Jared Bowen

Federal Officials Asked to Probe Wal-Mart Firing

ANN ZIMMERMAN / Wall Street Journal 28apr2005

[More on Wal-Mart]

Jared Bowen, a former vice president of Wal-Mart Stores Inc., has asked federal prosecutors to investigate whether the company violated a federal mandate protecting corporate whistleblowers when he was fired after reporting questionable payments requested by former Wal-Mart executive Thomas Coughlin.

Mr. Bowen, 31 years old, gave Wal-Mart information that helped the company to investigate Mr. Coughlin, who resigned as vice chairman of Wal-Mart in January, but was expected to fill out his board term until June. During a six-week investigation, the company said it found a pattern of expense-account abuses and false invoices to obtain reimbursements. The board asked Mr. Coughlin to resign his board seat on March 25.

The retailer said it found as much as $500,000 in questionable payments. Wal-Mart referred the matter to the office of the U.S. attorney for the Western District of Arkansas, which is conducting an investigation.

Mr. Coughlin's lawyers said he "did not seek nor obtain any improper reimbursements from Wal-Mart." People familiar with the matter say Mr. Coughlin has claimed that the questioned transactions, which spanned at least five years, were intended to fund a secret campaign to gather intelligence about union organizing at Wal-Mart. Wal-Mart says it has no evidence Mr. Coughlin was paying for union information.

A week after Mr. Coughlin resigned, the Bentonville, Ark., retailer terminated Mr. Bowen, who says he told the company about two incidences where Mr. Coughlin made dubious expense-related requests. According to a copy of Mr. Bowen's exit interview with Wal-Mart, the reason for his termination was "loss of confidence in associate as a company officer."

Wal-Mart said yesterday that it had acted properly in firing Mr. Bowen. "First of all, Mr. Bowen is not a whistleblower," says Mona Williams, vice president of corporate communications at Wal-Mart. "Our investigation was initiated after another associate provided information related to Mr. Coughlin's use of gift cards. We contacted the U.S. attorney's office based on the results of an internal investigation that included her information."

"This associate reported her finding promptly and was not involved in facilitating the questionable action. She is still with us in good standing."

Mr. Bowen submitted a letter earlier this week to the U.S. attorney for the Western District of Arkansas asking the federal prosecutor to investigate whether Wal-Mart violated a U.S. Department of Justice mandate known as the Thompson Memorandum, issued in the wake of numerous corporate scandals in 2001 and 2002.

The memo outlines guidelines for prosecutors gauging a corporation's liability for internal wrongdoing. One of the guidelines to consider is whether a corporation has an effective compliance program that encourages employees to report suspected wrongdoing.

"Wal-Mart has an obligation to Jared and all employees to create an environment in which people can come forward, report wrongdoing and not worry about retaliation," said Mr. Bowen's attorney, Steve Kardell of Clouse Dunn Hirsch in Dallas. "But in this case, Jared came forward, reported wrongdoing, and the company packed up his things and sent him on his way. Someone will have to explain to me how that's not retaliation."

William Cromwell, first assistant U.S. attorney for the Western District of Arkansas, said, "I can't comment on anything that relates to the matter."

Mr. Bowen says he initially told Wal-Mart investigators that on at least two occasions Mr. Coughlin requested approval for expenses that seemed suspect. Late last year he asked Mr. Bowen to approve travel expenses for a subordinate that lacked receipts totaling almost $2,000. Mr. Bowen said he reported it to a superior about two months later. And last spring, he asked Mr. Bowen to obtain $5,100 in Wal-Mart gift cards that Mr. Coughlin told him would be given as incentives to managers of the 51 top-performing Wal-Mart stores. Mr. Bowen said he alerted a high-ranking company officer about the gift cards.

Mr. Bowen initially neglected to tell investigators that Mr. Coughlin also asked him last summer to get a corporate cellphone for his brother Tim Coughlin, who also worked at Wal-Mart. Thomas Coughlin said his brother needed it for a project, according to Mr. Bowen.

Wal-Mart investigators later told Mr. Bowen they didn't think he had been totally forthcoming and asked why he didn't tell them about the cellphone in earlier conversations, according to Mr. Bowen. He said he told them he had simply forgotten about it.

A short while later, Mr. Bowen said he arrived at his office to find his electronic key no longer worked and his office had been emptied out, except for his phone.

"Mr. Bowen was terminated because he, along with others, assisted Tom Coughlin in a scheme to defraud the company," said Wal-Mart's Ms. Willliams. "Additionally, once the investigation began, he did not give a complete and accurate account of his knowledge and involvement in multiple improper transactions.

"As an officer, Mr. Bowen had the highest fiduciary duty to the company. He admitted during interviews he had approved transactions that violated company policy and then remained silent for months rather than step forward."

Replied Mr. Kardell, the attorney for Mr. Bowen, "Jared in good faith reported his concerns about the dubious expense requests in a timely fashion."

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