic bait-and-switch."

Of the nearly 9,000 generic drugs available in the U.S., the Wal-Mart pilot program will offer fewer than 300. Of that group:

-- Fewer than 150 separate medicines are included. For example, 12 different versions of the antibiotic amoxicillin are included on the list.

-- Only one of the top 20 most frequently prescribed medications, in its commonly used form, is on the list.

-- None of the generic statins, used to treat high cholesterol, are on the list.

-- Many older medications are on the list and newer, replacement medications that often work better or have fewer side effects are not included on the list.

"Community pharmacists strongly support providing access to safe, affordable prescription medicines to the people who need them," Roberts said. "That is one of the reasons why community pharmacists have worked so hard, under difficult circumstances, to make the Medicare Part D prescription drug plan work. But this move by Wal-Mart certainly cannot be viewed as the answer to most patients' needs. Patients' time and health are too valuable to send them on a wild-goose chase looking for their medications."

The impact of Wal-Mart's announcement also raises concerns about patient safety and the professional counseling role of pharmacists.

"We have tremendous respect for the power of prescription medications and the lifesaving -- or if used incorrectly, life -- threatening-power they possess," Roberts said. "NCPA hopes that Wal-Mart pharmacists will be given the time and incentive to adequately counsel all of their patients about their prescription medicines."

NCPA also is seeking a close examination of the anti- competitive nature of Wal-Mart's action. Wal-Mart is infamous for driving small-town businesses out of business through deceptive and predatory pricing practices.

"Prescription medicines are not a commodity like T-shirts and DVDs and should not be held out as a loss-leader lure to patients," Roberts said. "Community pharmacists are in the health care business and provide a value to patients no matter what medications they are taking. We are concerned that patients will be both misled and disappointed by the limited number of medicines in this new program."


The National Community Pharmacists Association, founded in 1898, represents the nation's community pharmacists, including the owners of more than 24,000 pharmacies. The nation's independent pharmacies, independent pharmacy franchises and independent chains dispense nearly half of the nation's retail prescription medicines.

© 2006 U.S. Newswire

Wednesday, September 27, 2006

Wal-Mart Eliminates Health Care Options for Employees and Their Families

Wal-Mart Eliminates Health Care Options for Employees and Their Families

Wal-Mart Shifts More Health Care Costs to Workers By Eliminating Low-Deductible Plans, Increasing Premiums, Increasing 'Spousal Surcharge' to Push Workers Off Company Health

9/26/2006 7:08:00 PM

To: National Desk, Labor Reporter

Contact: Chris Kofinis of, 202-486-6422

WASHINGTON, Sept. 26 /U.S. Newswire/ -- Today, revealed new, internal Wal-Mart health care documents proving that Wal-Mart's health care benefits are actually getting worse, not better as the company would have the American public and elected leaders believe.

The 2007 Wal-Mart Medical Benefits Booklet, which will be distributed to employees prior to the upcoming enrollment period, details Wal-Mart's plans to eliminate a number of health care options, increase medical premiums, increase surcharges, and will, in total, place an even greater financial burden on Wal- Mart's 1.39 million employees and their families. In 2006, as documented in the report "America Pays, Wal-Mart Saves," available on's website, Wal-Mart failed to provide company health care to over 750,000 hard-working families, or 54 percent of Wal-Mart employees and their families, at a cost to American taxpayers of at least $1.39 billion annually.

According to the new documents, as of Jan. 1, 2007, Wal-Mart will only offer two health care options for new hires - catastrophic health care with multiple high deductibles (which Wal-Mart calls the "Value Plan") and Health Savings Accounts, which new employees will not be immediately eligible for (which Wal-Mart has renamed the "Freedom Plan"). By making this change, Wal-Mart is eliminating the Network Saver plans and the standard plans for new hires. The network and standard plans had health care plans with much lower deductibles for employees and their families.

In addition to eliminating all "low deductible" health care options for new hires, Wal-Mart is increasing premium costs by 8.3 percent for the Network Saver Plan, 7.6 percent for the Standard Plan, and 6.9 percent for the Freedom Plan (formerly the Health Savings Account Plan) and charging a whopping $1800 a year "spousal surcharge" to deter spouses from being insured by Wal- Mart. Despite Wal-Mart calling it a 'Value' plan, the plan includes multiple, expensive deductibles like a $300 pharmacy deductible and a $1,000 in-patient deductible on top of the $1,000 deductible the plan already has.

"By eliminating most of its health care plans and replacing them with a high-deductible, catastrophic plan, Wal-Mart is effectively out of the health care business. Despite an overwhelming majority of Americans calling on profitable companies like Wal-Mart to provide real health care coverage to their employees, Wal-Mart is cruelly hurting its employees, cutting health care options, and shifting costs on to the American taxpayer. This sends a terrible message to every responsible corporation that is trying to do the right thing for their employees," said Paul Blank, campaign director for

Despite the damage to Wal-Mart's reputation caused by the Wal- Mart health care crisis, Wal-Mart remains unwilling to address its responsibility to lessen the burden on taxpayers, as well as provide affordable, comprehensive health care to its employees. In addition to Wal-Mart failing to provide company health care to 54 percent of its employees, in 18 out of 19 states where data is publicly available, Wal-Mart leads all employers with the greatest number of employees or dependents on taxpayer-funded public health care assistance. According to Wal-Mart's own internal memo, 46 percent, or nearly 1 out of every 2 children of Wal-Mart workers is either uninsured or on public health care assistance. As a result, American taxpayers paid an estimated $1.39 billion in 2005 and will pay as much as $9.1 billion over the next 5 years to subsidize the health care costs of a company with over $11 billion in annual profit.

"These documents reveal the truth about Wal-Mart's public relations game with the American people and its employees. Last week Wal-Mart touted a low cost generic drug plan in 1 city that includes 124 drugs that represent just 1 percent of all the generic drugs offered in America, while this week Wal-Mart eliminates health care plans for its workers and shifts billions of dollars of health care costs onto its employees and American taxpayers. As one of the richest companies in the world, Wal- Mart should be ashamed," added Blank.

Among the most striking findings outlined in Wal-Mart's 2007 benefits booklet is the substantial health care cost a low-paid Wal-Mart worker would be forced to pay under the so-called "Value" plan. A typical individual Wal-Mart worker who enrolls in the Value Plan will face high upfront costs because of a series of high deductibles, including a minimum $1,000 deductible for individual coverage, a $1,000 in-patient deductible per visit, a $500 out-patient surgical deductible per visit, a $300 pharmacy deductible, and a maximum out of pocket expense of $5,000 for an individual per year.

In total, when factoring the maximum out-of-pocket expense and the cost of the yearly premium ($598 a year for an individual under the Value Plan), a typical full-time worker (defined by Wal-Mart as 34 hours) who earns 10.11 an hour or $17,874 a year, would have pay nearly 30 percent of their total income for health care costs alone.

Incredibly, the health care cost burden actually worsens should an uninsured Wal-Mart worker enroll their family under the Value Plan. Again, because of multiple deductibles for each family member, and when factoring in the cost of the medical premium ($780) and maximum out-of-pocket expense ($10,000), a Wal-Mart worker whose family is insured under the "Value Plan" could pay as much as 60 percent of their total income towards health care costs under Wal-Mart's most "affordable health care" plan.

/© 2006 U.S. Newswire 202-347-2770/

© 2006 U.S. Newswire

Sunday, September 24, 2006

Man Accused Of Scamming Wal-Mart Into Fried Chicken Refund

Sunday, September 24th, 2006
Man Accused Of Scamming Wal-Mart Into Fried Chicken Refund
Sep 23, 2006

CHIPPEWA FALLS, Wis. (AP) -- The chicken could be coming home to roost for a man accused of scamming Wal-Mart clerks into refunds for large fried chicken orders that he hadn't purchased, authorities say.

Robert McClung, 38, of Holland, Mich., has been charged with theft in Chippewa County. He already faced a similar theft charge in Wood County and an attempted theft charge in Polk County. All offenses allegedly happened over a four-day period in July.

According to court records, McClung went to the Wal-Mart in Lake Hallie July 7 and told two managers that he regularly ordered 300-piece orders of fried chicken dinners, but they hadn't been satisfactory to him or the business he represents.

He returned July 17 and discussed meat platter orders with two managers, then went to the service counter and told the customer service manager he was due a refund for 300 pieces of fried chicken from the deli, the court records show. The manager had seen McClung talking to the two managers and gave him a $174.01 cash refund, the records show.

Store personnel were alerted to a problem a few days later after getting an e-mail from another Wal-Mart with details of a man of the same description pulling a scam at other stores, according to the records.

McClung, charged in Chippewa County Circuit Court Wednesday, has been scheduled for a court appearance Oct. 31.

The Associated Press left a message at a phone listing for McClung Friday night seeking comment, but there was no immediate return call.

© 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Contents © 2006 WAOW -TV9 1908 Grand Avenue, Wausau, Wisconsin USA 54403.

Saturday, September 23, 2006



September 22, 2006 -- Worried about its massive DVD sales, retail behemoth Wal-Mart has told some of Hollywood's biggest players it will retaliate against them for selling movies on Apple's iTunes.

Last year when Disney announced it would begin offering episodes of the hit shows "Lost" and "Desperate Housewives" on Apple's iTunes, the reaction of the world's largest retailer sent shockwaves through the entertainment industry.

Wal-Mart, worried that offering the shows for viewing on iPods would cut into DVD sales at its stores, sent "cases and cases" of DVDs back to Disney, according to a source familiar with the matter.

Now, following Apple's entrance in to the business of selling full-length films for download, the battle between Hollywood and its largest client is getting uglier, as studio executives say Wal-Mart has overtly threatened to retaliate if they go into business with Apple.

So far, Apple has only inked a deal with one studio - Disney - on whose board Apple boss Steve Jobs sits. But after seeing the success Apple had in creating a legal download business for the music industry, the movie industry would like to come aboard.

"We all want to be in the Apple business," said one high-level executive at a major movie studio. But Apple's pricing - $9.99 to $14.99 - is lower than DVD prices at Wal-Mart.

The studios generally charge Wal-Mart a wholesale price of $17.95 for new DVDs, while Apple is paying Disney a wholesale price of about $14.50 per film, according to a studio source.

The last thing studios want to do before the holiday shopping season is to offend their biggest sales outlet; the studios, collectively, rely on Wal-Mart for some $5 billion of DVD sales in the fourth quarter.

But several weeks ago, in the midst of rumors that Apple was close to announcing a deal with Disney, Wal-Mart's David Porter - the executive responsible for stocking the retailer's shelves with DVDs and CDs and whose influence is so immense in Tinseltown that he's been named to Premiere magazine's annual power list - made the rounds of Hollywood studios.

His message, according to a studio exec involved in the discussions: that there would be "serious ramifications" if the studios hopped in bed with Apple.

"They threatened to hurt us in terms of buying less products," said this person.

The situation between Bentonville and Hollywood has gotten so heated and so high-level that Jobs recently phoned Wal-Mart CEO Lee Scott to ask him to moderate his stance, according to a source.

"What they probably will do is not hurt Disney on new titles, but will buy less of their library titles," said one source.

Library titles, however, are where Wal-Mart makes money from DVDs. The retailer typically slashes the price of new releases below cost, making up for it by selling other products to shoppers.

A Wal-Mart spokeswoman said, "We intend to meet our customer needs whether they choose to purchase movies online or in the store and will continue to work hard with all our partners to do that."

NEW YORK POST is a registered trademark of NYP Holdings, Inc. NYPOST.COM, NYPOSTONLINE.COM, and NEWYORKPOST.COM
are trademarks of NYP Holdings, Inc. Copyright 2006 NYP Holdings, Inc. All rights reserved.

Friday, September 22, 2006

Woman's car stolen from service shopMechanic reportedly gave keys to a stranger

Woman's car stolen from service shop
Mechanic reportedly gave keys to a stranger
By Andy Cerota

(9/20/06 - KTRK/HOUSTON) - A local woman is left empty-handed after she claims a Wal-Mart employee gave the keys to her car to a complete stranger. What was supposed to be a quick visit to Wal-Mart Tire and Lube Express on FM 1960 in northwest Harris County to fix a bad tire turned into a nightmare for Martha Velazquez.

She said, "I basically told them, I said, 'I need my tire to be replaced. I have a hole that cannot be fixed. I've already verified that with my mechanic.'"

Velazquez had no idea having her tire replaced would cost her in a way she never imagined.

"I started freaking out," she recalled. "I started hyperventilating. I couldn't breathe."

It wasn't because the job took nearly four hours. Velazquez says she became hysterical when the mechanic told her that her car was gone.

"I ask him for my keys. He then in turn says, 'I gave your keys to your husband. He drove the car out,'" Velazquez told Eyewitness News. "So you can just imagine my feeling. My heart just dropped. And I'm like, 'What do you mean, my husband? I don't have a husband!' I was like, 'You know I was here by myself. I don't have a husband. You're joking!'"

It was no joke. Velazquez no longer had a car. It was given to someone she didn't even know. The case is now in the hands of Houston police. Wal-Mart did provide Velazquez with a rental car for five days.

We went to Wal-Mart's Tire and Lube Express Wednesday morning in search of answers, but we were escorted out by an employee who said he couldn't make any comments. Later we talked to a Wal-Mart spokesperson over the phone, who told us the company is cooperating with police.

Velazquez has since hired an attorney. Her reason for speaking out is simple.

"I don't think that's right," she said. "I really, really want to make people aware of this."

Wal-Mart sent Eyewitness News an email, once again making the point that the company continues to cooperate with Houston police and beyond that, it couldn't comment on an open investigation. A company spokesperson also told us they plan to hand over surveillance tape to police. But as of late Wednesday afternoon, police have not received that tape.

(Copyright © 2006, KTRK-TV)

Copyright ©2006 ABC Inc., KTRK-TV Houston.

Wednesday, September 20, 2006

Good Wal-Mart Business Bad for America?

Tuesday, September 19, 2006
Buying from the big boys
Good Wal-Mart Business Bad for America?
by Andrew Bast

Wal-Mart's immense network of stores and all-service Supercenters requires a massive purchasing operation, and if you want to sell to the nation’s largest retailer, you'd better believe it's going to be on their terms.

Get your pitch together, and you’ll be ushered into a small, white room with a table. You’ll face the Wal-Mart buyers, and more often than not, those men and women across the table from you have the upper hand. Because if your product—its purpose, prevalence, and most importantly, price—doesn’t make the grade, Wal-Mart has someplace else to turn: China.

After the death of Deng Xiaoping, China opened to foreign investment and development, and Wal-Mart capitalized. The company’s management encouraged learning Mandarin, and explicitly expressed an interest in being an international powerhouse. In the early 1990’s, Goldman Sachs said that the company’s doings overseas, namely in China, marked, “a major strategic merchandising revolution.”

On the one hand, the strategy has proved to be great business. Wal-Mart is the U.S.’s top retailer (also the top importer of Chinese goods), and across the country consumers are afforded low prices on everything for their family, from toys and irons to eyeglasses and truck tires.

On the other hand, Wal-Mart has become the kind of behemoth that has the economic power to build and destroy factories, industries, and even entire towns. Remember the white room where you’re selling your product? Well, if the basketball you manufacture is priced at $12.99 and Wal-Mart won’t settle for anything less than an $8.99 price point, your pitch won’t fly. Wal-Mart can buy plenty of basketballs somewhere else—guess where?—and sell them at nine bucks a pop.

Almost three out of every four items on Wal-Mart shelves are made in China (that’s excluding food products). And considering that the company sells more to American consumers than any other company, it doesn’t take long to figure out that the company’s heavy draw on Chinese labor has serious repercussions for the American workforce. Just take pickles, for instance. Serious business.

Sure, it’s market forces that are bringing benefits to American consumers and making Wal-Mart a massively successful company. And no one disputes the fact that any big player has to deal with a globalized—some call it flat—world. But isn’t the economic logic flawed?

Wal-Mart can only sell products, no matter how cheap, to people who have the money to buy them. If the country’s manufacturing sector is rapidly being exported, especially to China, won’t Wal-Mart end up with stores full of Chinese goods and tens of millions of Americans out of work without the nine bucks (instead of $13!), to buy their kid a basketball?

Simple, cheap, and fast -- The Inquirer's weekly update.

THE NEW YORK INQUIRER, launched in July of 2006, is the first all-online Alternative Weekly. Every week, The Inquirer offers up analyses of the national and world stories going underreported elsewhere, that is, if they're being reported at all.

Saturday, September 16, 2006

A Milk War Over More Than Price

September 16, 2006
A Milk War Over More Than Price

Many organic foods have been popping up on the shelves of Wal-Mart in recent years, but none have been as popular as organic milk. For many shoppers, particularly mothers with small children, it is the first organic product they try.

Now organic milk is about to become much more widely available, as Wal-Mart rolls out its own organic brand, which will be cheaper than similar milk on the market. But critics worry that what consumers will be getting is a diluted form of organic milk.

Sold under Wal-Mart’s popular Great Value label, half-gallon cartons of the milk have been quietly introduced at 1,200 supercenters and Neighborhood Markets, according to a Wal-Mart spokeswoman, Karen Burk.

Wal-Mart’s own organic milk is likely to create stiff competition for many other makers of organic milk — which comes from cows that have not been treated with hormones or antibiotics — and even sellers of conventional milk.

Harvey Hartman, president of the Hartman Group, a market research firm working with Wal-Mart on its organic initiatives, said Wal-Mart’s own brand of organic milk will mean a lot more will be sold in the United States. “They’re creating incremental users because they’re removing one of the big inhibitors to buying organic, which is price,” he said.

Last year, organic milk sales increased by 25 percent from the year before and Mr. Hartman predicts that Wal-Mart’s brand could lift annual growth to as much as 35 percent. Currently, organic dairy represents 3.5 percent of all dairy products sold in the United States, according to the Organic Trade Association.

The organic milk Wal-Mart is selling under its own label comes from Aurora Organic Dairy, which also supplies Safeway, Costco, Target and Wild Oats with their store brands of organic milk. But Wal-Mart’s entry into the market stirs greater attention from critics.

Activist groups, as well as some organic food retailers and dairies, contend that the company where Wal-Mart and the other big retailers get their milk operates large factory farms that are diluting the principles of organic agriculture and delivering customers a substandard product. They argue that Aurora’s cows do not spend any significant time roaming pastures and eating fresh grass; instead they live on a diet high in grains.

“They are trying to cut corners in the interest of producing milk as cheaply as possible,” said Mark Kastel, senior farm analyst at the Cornucopia Institute, which represents organic family farmers.

Wal-Mart and its supplier say that those allegations are misleading and that Aurora’s two farms in Colorado and Texas are in full compliance with Agriculture Department standards for organic dairy.

Executives at Aurora, which is based in Boulder, Colo., acknowledge that their farms, with 4,000 cows in Platteville, Colo., and 3,300 in Dublin, Tex., are among the largest organic dairy operations in the country. But they say their animals are healthy and contented and that the company’s organic milk is of the highest quality.

Wal-Mart’s buying power is certainly cutting the cost of its organic milk. An informal survey of organic milk at Denver area grocery stores found that Wal-Mart’s label was 8 percent to 35 percent cheaper than other brands. At Wal-Mart, it was selling for an average of 10 percent less than Horizon Organic milk, the brand Wal-Mart has been carrying for three years.

The controversy turns on how closely Aurora adheres to the principles behind the organic food movement. Many organic farmers say grass feeding is essential for organic dairy production because it is part of a cow’s natural behavior. Milk from grass-fed cows, they say, is also higher in beneficial fatty acids than milk from cows fed grain, making it more nutritious.

At Aurora’s Platteville operation, about 40 miles north of downtown Denver, 4,000 cows are put on grass only when not being milked or when they are nearing the end of a lactation cycle. That totals about two to three months a year. The rest of the time they stay in dirt-lined outdoor pens where they eat from an ample trough filled with a mixture of hay, silage, corn and soybeans.

Clark F. Driftmier, head of marketing at Aurora, said the company planned to reduce the number of cows in Platteville to 1,000 by next summer so all the animals could graze. In addition, he said, the number of acres of pasture at the Texas farm will triple by next spring.

The company, he added, is opening a 3,200-cow dairy farm in Kersey, Colo., that has been designed to allow for year-round daily access to pasture. Mr. Driftmier acknowledges these changes are being made partly in anticipation of the Agriculture Department’s plans to tighten rules requiring more grazing for milk to be called organic.

Mr. Kastel of Cornucopia calls Aurora’s efforts “greenwashing.” He says the farm’s acreage per cow will still be low and that the company is overtaxing its animals by milking them three times a day instead of twice, which is the norm at organic farms.

John Mackay, chief executive of Whole Foods Market, the nation’s largest organic food supermarket chain, toured Aurora’s Platteville farm in May with Margaret Wittenberg, vice president for quality standards. They found it to be “unacceptable” and “not up to our standards,” said a spokeswoman, Ashley Hawkins.

While a 4,000-cow farm is not large among conventional dairies, which can hold as many as 25,000 cows, it dwarfs most organic farms. Jim Riddle, organic outreach coordinator for the University of Minnesota and former chairman of the National Organic Standards Board, said that putting thousands of cows on pasture is almost impossible.

Wal-Mart would not say how much it was paying Aurora for its milk and whether that price was lower than the typical $26 per hundred pounds of milk that most organic dairy farmers get. But on its Web site, Aurora boasts that it is one of the lowest-cost producers of organic milk in the country, in part because the Platteville farm has a milking plant on site.

Because Aurora milks its cows three times a day and feeds its animals diets of calorie-dense grains, its milk production per cow is also higher than that of other organic milk producers. In Platteville, Aurora’s annual milk output per cow is 20,000 pounds, according to the company, whereas most organic dairies get 14,000 to 18,000 pounds per cow, Mr. Kastel says.

Mr. Driftmier at Aurora says that grass feeding should not be the only measure of animal health and well-being. “Our record of animal welfare is certified by an independent third-party expert,” he said. “Our animals are outside all year long; they’re never locked into barns.”

In accordance with organic standards, Aurora cows also get no hormones or antibiotics and all their feed is grown organically.

Many in the organic industry, however, say that Wal-Mart, in its push to move organics into the mainstream, could do more than simply search for the biggest and lowest-cost producer in the market.

Mr. Riddle, the organic coordinator, points to subsidy programs that dairy companies like Organic Valley, Horizon Organic and Stonyfield Farms are operating to help small and midsize dairy farmers move to organic methods. “These programs are going to help alleviate the organic milk shortage by next year,” he said. “But you can’t increase the supply overnight or place orders and have them immediately filled. Organic takes time.’’

Copyright 2006 The New York Times Company

Friday, September 15, 2006

Personnel consultant hits Wal-Mart

Personnel consultant hits Wal-Mart
By Bloomberg News September 14, 2006

Wal-Mart Stores Inc. paid bonuses to store managers that encouraged them to limit employee meal and rest breaks, a human resources consultant testified at a trial over claims the company cheated workers in Pennsylvania.

The bonuses sometimes exceeded managers' salaries, Frank Landy, a Colorado-based psychologist, said in a third day of testimony in Philadelphia. The bonuses averaged $85,000 last year, with a quarter of store managers receiving more than $140,000, he said.

``If we have a manager who is able to capture one minute a week, 52 minutes a year, from 300 associates in his or her store, he would add to his bonus something around $1,300," Landy told jurors in state court. ``If he was able to capture one hour a week, his bonus would be enhanced by $82,000 for the average manager."

Landy testified on behalf of two former Wal-Mart workers who claim the world's largest retailer forced hourly employees to skip breaks and work off the clock . Michelle Braun and Dolores Hummel seek as much as $300 million in damages in their suit, one of more than 70 filed in federal and state courts that claim Bentonville, Ark. - based Wal-Mart failed to pay wages for all time worked.

Wal-Mart's bonus policy was one of several factors that led to the company's wage-hour violations, Landy said today. Number one on the list is the company's preferred scheduling system, which use s sales to determine store staffing levels, he said. The system pressures managers to limit employee hours and doesn't hold them accountable for missed breaks and lunches, Landy said.

``There's a lot of money sitting out there for a store manager if he or she can reduce payroll costs as a ratio to sales," he said. ``The more they can reduce costs, the more they get at the end of the year."

That focus on curbing payroll led hourly workers at Pennsylvania stores to skip more than 33 million breaks and 2 million meal periods between 1998 and 2001, attorney Michael Donovan said during opening arguments on Sept. 8.

Wal-Mart denies any violations of wage and hour laws.

Under the company's policy, 30-minute meal periods granted after six hours work are unpaid, Wal-Mart attorney Neal Manne told jurors last week.

Rest breaks are paid, with employees who work more than six hours allowed two 15-minute periods, he said.

© Copyright 2006 Globe Newspaper Company.
© Copyright 2006 The New York Times Company

Wednesday, September 13, 2006

Wal-Mart planning own video download service

Wal-Mart planning own video download service
Last Update: 5:12 PM ET Sep 12, 2006

Wal-Mart Stores Inc. (WMT) is pursuing its own plans for a digital video downloading service, the Financial Times reported on its Web site Tuesday, citing recently published job ads seeking a business manager to head what it describes as a new digital video category at

According to the ad, this would-be employee "will play a critical role in bringing the business to market." The ad didn't give any details of when Wal-Mart will launch this service.

Earlier Tuesday, Apple Computer Inc. (AAPL) unveiled its own digital video downloading service, following last week's launch of a rival service by online retailing giant Inc. (AMZN).

Newspaper Web site:
-Contact: 201-938-5400

Copyright © 2006 MarketWatch, Inc. All rights reserved.

Tuesday, September 12, 2006

Woman Falls Into Manhole at Walmart

Woman Falls Into Manhole at Walmart
Aug 16, 2006 09:43 PM EST
Reported by Ray Pedraza

A woman is sent to the hospital Wednesday after falling into a manhole in a Wal-mart parking lot in Edinburg.

The incident was reported to the Edinburg Fire Department by a Wal-mart employee at around two in the afternoon.

A firefighter conducting a code inspection inside the store responded immediately and called for a rescue team.

The woman, believed to be a Wal-mart employee in her 30's, was rescued about 10 minutes later. She was transported to a local hospital with knee injuries and a possible fracture.

Edinburg Fire Chief Shawn Snider says there was no flowing sewer inside this particular manhole, which is also referred to as a pit valve where the store's water supply is turned off and on.

Fire investigators are trying to determine if the lid was removed and not properly secured. They are questioning employees of a vacuum company who had been in the store parking lot moments earlier.

"We're trying to see if that person had any information on it or see if the lid was loose and the lady walked on top of it, or there's about three scenarios or looking to see if the lid was absolutely not there," Snider said.

He says Wal-mart will also be reviewing parking lot surveillance video for any clues.

"The lid is extremely heavy so somebody had to want to remove it or (it was) knocked out by something in or order for it to be gone," he added.

Investigators did determine that the hinges were broken on the manhole cover which may have been caused by a vehicle running over it.

What's bizarre about this incident, Snider said, is that it comes on the heels of the recent missing manhole cover crimes around Edinburg where a group of suspects were stealing manhole covers and selling them for scrap metal.

Action 4 News contacted Wal-mart for comment but an associate manager said the store director was unavailable.

All content © Copyright 2000 - 2006 WorldNow and KGBT, a Barrington Broadcasting Group LLC.

Monday, September 11, 2006

Swedish fund closes the door on Wal-Mart

Swedish fund closes the door on Wal-Mart
The pension group is the latest to follow in the steps of Norway's oil fund, criticizing the company for violations of labor rights.
September 7 2006: 3:10 PM EDT

STOCKHOLM (Reuters) -- A Swedish state pension group has followed Norway's oil fund in dropping the world's largest retailer, Wal-Mart, as an investment, saying the U.S. company had violated human rights in the labor market.

Wal-Mart (up $0.54 to $45.94, Charts) shares were up more than 1 percent during afternoon trade on the New York Stock Exchange.

Wal-Mart said it did not comment on individual investor decisions, but spokeswoman Amy Wyatt added: "We strive to adhere to the highest standards in the treatment of each and every one of our own associates. These matters are among our highest priorities as a company."

The Swedish Second National Pension Fund said it had sold its small stake of shares in Wal-Mart and Wal-Mart Mexico, worth about 300 million Swedish kronor ($9.14 million), out of total funds of 194 billion kronor it has under management.

"The Second AP Fund has since 2003 written letters, voted at shareholder meetings and taken part in an investor group to influence the company [Wal-Mart], but there has been no change in the company's view of labor rights," it added.

The fund group did not detail its objections. Norway said in June that its more than $240 billion oil fund would no longer invest in the U.S. firm.

The Bentonville, Arkansas-based firm has stepped up efforts to counter criticism it pays low wages, discriminates against women and drives local retailers out of business.

The second AP fund is one of four so-called buffer funds in the Swedish pension system that aim to smooth strains on the system when retirement reaches a peak.

Copyright 2006 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

© 2006 Cable News Network LP, LLLP. A Time Warner Company ALL RIGHTS RESERVED.

Sunday, September 10, 2006


Friday, 08 September 2006

As Wal-Mart Stores struggles to rebut criticism from unions and Democratic leaders, the company has discovered a reliable ally: prominent conservative research groups like the American Enterprise Institute, the Heritage Foundation and the Manhattan Institute.

Top policy analysts at these groups have written newspaper opinion pieces around the country supporting Wal-Mart, defended the company in interviews with reporters and testified on its behalf before government committees in Washington.

But the groups — and their employees — have consistently failed to disclose a tie to the giant discount retailer: financing from the Walton Family Foundation, which is run by the Wal-Mart founder Sam Walton’s three children, who have a controlling stake in the company.

The groups said the donations from the foundation have no influence over their research, which is deliberately kept separate from their fund-raising activities. What’s more, the pro-business philosophies of these groups often dovetail with the interests of Wal-Mart.

But the financing, which totaled more than $2.5 million over the last six years, according to data compiled by GuideStar, a research organization, raises questions about what the research groups should disclose to newspaper editors, reporters or government officials. The Walton Family Foundation must disclose its annual donations in forms filed with the Internal Revenue Service, but research groups are under no such obligation.

Companies and such groups have long courted one another — one seeking influence, the other donations — and liberal policy groups receive significant financing from unions and left-leaning organizations without disclosing their financing.

But the Walton donations could prove risky for Wal-Mart, given its escalating public relations campaign. The company’s quiet outreach to bloggers, beginning last year, touched off a debate about what online writers should disclose to readers, and its financing to policy groups could do the same.

Asked about the donations yesterday, Mona Williams, a spokeswoman for Wal-Mart, said, “The fact is that editorial pages and prominent columnists of all stripes write favorably about our company because they recognize the value we provide to working families, the job opportunities we create and the contributions we make to the community we serve.”

At least five research and advocacy groups that have received Walton Family Foundation donations are vocal advocates of the company.

The American Enterprise Institute for Public Policy Research, for example, has received more than $100,000 from the foundation in the last three years, a fraction of the more than $24 million it raised in 2004 alone.

Richard Vedder, a visiting scholar at the institute, wrote an opinion article for The Washington Times last month, extolling Wal-Mart’s benefits to the American economy. “There is enormous economic evidence that Wal-Mart has helped poor and middle-class consumers, in fact more than anyone else,” Mr. Vedder wrote in the article, which prominently identified his ties to institute.

But neither Mr. Vedder nor the newspaper mentioned American Enterprise Institute’s financial links to the Waltons. Mr. Vedder, a professor at Ohio University, said he might have disclosed the relationship had the American Enterprise Institute told him of it. “I always assumed that A.E.I. had no relationship or a modest, distant relationship with the company,” said Mr. Vedder, who has written a forthcoming book about the company. The book, he said in an interview yesterday, would eventually contain a disclosure about the Walton donations to the institute.

A spokesman for the Walton Family Foundation, Jay Allen, said there was no organized campaign to build support for Wal-Mart among research groups. All of the foundation’s giving, he said, is directed toward a handful of philanthropic issues, including school reform, the environment and the economy in Northwest Arkansas, where Wal-Mart is based. “That is the spirit and purpose of their giving,” Mr. Allen said.

Mr. Allen said the foundation, which had assets of $608.7 million in 2004, the last year for which data is available, has never asked the research groups to disclose the donations because “the family leaves it up to the individual organization to decide.”

Those groups, for the most part, say they have decided not to share the information with their analysts or the public.

For example, Sally C. Pipes, the president of the Pacific Research Institute, a free-market policy advocate, has written several opinion articles defending Wal-Mart in The Miami Herald and The San Francisco Examiner.

A month after a federal judge in California certified a sex discrimination lawsuit against the company as a class action in 2004, Ms. Pipes wrote an article in The Examiner criticizing the lawyers and the women behind the suit. “The case against Wal-Mart,” she wrote, “follows the standard feminist stereotype of women as victims, men as villains and large corporations as inherently evil.”

The article did not disclose that the Walton Family Foundation gave Pacific Research $175,000 from 1999 to 2004. Ms. Pipes was aware of the contributions, but said the money was earmarked for an education reform project and did not influence her thinking about the lawsuit. Asked why she typically did not disclose the donations to newspapers, she said: “It never occurs to me to put that out front unless I am asked. If newspapers ask, I am completely open about it.”

The lack of disclosure highlights the absence of a consistent policy at the nation’s newspapers about whether contributors must tell editors of potential conflicts of interest.

Juan M. Vasquez, the deputy editorial page editor of The Miami Herald, which ran an opinion article praising Wal-Mart by Ms. Pipes of Pacific Research, said his staff researches organizations that write opinion articles, including their financing. But that does not always require asking if the organization has received money from the subject of an article, he said.

The New York Times has a policy of asking outside contributors to disclose any potential conflicts of interest, including the financing for research groups.

Several of the research groups noted that their mission is to be an advocate for free market policies and less government intrusion in business. “Those aims are pro-business, so it’s not surprising that companies would be supporters of our work,” said Khristine Brookes, a spokeswoman for the Heritage Foundation.

Last year, for instance, The Baltimore Sun published an op-ed article by Tim Kane, a research fellow at Heritage, in which he criticized Maryland’s efforts to require Wal-Mart to spend more on health care. He objected to the move on the grounds that it was undue government interference in the free market, a traditional concern of Heritage.

“The existence of Wal-Mart dented the rise in overall inflation so much that Jerry Hausman, an economist from the Massachusetts Institute of Technology, is calling on the federal government to change the way it measures prices,” Mr. Kane wrote. “Translation: Wal-Mart is fighting poverty faster than government accountants can keep track.”

Ms. Brookes pointed out that the $20,000 Heritage has received from the Walton Family Foundation since 2000 amounts to less than 1 percent of its $40 million budget.

Ms. Brookes said it was unlikely that researchers and analysts at Heritage were even aware of the foundation’s contributions. “Nobody here would know that unless they walked upstairs and asked someone in development,” she said. “It’s just never discussed.”

She said Heritage did not accept money for specific research. “The money from the Walton Family Foundation has always been earmarked for our general operations,” she said. “They’ve never given us any funds saying do this paper or that paper.”

A spokeswoman for the American Enterprise Institute said the group did not comment on its donors. The group’s focus on Wal-Mart has been notable. In June, the editor in chief then of the group’s magazine, The American Enterprise, wrote a long essay defending Wal-Mart against critics. The editor, Karl Zinsmeister, now the chief domestic policy adviser at the White House, said the campaign against the company was “run by a clutch of political hacks.”

Conservative groups are not the only ones weighing in on the Wal-Mart debate. Ms. Williams of Wal-Mart noted labor unions have financed organizations that have been critical of Wal-Mart, like the Economic Policy Institute, which received $2.5 million from unions in 2005.

In response, Chris Kofinis, communications director for, an arm of the United Food and Commercial Workers Union that gives money to liberal research groups, said: "While we openly support the mission of economic justice, Wal-Mart and the Waltons put on a smiley face, hide the truth, all while supporting right-wing causes who are paid to defend Wal-Mart’s exploitative practices.”

The lack of a clear quid pro quo between research groups and corporations like Wal-Mart makes the issue murky, said Diana Aviv, chief executive of the Independent Sector, a trade organization representing nonprofits and foundations. “I don’t know how one proves what’s the chicken and what’s the egg,” she said.

Last year, the National Committee for Responsive Philanthropy, a research and watchdog group, published a report, “The Waltons and Wal-Mart: Self-Interested Philanthropy,” that warned of the potential influence their vast wealth gives them.

But Rick Cohen, executive director of the group, said he was more concerned about the role the Walton foundation’s money might play in shaping public policy in areas like public education, where it has supported charter schools and voucher systems.

“These are certainly not organizations created and controlled by the corporation or the family and promoted as somehow authentic when they aren’t,” Mr. Cohen said. “More important, I think, is the disclosure of the funding in whatever’s written, a sort of disclaimer.”

Saturday, September 09, 2006

Wal-Mart workers pay for profit, lawyer says

RETAIL: Wal-Mart workers pay for profit, lawyer says

Wal-Mart Stores Inc. boosted profit at the expense of employees by pressuring store managers to cut payroll costs, a lawyer for two former workers said at a trial in Philadelphia.

Hourly workers at Wal-Mart's Pennsylvania stores were forced to skip more than 33 million breaks and 2 million meal periods between 1998 and 2001 because of the focus on cutting costs, attorney Michael Donovan said Friday in state court. His clients are suing Wal-Mart, the world's largest retailer, on behalf of about 186,000 current and former employees in Pennsylvania.

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Friday, September 08, 2006

Salmonella Lawsuit Filed Against Wal-Mart

Salmonella Lawsuit Filed Against Wal-Mart

Download this press release as an Adobe PDF document.

A lawsuit was filed today against Wal-Mart Stores, Inc., the company whose Greenwood, Indiana, store was the source of a Salmonella outbreak. The lawsuit was filed in Johnson County Superior Court on behalf of a Greenwood resident whose son became violently ill and was hospitalized after consuming foods purchased at the Wal-Mart deli. The lawsuit was filed by Marler Clark, a Seattle-based law firm that has represented hundreds of victims of Salmonella outbreaks.

(PRWEB) September 8, 2006 -- A lawsuit was filed today against Wal-Mart Stores, Inc., the company whose Greenwood, Indiana, store was the source of a Salmonella outbreak between May and August, 2006. The lawsuit was filed in Johnson County Superior Court (Case No. 41D03-0609-CT00062, Johnson Superior Court #3) on behalf of Ryan Merritt, a Greenwood resident whose son became violently ill and was hospitalized after consuming foods purchased at the Wal-Mart deli. Mr. Merritt is represented by the Seattle law firm of Marler Clark, widely recognized as the nation’s leading law firm representing victims of foodborne illnesses, and Greenwood attorney John M. Reames.

In the complaint, attorneys allege that Mr. Merritt purchased ham and cheese from the Wal-Mart deli on August 13. Mr. Merritt’s son, Noah, consumed the ham and cheese in the subsequent days and became ill on August 18. Noah’s symptoms became severe by August 20, and he was seen in the Emergency Room at St. Francis Hospital in Indianapolis on August 22. Noah was subsequently admitted to the hospital, and was released on August 24. While hospitalized, Noah provided a stool sample that tested positive for Salmonella.

“The Indiana State Health Department reported that at least 84 customers who ate foods from the deli and bakery departments at Wal-Mart from May to August were part of this Salmonella outbreak,” said William Marler, attorney for Mr. Merritt. “The longevity of this outbreak suggests that it was not the result of a one-time food handling error, but rather the consequence of repeat food code violations over a period of four months. The spread of foodborne illness from infected workers can be prevented by proper hygiene – especially handwashing.”

An Indiana State Department of Health (ISDH) investigation into the Salmonella outbreak led ISDH to believe that infected food workers who did not exhibit symptoms of Salmonellosis, or who were a-symptomatic carriers of the bacterium, contaminated the deli and bakery foods.

“We’ve seen this before and will see it again,” Marler continued. “Businesses who fail to enforce strict handwashing policies will continue to be the source of outbreaks, and will be held responsible for their failures through the legal system.”

Marler’s law firm, Marler Clark, has represented thousands of victims of Salmonella outbreaks. The firm recently negotiated settlements on behalf of 138 individuals who became ill with Salmonella infections after eating contaminated tomatoes served at Sheetz convenience stores in Pennsylvania, Virginia, West Virginia, Maryland, and Ohio in 2004. Marler Clark represented 50 individuals in litigation against Chili’s after the chain’s Vernon Hills, Illinois restaurant was traced as the source of a Salmonella outbreak in 2003. For more information about Marler Clark and Salmonella litigation, visit

To reach Mr. Marler for comment, please contact him at (206) 346-1890.


© Copyright 1997-2006, PRWeb®. PRWeb is a registered trademark of PRWeb International, Inc.

Thursday, September 07, 2006

Wal-Mart says no to personnel representatives' training in Germany, will have to answer in court

Wal-Mart says no to personnel representatives' training in Germany, will have to answer in court
- Labour news from UNI global union - for trade unions in a global services economy. -

Wal-Mart tries to deny its German personnel representatives their right to participate in training sessions. The unionists had wanted to add to their knowledge and skills with a view of being better able to handle their tasks in the ongoing process of selling the company to the Metro Group. The Bentonville multinational will now be taken to court by its own workers, in what could be characterised as an expected end to its failed adventure.

Germany's largest trade union, UNI-affiliated ver.di, takes a rather ironical tone in today's press statement. During what will probably be the last few weeks of their engagement in Germany, the company whose "management in our country has let a few hundred million Euros run into the sand want to save a few hundred Euros at the expense of its workers", the ver.di statement reads.

- And one is not sold every day, the union says.

Now, the labour court will decide whether Wal-Mart has to pay for the training of its shop stewards, or whether they can get out of this obligation. Lawyers in Germany, whom the union has talked with, seem all to agree that the company will finally have to dig out the wallet from its deep pockets.

- The probable end result: Nothing saved, but even more money lost in the sand, the union states in a less than benign comment about the achievements of the Bentonville retail giant's top management in Germany.

At the end of July, Wal-Mart announced the sale of its German operations to Metro and its hypermarket-chain Real. The affair is now being studied by the competition authorities, who are expected to announce their decision by the end of the year.

Union Network International

Wednesday, September 06, 2006

Wal-Mart signs on as Monday Night Football sponsor

Wal-Mart signs on as Monday Night Football sponsor
Los Angeles Business from bizjournals - 7:49 AM PDT Tuesday

The world's largest retailer is teaming up with the Worldwide Leader in Sports.

Wal-Mart has signed a multimedia marketing deal with ESPN to promote Wal-Mart's high-definition televisions during ESPN's broadcasts of "Monday Night Football."

Wal-Mart (NYSE: WMT) will have a presence during the broadcasts, including the pre- and post-game shows, as well as have ads on, ESPN Radio and ESPN the Magazine.

The iconic National Football League broadcast has moved from ABC to ESPN this season. Both networks are owned by the Walt Disney Co. (NYSE: DIS).

Wal-Mart has begun offering higher-end products, such as national-brand HDTVs, in an effort to freshen up its image and attract more affluent customers.

© 2006 American City Business Journals, Inc. and its licensors. All rights reserved. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of bizjournals.

Monday, September 04, 2006



Wal-Mart, which claims that its stores account for 40 percent of all DVD's sold in the U.S., has been using its clout to dissuade Hollywood's major studios from cooperating with Apple's iTunes Music Store, which plans to sell them online. According to Business Week Wal-Mart has sent executives to Hollywood in hopes of blocking any deal between Apple and the studios. Wal-Mart has denied the report. Apple is expected to announce a movie download service within the next two weeks, at about the same time that it is expected to unveil a new, wider-screen video iPod. New movies are expected to go for $14.99; older ones, for $9.99. So far, however, Apple has reportedly only signed up one studio, Disney, where Apple chairman Steve Jobs is the company's largest shareholder.


©2006 Ltd, all rights reserved

Sunday, September 03, 2006

Wal-Mart and Apple Battle for Turf

AUGUST 31, 2006
Top News
By Ronald Grover
Wal-Mart and Apple Battle for Turf
The retail behemoth isn't happy about the iPod maker's plans to offer movie downloads through iTunes. Has Wal-Mart met its match?

The guy from Bentonville, Ark., surely isn't on any of Hollywood's leading man lists. A 23-year Wal-Mart Stores (WMT ) veteran, David Porter is the person at the retail giant who orders DVDs and slashes prices to move them. But this summer, Porter has been one of Hollywood's hottest acts, taking meetings with top studio brass like a producer with a hot script. His pitch: Wal-Mart isn't happy.

That prospect tends to send shivers through Hollywood's Gucci-toed corner offices. As the largest seller of DVDs, Wal-Mart accounts for roughly 40% of the $17 billion in DVDs that will be sold this year, a financial lifeline to big-spending studios. But now Wal-Mart's video business faces a potential threat by Steve Jobs and Apple Computer (AAPL ), which in mid-September, sources tell BusinessWeek, plans to announce it will start offering movie downloads from its iTunes store.

The notion of kids running around with full-length movies on new, wider-screen iPods that Apple is expected to unveil as well is causing grief in Bentonville, according to Hollywood executives. The $312 billion a year retailer, they say, wants concessions that could include lower DVD wholesale prices.

PLAYING THE HEAVY. With Wal-Mart CEO H. Lee Scott assigning his point man Porter to roam the halls of major studios, skittish executives have for months delayed giving Jobs the rights to distribute their movies through his new service. The price Apple hopes to charge, now set at $14.99 for new releases and $9.99 for older movies, has risen from Jobs's initial plan to offer new flicks for $9.99, say industry insiders.

So far, Apple only has one studio signed on: Walt Disney (DIS ), where Jobs is the largest shareholder following the entertainment giant's purchase of his Pixar Animation Studios. News Corp.'s (NWS ) Fox Entertainment Group may join in later, as might independent Lions Gate Entertainment (LGF ), say Hollywood sources, but only if other studios come along, too. So far, other large studios have taken a pass, especially after Wal-Mart earlier this year threatened not to sell Disney's High School Musical for a time after Disney released it initially only on iTunes.

What does Wal-Mart want this time to play nice? Executives who have met with Porter say it wants marketing help when it launches its own planned download site. And it wants Hollywood to trim the current $17 wholesale price for DVDs. That would let Wal-Mart slash its own prices to the same $15 or so that Apple would charge. (The plan is for Apple to pay a $14 wholesale price for new releases, say sources, although negotiations continue.) A large wholesale cut for Wal-Mart, of course, would amount to hundreds of millions in lost studio revenues each year at a time when DVD sales are slowing.

LOSING PATIENCE. Wal-Mart isn't the only issue that's giving some studios pause. Several are concerned about Apple's rules for using iTunes, which let users watch a film on up to five different devices. And others worry about letting Jobs set a download price they can't change, as he has done in music. Still, studios have embraced the digital concept and accept some "burning" of movies to DVDs. In addition to Apple, the studios are negotiating potential download deals with (AMZN ), AT&T (T ), and cable giant Comcast (CMCSA ).

No doubt Steve Jobs knows how to turn tiny digital media niches into a mainstream phenomenon. That's what he did in the music biz. But his patience for all this tiptoeing is wearing thin. Jobs recently hopped aboard his corporate jet for a little politicking of his own in Hollywood, and insiders say he called Scott to express the concern of a vendor who sells tons of iPods and Macs through Wal-Mart stores.

Jobs would not comment for this story nor would any studios. Wal-Mart acknowledged that it's talking with studios about starting its own download service but disputed that it is "dissuading studios from conducting business with other providers," according to Wal-Mart spokeswoman Jolanda Stewart.

Grover is Los Angeles bureau chief for BusinessWeek

Copyright 2000- 2006 by The McGraw-Hill Companies Inc.
All rights reserved.

Saturday, September 02, 2006

Bids by Wal-Mart, Home Depot to own banks draw scrutiny

Posted on Thu, Aug. 31, 2006
Bids by Wal-Mart, Home Depot to own banks draw scrutiny
By Michele Heller
McClatchy Newspapers

WASHINGTON - Car makers have them. So do Target, General Electric and a dozen other commercial enterprises. Now Wal-Mart and Home Depot want their own industrial banks.

But the giant retailers' interest in these obscure but rapidly growing financial institutions, called industrial loan companies, has moved Washington policymakers to the brink of shutting off the last avenue that nonfinancial companies have into the banking business.

Why the fuss over an arcane subject such as who can own a financial institution? Critics say the health of the country's economy is at stake. They're concerned because the nonfinancial businesses that own ILCs aren't regulated the same way that those owning banks are. They fear that nonfinancial firms could use their industrial banks to make loans based on their own business considerations, not on sound financial ones.

While ILCs can sell the same products and services as banks, they don't have standard checking accounts; they can, however, offer a comparable service. Some companies apply for more limited ILC charters. Home Depot wants only to make home-improvement loans, and Wal-Mart wants to process credit and debit card transactions.

The real difference between banks and ILCs is in their ownership and regulation. Nonfinancial companies may not own banks, but they can operate ILCs. Banks can't own or be owned by nonfinancial commercial firms. The Federal Reserve regulates the corporate owners of banks but doesn't have oversight of commercial companies that own ILCs.

"The question of whether to allow broader mixings of banking and commerce has broad-reaching implications for the structure and soundness of the American economy and financial system," Scott Alvarez, the general counsel of the Federal Reserve System, told Congress at a hearing in July on ILC ownership and supervision.

ILC supporters say consumers benefit from the additional competition that industrial banks offer and that they aren't a threat to the economy.

"In the absence of a demonstrated example of regulatory failure, there is no fundamental, underlying reason for a public policy change," G. Edward Leary, the commissioner of the Utah Department of Financial Institutions, said at the July congressional hearing. He noted that ILCs "have operated for over a century without harming competitors, consumers or the deposit insurance system."

This summer, bank regulators imposed a six-month moratorium on new ILC applications and the ones pending from Wal-Mart, Home Depot and 10 other companies.

The announcement came after 98 members of Congress asked the Federal Deposit Insurance Corp. to give them time to consider a bill that would bar more commercial firms from owning ILCs, restrict the business activities of ILCs that commercial companies opened after 2003 and have the FDIC regulate the companies that own industrial banks.

ILC proponents and opponents agree on one thing: Wal-Mart's application for an ILC charter moved the debate onto the radar screens of groups from unions to small-business owners. It also may have spurred other commercial firms to seek ILCs.

"Many companies may not know why they want an ILC, but if their competitors have one, they want to grab one too," said Bert Ely, an independent banking consultant in Alexandria, Va.

An ILC is the only type of bank that nonfinancial enterprises have been allowed to own since the Great Depression, when Congress reacted to the cascade of bank and commercial failures by banning common ownership of banks and commercial firms. It made an exception, however, for the then-tiny ILCs, so that industrial companies could make loans to their low-paid workers, whom commercial banks shunned.

Now, banks are happy to lend to even the poorest workers, and ILCs have expanded into multipurpose, multibillion-dollar financial institutions, including ones that help owners of BMWs and Harley-Davidsons finance their machines.

Nonfinancial companies accounted for nearly half the new ILC charters granted in the last two years (financial companies can also own ILCs, but the controversy is over whether commercial firms should be allowed to continue to own them) and contributed to a 3,900 percent growth in ILC assets to $155 billion from 1987 to 2006, according to the Government Accountability Office. While only 15 of the country's 61 ILCs are owned or affiliated with commercial firms, 11 of the 14 applications in the last three years were from nonfinancial companies.

That concerns an unlikely coalition of union leaders, consumer advocates, small-business owners, bankers, the Federal Reserve and conservative and liberal lawmakers. "It's a motley group, but we found common ground," said Michael J. Wilson, the vice president of the United Food and Commercial Workers International Union.

"Financial trouble in one part of a business organization can spread, and spread rapidly, to other parts of the organization," said Alvarez, of the Fed. By regulating bank owners, he said, the Fed can detect problems "before they pose a danger to the organization's subsidiary insured banks and the federal safety net."

Ed Mierzwinski, the consumer-program director at U.S. Public Interest Research Group, a watchdog organization, said that another reason "we separate banking and commercial firms is to make sure everybody gets a fair shake when they go into a bank."

"When the bank of a big company makes favorable loans to businesses friendly with the commercial parent, such as suppliers, that distorts the economy," he said. "So a company that is doing well might not get a fair shake at the loan, while a company that is not doing well is dangerously propped up with a loan on favorable terms from an ILC."

Wilson, of the workers union, put the concern about mixing banking and commerce into real-life terms.

"It has the potential to drive out competition" from other banks, he said, and revive the company-town model of the early 20th century, when everything in a town was owned by one company. "You rented your home from the company and you purchased your retail stuff from the company. How much pressure will they put on people to bank at the company bank?"

Ely, the Virginia banking consultant, said those arguments were based on fear, not fact.

"The arguments being offered are emotional ones that just don't hold up to close scrutiny," he said. "I'm of the belief that the market will develop that which works most efficiently."

Some companies withdrew their applications after the FDIC announced the six-month moratorium. But Wal-Mart and Home Depot don't plan to give up the fight, company executives said.

Neither retailer said it planned to use an ILC charter to operate a full-service bank. Home Depot has applied to acquire an existing ILC - EnerBank of Utah - that specializes in home-improvement lending.

"We're not creating anything new. We're simply moving an organization that already exists from one corporate owner to another," said Jim Stoddart, Home Depot's senior vice president for growth initiatives. "Our interest in EnerBank is because it fits strategically. It's not just about applying for (an ILC) charter for the charter's sake."

Wal-Mart wants the charter to process credit and debit card transactions. "We want to provide a greater efficiency and more effectiveness in our payment system," Wal-Mart spokeswoman Tara Raddohl said.

In August, Wal-Mart applied for a retail banking license to operate a commercial bank in Mexico. Raddohl said the company didn't have similar plans for its ILC in the United States, should it be allowed to open one.

Still, Wal-Mart's foray into Mexican banking feeds opponents' fears that if it gets an ILC charter, it might use it to expand to a full-service bank. Raddohl said the concern was unfounded.



Q. What's an ILC?

A. An industrial loan company is a U.S. financial institution that lends money and takes deposits. It may be owned by nonfinancial institutions.

Q. How is it regulated?

A. ILC's are reviewed by state regulators and the Federal Deposit Insurance Corp., but the Federal Reserve doesn't regulate their parent companies.

Q. What kinds of companies own ILCs?

A. Banks and nonfinancial companies such as retailers and automakers. Banks aren't allowed to own nonfinancial companies.

Q. What types of transactions can ILCs make?

A. They can make the same types of loans as banks, as well as issue credit cards and take deposits. They can't offer regular checking accounts, but they can offer NOW Accounts, in which customers are permitted to write drafts against money held on deposit.

Q. Which nonfinancial companies own ILC's?

A. General Electric Co., General Motors, Merrill Lynch & Co. Inc., Morgan Stanley, American Express Co., Target Corp., Nordstrom, Harley-Davidson, First Data, SALLIE MAE.

© 2006 McClatchy Washington Bureau and wire service sources. All Rights Reserved.

Friday, September 01, 2006

Employee Files Whistle-Blower Suit Against Wal-Mart

Employee Files Whistle-Blower Suit Against Wal-Mart
This article was published on
Thursday, August 31, 2006 10:45 PM CDT in News
By Anita French
The Morning News

Fallout from former Vice Chairman Tom Coughlin's fraud against Wal-Mart Stores Inc. in Bentonville continues as another lawsuit connected with that case has been filed against the retailer.

Rita Miles, who works in Wal-Mart's Labor Relations Department, filed a suit against her employer, claiming it violated the federal Sarbanes-Oxley Act by retaliating against Miles after she protested the alleged shredding of documents related to the Coughlin case by Wal-Mart. The suit was filed in U.S. District Court in Fayetteville.

Coughlin, 57, pled guilty in U.S. District Court in Fort Smith to five counts of wire fraud against Wal-Mart and also tax evasion. He was sentenced on Aug. 11 to 27 months of home confinement, five years probation and ordered to pay more than $460,000 in fines and restitution to Wal-Mart and the Internal Revenue Service.

Miles, who has been with Wal-Mart since 1999, says in her suit that a company attorney instructed her and other members of her department during the company's investigation of Coughlin in May 2005 that all hard copies and electronic versions of documents relating to the case should be preserved.

"Nevertheless, Aaron Campbell and Jana Wegner, project managers in (Miles') department immediately called a meeting and instructed (Miles) and others in her department to shred all documents once they had been scanned into the data base," the lawsuit states.

Miles claims she voiced her concern to the company that this order violated not only the subpoena but also instructions from the Wal-Mart attorney. Miles says in her suit she was told by the attorney later that the shredding was "permissible."

Miles notified the U.S. Attorney's Office in Fort Smith about her concerns, according to court documents. FBI agents and others from the U.S. Attorney's Office subsequently took possession of all documents related to the subpoena, the lawsuit states.

Miles alleges in her suit that Wal-Mart continued to shred certain documents in her department up until July 2005 and that, as a result of her having voiced her concerns over the matter, she was "immediately subject to retaliation ... through psychological and physical harassment, damage to her personal property and (by) giving her undeserved low evaluation scores."

Wal-Mart spokesman John Simley said Thursday that Wal-Mart retained copies of all documents that were requested by the U.S. Department of Justice subpoena in the Coughlin case.

"We cooperated fully in the investigation and there was never any finding of wrongdoing by the company," he said. "It was Wal-Mart that first brought its concerns about Mr. Coughlin to the attention of the Justice Department early last year.

"The bottom line is that we believe this complaint has no merit. An inquiry by (the Occupational Safety and Hazard Administration) earlier this year found that Ms. Miles has suffered no adverse employment action -- that was OSHA's exact words."

Miles is being represented by attorneys Jim Lingle of Rogers and Steve Kardell in Dallas, both of whom are also representing former Wal-Mart Vice President Jared Bowen in separate lawsuits.

Bowen, formerly of Garfield, was fired by Wal-Mart in 2005 for allegedly helping Coughlin cover up his fraud against the company. Bowen has filed a defamation lawsuit and also a Sarbanes-Oxley whistle-blower complaint against Wal-Mart.

Lingle declined to talk about the Miles' lawsuit in detail, except to say that Wal-Mart's claim that it preserved all documents in the Coughlin matter is "something that will come out during the case."

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