Outside editorial: Wal-Mart's board should consider cleaning the air

Posted: Friday, April 27, 2007

This editorial appeared in the Kansas City Star:

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Over the years, Wal-Mart has acquired a growing crowd of critics.

The retail behemoth is regularly the target of unfavorable billboards, newspaper ads and at least one critical documentary.

So it's hardly surprising that the Bentonville, Ark., company would try to protect itself from damaging leaks and disruptions during shareholder meetings. As the company points out, taking such steps is only prudent.

It should be noted that Wal-Mart's low prices deliver real benefits to consumers, especially families with low incomes. Those low prices also help tamp down the national inflation rate.

But Wal-Mart went too far in its efforts to deal with critics. The work of the company's Threat Research and Analysis Group, set up to counter problems such as leaked confidential memos, makes the company look downright paranoid.

Last month an employee was fired after phone calls from a New York Times reporter were intercepted along with pager messages. A subsequent Wall Street Journal story, quoting the fired worker and several Wal-Mart employees, shed light on the company's extensive surveillance operations.

The Journal reported that those efforts involved infiltrating an anti-Wal-Mart group.

Other surveillance targets included company employees, activists, a consulting firm and certain investors, including the New York City controller's office.

Wal-Mart says it has revised some of its practices since the unauthorized recordings were revealed. The company also says it did not act on a 2007 internal memo seeking a "threat assessment" of shareholders thought to be opposed to management policies.

The company is correct in noting that it has a responsibility to keep tabs on potential threats to its operations. But the issue here largely seems one of degree. As one security consulting executive told The Journal, Wal-Mart's surveillance program seemed "Orwellian."

The question of whether Wal-Mart snooped on activist shareholders was recently referred to the Securities and Exchange Commission's New York office.

Wal-Mart's board of directors should act on its own to help clear the air.

It should oversee its own investigation, find out how extensive the snooping was and then make those results public.

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