Wal-Mart No Stranger to
Illegal Contract Work 

ADAM GELLER / AP Investigation 30oct03

EDITOR'S NOTE:
This is the first in a two-part series on the widespread illegal use of eastern Europeans and other foreigners for menial work in the United States, their recruitment abroad and exploitation by unscrupulous contractors.

The first clue came when police investigating an apartment burglary in the eastern Pennsylvania town of Honesdale picked up a young Russian immigrant who worked nights cleaning floors at the local Wal-Mart Supercenter.

source: www.AmericaGo.biz 30oct03

Vladimir Blinov was 18, had exhausted his tourist visa and could provide just a few details to explain how he'd ended up in the small Pocono Mountains town—two names and three telephone numbers. But that was enough for a federal agent to start a probe five years ago that set the stage for last week's arrest of 245 allegedly illegal workers employed on contract cleaning crews at 58 Wal-Mart stores across the country.

Federal authorities have offered only limited details on last week's sting, refusing to identify the contract cleaning firms involved. They're saying even less about the Honesdale case—which implicated two dozen interconnected businesses with contracts to clean more than 80 Wal-Mart stores—except to confirm a link between it and the recent arrests.

But taken together, the Honesdale case and three others in Florida, Illinois and Virginia all involving illegal workers employed to clean Wal-Marts and other businesses, point to the largely overlooked but widespread recruiting of eastern Europeans and other foreigners to scrub the floors and toilets of America's retail emporiums while most shoppers sleep.

"Employers don't care about what documents you have," promises a Web site operated by Tady, a recruiting firm in the Czech Republic that offers to match workers with jobs in the United States.

Another Czech site, AmericaGo.biz, greets viewers with a picture of Uncle Sam and photos of Wal-Mart, Home Depot, and Target stores—promising cleaning jobs at those chains in Delaware, Maryland and Washington, D.C.

"There is a big web of people back in eastern Europe connected to a big web of people of mostly eastern European origin here and they do nothing else but trying to persuade people in eastern Europe who are not very well off to try to come to the United States," said Richard Krpac, the Czech consul in Washington D.C. "They give them a lot of promises and the majority of the promises are never fulfilled."

Last week's crackdown was unusual because it appears to be the first to implicate executives at Wal-Mart Stores Inc., itself.

In addition to the arrests, federal agents also searched a mid-level executive's office at Wal-Mart's Bentonville, Ark. headquarters, leaving with boxes of files, the company said.

No Wal-Mart executives have been arrested. But a law enforcement source told The Associated Press that investigators had recorded undercover meetings between a contractor and Wal-Mart executives as well as phone conversations between a contractor and store managers establishing "that various immigration violations have continued to occur for several years with direct knowledge and reckless disregard of these violations by the Wal-Mart Corp."

Previous cases have not asserted a direct connection between contractors and Wal-Mart, and the retailer has, under subpoena, provided investigators with payment records and other information in at least one of them.

Yet people familiar with the cases say it's hard to imagine Wal-Mart employees at some level did not know the cleaning workers were illegal. Court papers in the Honesdale case indicate that after illegal workers were arrested at some Wal-Marts, affected store managers sometimes hired replacements from contractors connected to the previous cleaning firms.

The use of outside contractors has proved popular as part of a boom in outsourcing by U.S. companies, say lawyers, labor experts and others familiar with the cleaning industry. Part of the attraction: the arrangement insulates companies from checking work eligibility and the myriad other responsibilities of having workers on their own payrolls.

The Wal-Mart situation "isn't a highly unusual case," said Stacy Whitacre, the editor of Contracting Profits, a cleaning industry trade publication. "The standard is basically that if you do your due diligence in picking a contractor, then it (employee's legal status) is the responsibility of the contractor."

A spokeswoman for Wal-Mart, Mona Williams, said the retailer's arrangements with cleaning companies and other outside contractors leaves hiring and other operating decisions to those businesses.

"We entrust these third-party contractors to hire only legal workers," said Williams. "You look at the vast number of suppliers we have, service suppliers and others, and you're looking at thousands and thousands of suppliers. In each of these cases, we entrust our suppliers to operate honestly and ethically and part of that would be hiring only legal workers."

The pressure to keep costs down gives retailers a good reason not to ask too many questions.

"The retailers, they don't have any choice because they cannot find the labor force to do this kind of work," said Stanislaw Kostek, a Polish immigrant from Queensbury, N.Y., whose contract cleaning firm pleaded guilty to employing illegal workers in the Honesdale case.

None of the firms or individuals named in the case, except for Kostek, could be reached for comment.

Wayne Samuelson, an assistant U.S. attorney in Pennsylvania who is a prosecutor in that case as well as in the investigation that led to last week's arrests, would say little about either case except to confirm a link.

"They're somewhat connected," he said.

In the Honesdale case, investigators arrested workers from Armenia, Bulgaria, the Czech Republic, Georgia, Mongolia, Russia and Uzbekistan employed as contract custodians in at least 82 Wal-Mart stores located in Pennsylvania, Ohio, Florida and elsewhere.

Kostek said he paid his workers between $6 and $8 an hour to work overnights cleaning floors and toilets. He didn't set out just to hire ineligible foreigners, but few Americans applied, he said.

"As long as this country has any economic growth, this (employment of foreign workers) always has to be because somebody has to do the job," Kostek said.

The Wal-Mart spokeswoman, Williams, would not comment on her employer's requirements for the companies that do its contract cleaning or whether they have changed in recent years.

Though the recruiting of eastern Europeans is said to be prevalent, the largest group among those arrested last week were Mexicans. There were also Mongolians, Brazilians, Uzbeks and others.

Kostek said he found his workers by word-of-mouth; most were eastern Europeans in the United States on tourist visas.

But many such workers are enticed from abroad with job offers and often pay a fee—from less than $1,000 to as much as $2,500—for the privilege, according to documents from several court cases and interviews. Krpac, the Czech consul, said his office has fielded calls from many such workers who complain of being severely overworked and often cheated out of wages. Such situations create "extreme duress" that Krpac blames for leading some of the workers to suicide and drug abuse.

Experts on immigration law say the use of contract firms—both those doing cleaning and other types of work—has increased substantially in recent years. The shift to contractors in cleaning, as well as jobs like farm work, stems in part from 1986 reforms in federal law that specifically prohibit companies from employing illegal immigrants.

"Employers started looking for ways to insulate themselves," said Mark Krikorian, executive director of the Center for Immigration Studies, which advocates tighter immigration policies. "Everybody knew they were hiring illegals, but they just paid these guys to say we're not asking, you're not telling. If the INS comes, it's your problem."

The United Food and Commercial Workers Union, which has struggled to bring Wal-Mart employees under its umbrella, says that when it tried to organize company-employed cleaning crews in two stores in the last few years, the retailer threatened to outsource the work to a contract firm. In one case, it followed through, said Al Zack, assistant director of strategic programs for the UFCW.

Contract cleaning firms, meanwhile, face their own set of challenges. Industry estimates of worker turnover range from 50 percent each year to over 300 percent, said Whitacre, the editor of Contracting Profits. That means most firms are constantly looking to hire, while offering pay too low to appeal to many American workers, she said.

Wal-Mart has been moving gradually in the past few years away from contract cleaners to maintaining its own stores, said Williams. Of Wal-Mart's approximately 3,000 U.S. stores, only about 700 are now still cleaned by outside contractors, she said. Most of the remaining relationships with cleaning firms are contracted out by individual store managers, with a small number done by executives at the headquarters.

But Krpac, the Czech consul, said the rings that recruit workers from eastern Europe are so well-organized they will not likely fade, especially since they continue to operate largely below the radar of law enforcement and the public.

"It definitely is a huge problem for the people affected," he said. "And the fact that the American public is unaware of the harm these people go through is definitely unhealthy."

AP Investigative Researcher Randy Herschaft in New York, and AP writers Suzanne Gamboa in Washington and Karel Janicek in Prague contributed to this story.

• www.cleanlink.com  Web site for Contracting Profits trade publication
• www.cis.org
• www.ufcw.org