Ex-Wal-Mart executive blows the whistle

/ Source: The Associated Press

Wal-Mart chief executive Lee Scott violated the company’s ethics policy and accepted trips and received discounts on yachts and jewelry from a vendor, according to documents filed by a marketing executive fired by Wal-Mart in December.

In her latest court filing aimed at the world’s largest retailer, former marketing executive Julie Roehm also attacked other senior executives for accepting trips, concert tickets and other gifts from vendors.

Roehm is suing the company over her firing, and challenging Wal-Mart’s charges that she accepted gifts from vendors and had an affair with a subordinate.

In the documents filed Thursday in the U.S. District Court in Detroit, Roehm contends that CEO Scott and his wife frequently used private airplanes provided by entrepreneur Irwin Jacobs to travel to their residences in Longboat Key, Fla., and Las Vegas. Through his relationship with Jacobs, Scott was able to purchase a large pink diamond for his wife at a preferential price, she claims.

Scott, Roehm argued, maintained a relationship with Jacobs that goes “beyond a business relationship.”

Jacobs owns a number of companies including Genmar Holdings Inc., a builder of recreational boats, and Jacobs Trading Co., which buys unsold merchandise from Wal-Mart Stores Inc.

Wal-Mart spokesman John Simley dismissed Roehm’s charges, saying “This lawsuit is about Julie Roehm and her misconduct. Her document shows how weak her case is.”

He continued: “We will address these issues in court. The allegations of impropriety involving our CEO Lee Scott are untrue.”

In a telephone interview with The Associated Press, Jacobs called Roehm’s attacks untrue and “outrageous” and vowed that if Roehm declines to retract her statement, he will sue her and her lawyer.

Roehm’s lawyer Sam Morgan said he plans to depose Jacobs and will be subpoenaing records from all of Jacobs’ businesses.

Wal-Mart’s ethics policy — considered the strictest among all retailers — forbids company officials from accepting gifts or gratuities from vendors and those that are seeking to do business. Suppliers, who meet with buyers in stark rooms at the no-frills headquarters in Bentonville, Ark., aren’t even allowed to pay for executives’ bottled water.

Roehm’s filing follows a move by Rhode Island’s state treasurer, publicized Thursday, to ask the Securities and Exchange Commission to investigate whether Wal-Mart violated securities laws by not disclosing that Scott’s son Eric works for Jacobs Trading. Wal-Mart has maintained there is no requirement under the law for a disclosure and no conflict of interest. Mona Williams, Wal-Mart’s spokeswoman, told The Associated Press on Thursday that the question is a “non-issue.”

Rhode Island’s state employee pension fund has substantial holdings in Wal-Mart shares through index funds that group large corporations.

Peter Kerwin, a spokesman for the R.I. treasurer’s office, said on Friday that the move was instigated by reports from the local union chapters.

Jacobs confirmed that Scott’s son, a former buyer at Wal-Mart, runs a consulting company that does work for Jacobs Trading, a business dealing that was approved by Wal-Mart’s attorneys. But he stressed that Scott’s son can not call on Wal-Mart. Jacobs flatly denied all of Roehm’s charges, including Roehm’s claims that he gave Scott a discount on a diamond.

“If he owns a diamond ring, he didn’t get it from me,” said Jacobs, noting that none of his businesses have anything to do with diamonds. As for airfare, Jacobs vowed that he doesn’t own a plane, and never chartered a plane for Scott and his wife. He acknowledged that Scott in years past bought a several fishing boats, but he insisted on not getting a discount.

“He is so lily-white,” Jacobs said.

Roehm and Wal-Mart have been locked in a heated battle since she was fired in December. Roehm, who was hired last year to help shake up the company’s marketing image, filed suit Jan. 10, claiming she was wrongfully terminated. In March, Wal-Mart filed a counterclaim accusing Roehm of having an affair with her subordinate Sean Womack and of seeking gifts and otherwise showing favoritism toward an agency that was lobbying for Wal-Mart’s account. It also accused them of trying to find a job with the ad agency.

Roehm responded that she was a victim of a “smear” campaign and challenged Wal-Mart’s allegations.