- The Washington Times - Wednesday, August 4, 2004

Wal-Mart Stores won’t be digging too deep into its pockets if it settles a federal case over the hiring of illegal aliens to clean its stores.

A potential $10 million settlement between the government and the retail giant, reported by the Wall Street Journal yesterday, won’t affect the company’s bottom line, retail analysts say.

“$10 million to Wal-Mart is like a driver getting a $25 ticket for speeding,” said Mark Millman, president of the Millman Search Group, a Baltimore retail consulting firm. “It’s a slap on the wrist to a giant corporation. It serves as a wake-up call to them and everyone else.”

Any settlement is expected to include conditions that would force the world’s largest retailer to examine its hiring. The case is a sign to other retailers to clean up their operations.

“If you want to set a precedent in the industry, you always go after the leader — and Wal-Mart certainly is the leader,” Mr. Millman said.

Analysts agree the potential $10 million fine is insignificant financially for Wal-Mart.

“It’s not a material number for a company of that size,” said Mark Miller, stock research analyst for William Blair & Co. in Chicago. “It’s one-thousandth of what they’ll earn this year.”

The Bentonville, Ark., retailer raked in $9.1 billion in net income in the fiscal year ended Jan. 31.

In October, federal authorities arrested 250 illegal aliens in a nationwide sweep that targeted 61 Wal-Mart stores in 21 states, including Maryland and Virginia. The illegal aliens, mainly from Mexico and Eastern Europe, were members of cleaning crews that Wal-Mart hired through contractors.

Under federal law, employers face civil and criminal penalties for knowingly hiring illegal immigrants or for failing to comply with the immigration regulations.

“From the very beginning, we’ve maintained that we knew nothing of the alleged violations by the floor-cleaning contractors and that we hoped the government would reach that conclusion in an expeditious manner,” said Gus Whitcomb, a Wal-Mart spokesman. “We continue to cooperate with this investigation, which includes talking with government representatives on a regular basis.”

Wal-Mart is not expected to admit wrongdoing in the settlement. In addition to the $10 million fine, the settlement likely will include harsh penalties if Wal-Mart hires illegal aliens in the future, the Wall Street Journal said.

There’s no telling how strongly the government would enforce the conditions.

“This is not something I feel that has been strongly enforced up to now,” said Maria Stephenson, an immigration lawyer in New Orleans. “Perhaps [the Wal-Mart probe] signifies the government is stepping up enforcement.”

Despite a minimal fine, the case will make Wal-Mart more careful about the contractors it uses and probably will result in strict guidelines that workers must be legal, Mr. Millman said. If contractors violate the policy, Wal-Mart will have no choice but terminate the relationship, he said.

Wal-Mart owns 1,409 discount stores, 1,562 Supercenters, 539 Sam’s Club stores and 70 Neighborhood Markets in the United States and about 1,500 stores internationally. The retailer, with sales last year of $256.3 billion, has about 1.2 million employees in this country and 330,000 abroad.

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