From Bloomberg:

The AFL-CIO, the largest U.S. labor group, is asking the New York Stock Exchange to investigate Wal- Mart Stores Inc.'s executive-compensation practices.

The AFL-CIO wants the NYSE to look at whether Wal-Mart is violating one of the company's own corporate-governance rules by allowing management, rather than its outside directors, to hire a compensation consultant who advises on pay for top executives, according to a Feb. 23 letter AFL-CIO Treasurer Rich Trumka sent to the exchange.

The labor group, whose member unions hold more than $400 billion in pension funds, says the NYSE should probe the matter because the Wal-Mart rule in question is the same as an exchange guideline stating that a company's compensation committee should have sole oversight over pay advisers.

``It seems to us that the NYSE's listing standards are made a mockery of if companies say they are adhering to the exchange's aspirational standards, but in fact aren't doing so,'' Damon Silvers, associate general counsel of the AFL-CIO, said in an interview today.

NYSE spokesman Brenda Intindola declined to comment. The AFL-CIO also is considering taking the Wal-Mart matter up with the Securities and Exchange Commission, Silvers said.

The labor group has filed a shareholder proposal asking Wal-Mart, the world's biggest retailer, to provide more details about its compensation adviser. Wal-Mart has asked the SEC for permission to omit the AFL-CIO's proposal from the company's proxy statement.

Compensation Consultant

The Bentonville, Arkansas-based retailer said today that its compensation practices aren't in violation of any rules. The company's board also is considering the hiring of an additional compensation consultant to advise on executive pay, according to spokesman John Simley.

Wal-Mart will have to reveal more information about its compensation consultant, including the identity, in its proxy voting statement as a result of new Securities and Exchange Commission rules requiring fuller disclosure of pay and the role that consultants play.
The new regulations were prompted in part by investor criticism of executive pay and a stock-options scandal involving almost 200 companies.

In the meantime, the AFL-CIO has been pressing companies for evidence that consultants are giving independent advice on the salaries and bonuses of top officials.

General Electric Co., the world's second-biggest company by market value, said in December that it would go beyond a new federal disclosure rule on executive pay and tell shareholders for the first time the full extent of its compensation consultant's work for the company. The decision followed talks with the AFL-CIO, GE spokesman Peter O'Toole said at the time.

In today's Seattle Post-Intelligencer, Craig Cole, President and CEO of Brown & Cole Stores in Washington state, writes about the effect of Wal-Mart on local employers:

For three years, I've asked the Washington Legislature to reconsider the current mindless health care system that encourages employers to be selfish and irresponsible. This session they have another chance with bills being considered that would require large employers to reimburse taxpayers for the cost of providing their employees with state-subsidized health care.

Brown & Cole Stores were founded almost a hundred years ago by my grandfather. Last year, we employed around 1,500 workers, very ably represented by United Food and Commercial Workers and Teamsters. As a 27-store regional supermarket chain based in Bellingham, our stores operated under the trade names of Food Pavillion, Cost Cutter, Food Depot and Save-On-Foods.

I was raised with the American values that good companies take care of their employees. We worked long and hard with our union partners to provide living wages and benefits to our workers and were proud to do so. We made health care payments on 95 percent of our work force, while some of our competitors covered less than half.

In November, Brown & Cole Stores filed for bankruptcy protection. We cited competition from low-paying chains, especially Wal-Mart. We hope to emerge a survivor, but it's difficult for employers who provide family-wage jobs. We're living proof of the very real impact that low-way employers have on the local job base that we all hold so precious.

There is no question that Brown & Cole was undermined by large profitable employers who have abandoned basic American values and pay their employees so badly their workers qualify for public assistance. Using state-funded health care is their profit strategy. They simply dump their health care costs onto taxpayers.

The largest corporation in the planet's history bases its business model on inferior wages and benefits. They're keeping the working poor working -- and poor. Meanwhile, they earn billions by transferring their health care costs onto the rest of us, and they set a very low competitive cost structure that punishes employers trying to conduct business with integrity.

I've brought those concerns to the Legislature for three years now, urging them to make a change. They didn't. Since, I've watched Brown & Cole's hard-working employees struggle with a change that has rattled their lives and the lives of their families. I wish I could tell you of the personal costs, the pain endured. I won't. I will tell you that it's the direct result of a competitive playing field that's not level and getting more lopsided as the months pass. Those irresponsible employers are costing the state a ton of money.

I ask the Legislature: Why are you letting the public pick up the tab? In essence, every state taxpayer puts money into the pockets of large profitable employers setting a new low for corporate social responsibility.

As a society, we have established a framework for commerce and competition that forbids profiteering by pollution, unsafe working conditions and discrimination. Why do we allow a public policy framework that rewards a company for misusing its workers?

Do I blame the companies? Only partially. I blame a public policy framework that encourages them to behave that way. Consumers benefit from slightly lower prices, yes. But workers and all citizens lose.

It's a Faustian bargain: We're giving consumers better deals while we're hammering workers, their families, good businesses and our communities. What kind of deal is that?

The dilemma we face is that there is no real economic incentive to be a good employer, even though company health care coverage keeps people off the state's rolls. Lawmakers need to be pragmatic. If more large profitable employers follow down this path, we'd better provide for the escalating costs of funding an ever-expanding state caseload.

Until universal health care with appropriate cost controls is in place, irresponsible employers shouldn't get off the hook. They'll pay then and they need to pay until then.

The Legislature is considering legislation that will affect only the very largest and stingiest employers who can afford to pay -- but don't. Without it, those companies will continue to degrade the American worker -- and not just their own. They're forcing all employers into a race to the bottom.

Founder Sam Walton often said that Wal-Mart would not build stores in towns if the community did not want them. But Wal-Mart real-estate manager Jeff Doss admits, "Were that the case, we'd never build a store anywhere."

Most recently, community opposition to Wal-Mart's immoral business practices is building from Ohio to California to Illinois:

Residents of Harrison, OH, signed a petition to challenge the city's approval of a new Wal-Mart store. Now, Wal-Mart is suing the city.

In Concord, CA, the vice mayor and a city councilman have called for an ordinance that could outlaw new Wal-Mart and other retail superstores.

In Stockton, CA, local community groups are raising concerns about how Wal-Mart "draws criminals like a porch light attracts insects."

And in Glen Carbon, IL, about 100 residents packed a City Commissioners' meeting last Wednesday to voice their concerns about Wal-Mart. They smelled something fishy when the majority of the Commissioners failed to show up. "Once Wal-Mart realized that they weren't going to win tonight, they convinced the Commissioners to stay home," one resident surmised.

Such unprecedented grassroots opposition will continue to grow until Wal-Mart becomes a responsible company and begins to treat workers and communities with respect.

Wal-Mart and CEO Lee Scott must answer to the American people.

By Jim Hightower, from the Topeka Capital-Journal:

Those who say that George W is not a "compassionate conservative," as he pledged to be when he first ran for president, obviously missed a remarkable, truly touching moment of Bush compassion in an action taken by his Labor Department last year. In a spirit of kindness and forgiveness that surely must stem from lessons he learned in Sunday school years ago, Bush & Company stepped in to prevent harsh treatment of someone who had made a mistake, compassionately offering leniency instead.

The someone was Wal-Mart. Its mistake was that it was caught in 85 violations of America's child labor laws. This was hardly Wal-Mart's first case of child labor abuse, and a less-compassionate president might have said: Throw the book at the creeps! But, no, Bush's political operatives in the Labor Department reached a kinder, gentler settlement. Wal-Mart, with $312 billion in yearly revenue, did have to pay a fine of $135,000 — but it was allowed to claim it had done nothing wrong.

Then, showing a passion for compassion, the Bushites agreed that Wal-Mart would be given 15 days notice before any further inspections of its stores! And, if any child labor abuses are found after the notice is given, Wal-Mart can avoid any punishment if it stops the abuses within 10 days.

In fairness, Mr. Bush has to share credit for such a moving display of regulatory restraint. While he had the sensitivity to go along with it, the settlement itself was substantially written by Wal-Mart's helpful lawyers. In fact, the Labor Department's own legal division was left out of the settlement process. And, in a neat touch of teamwork, even the press release about the deal was jointly written by Wal-Mart and Mr. Bush's political appointees.

Did I mention that Wal-Mart has given more than $4 million in campaign funds to Bush and the Republicans in the past seven years? No wonder he's their sweetheart.

From Reuters via the New York Times:

Demonstrators waving banners and shouting slogans marched on government buildings here Thursday to protest the entry of Wal-Mart, the world’s largest retailer, into India.

Wal-Mart and a venture partner, Bharti Enterprises, are working on a deal that could change the face of the country’s $300 billion retail sector and has aroused fears of mass job losses.

In New Delhi, more than 100 protesters shouted “Go back Wal-Mart” and waved placards saying “Save Small Retailers.” Some broke through police barricades and burned an effigy of a dummy with “Wal-Mart Down” scrawled on it.

But there were no protesters Thursday in a suburb of Mumbai where Michael T. Duke, vice chairman of Wal-Mart Stores, accompanied by Rajan B. Mittal of Bharti Enterprises, visited a mall and a hypermarket.

Wal-Mart and Bharti plan a joint venture in a retail market that is forecast to more than double by 2015. Retailing in India, now dominated by small family-run stores, has also attracted the interest of other top global retailers like Tesco and Carrefour.

But owners of small shops are concerned at what they call Wal-Mart’s “backdoor entry.”

Foreign multibrand retailers in India are restricted to cash-and-carry and franchise operations, the route chosen by Metro of Germany, Shoprite Holdings of South Africa and Marks & Spencer of Britain.

“We believe Wal-Mart is going to ruin this country and millions of people will lose their jobs,” said Dharmendra Kumar, campaign organizer in New Delhi for India FDI Watch, a coalition of trade unions, traders, students and communist parties.

Small shopkeepers fear that Wal-Mart could put out of work many of an estimated 40 million Indians whose livelihoods depend on retailing.

“The earnings for our small store keep me, my younger brother and sister and my parents alive,” said Amrit Prakash, 26, one of the protesters, who owns a small grocery store in Delhi.

“If Wal-Mart comes, they will sell goods at wholesale prices, which will be cheaper, and I will have no customers,” he said. “What will happen to me and my family? I’m worried we’ll end up on the streets.”

His fears have strong political resonance.

Sonia Gandhi, head of the Congress Party that leads India’s coalition government, raised her concerns about the “Wal-Mart effect” on retailers in a letter to the prime minister that was leaked to the Indian news media.

Mr. Duke was expected to hold talks with government and Bharti officials in New Delhi, but no specific business announcement would be made, Wal-Mart said in a statement.

Wal-Mart said that Mr. Duke was in India “to learn more about the market firsthand and to further explore the wholesale cash-and-carry business.”

The company, which is also discussing how to provide Bharti with technology support, said it also hoped to increase the amount of India-made goods it buys for its worldwide operations.

Analysts say investments in the supply chain, which is hamstrung by poor infrastructure, like refrigerated trucks and warehouses, would cut the number of middlemen and help reduce spoilage, estimated at nearly 40 percent of total output.

Bharti Retail, wholly owned by Bharti Enterprises, said earlier this week it would spend up to $2.5 billion by 2015 to build hypermarkets, supermarkets and other stores.

“Maybe a few years down the line, when they have a bigger presence, we can see the impact, but right now no single firm has the clout to make or break this market,” said one analyst.

Our latest press release:

WAKEUPWALMART.COM CALLS ON WAL-MART TO LESSEN RISK POSED BY MERCURY & ADOPT A NATIONAL CFL RECYCLING PROGRAM LIKE IKEA

CENTER FOR ENVIRONMENTAL HEALTH CALLS ON WAL-MART TO HELP PROTECT CHILDREN’S HEALTH AND ADOPT NATIONAL RECYCLING PROGRAM

Washington DC - Today, as Wal-Mart made another announcement regarding its plan to sell compact fluorescent light bulbs (CFL’s), WakeUpWalMart.com and the Center for Environmental Health called on the company to “do the right thing” and adopt a national recycling program to help lessen the mercury threat posed by these bulbs.

In statements released today, both the Center for Environmental Health (CEH) and WakeUpWalMart.com cautioned that Wal-Mart needs to address the risks of mercury exposure from the disposal of CFLs, preferably by insuring that consumers can return used bulbs for recycling. If CFL’s are disposed of improperly, mercury exposure can permanently damage the brain, kidneys, and developing fetus, with potential damage to vision, hearing, and memory. In addition, children are especially sensitive to mercury, and women exposed during pregnancy have greater risks of having children with developmental problems, including mental retardation, lack of coordination, and delays in learning to walk and talk.

As background, in January 2007, Wal-Mart announced it had set a goal of selling 100 million compact fluorescent bulbs this year. But, even after two months, Wal-Mart has refused to adopt a national recycling program to deal with the serious environmental threat posed by the mercury content contained in the CFL’s.

Without a national recycling program, Wal-Mart’s efforts to sell 100 million CFL’s could result in the spreading of an estimated 227,273 pounds of mercury into American households.

In addition, Wal-Mart has not publicly committed to selling only low mercury fluorescent light bulbs. In fact, the fluorescent light bulbs available for sale at Wal-Mart have a higher mercury content than similar fluorescent light bulbs available for sale at other retailers.

In contrast, IKEA, before launching its campaign to sell fluorescent bulbs, committed to both sell only low mercury light bulbs and to create a free recycling program that helps lessen the environmental risk.

A fact sheet on the serious environmental risks posed by Wal-Mart’s fluorescent light bulb initiative is available by contacting WakeUpWalMart.com.

The following statement is attributable to Chris Kofinis, communications director for WakeUpWalMart.com:

“Without question, all Americans support a cleaner environment and a higher level of energy efficiency. However, without a national recycling program, Wal-Mart’s push to sell 100 million fluorescent light bulbs could pose an incredible and needless health risk to our children and our communities.

As first exemplified by IKEA, Wal-Mart must stop delaying and immediately establish a free-of-charge recycling program. In addition, just like IKEA, we call on Wal-Mart to commit to only selling low mercury fluorescent light bulbs in order to help lessen the serious health risks to children and families posed by mercury exposure.

If Wal-Mart is truly serious about wanting to be a good steward of the environment, then Wal-Mart will see the light and publicly commit to a national recycling program that will ensure both our environment and the public health is protected from dangerous levels of mercury.”

The following statement is attributable to Michael Green, executive director of the Center for Environmental Health:

“We’re glad to see Wal-Mart taking an important step toward energy efficiency, but the company needs to put a little more than 18 seconds of thought into its program,” said Michael Green, Executive Director of CEH. “Without widely available recycling programs, disposal of these bulbs could mean more mercury near our homes, schools and playgrounds.”

From Reuters via CNNMoney.com:

Worker Rights Consortium says factory in the Philippines engages in labor rights violations, among others.

A U.S. watchdog group has called on Wal-Mart Stores Inc. to put a stop to what it says is worker abuse at a factory in the Philippines that makes apparel for the retailer.

The Worker Rights Consortium said the Chong Won factory, which primarily makes clothing for Wal-Mart supplier One Step Up, has engaged in labor rights violations including forced overtime and minimum wage violations. The WRC has 167 U.S. college and university affiliates.

It also accused the factory's management of colluding with government agents in violence against striking workers.

The group said it was basing its charges on an on-site investigation from Oct. 28 to Nov. 2, and said it notified Wal-Mart in November.

"Wal-Mart has the power to compel Chong Won to halt the violent assaults on lawfully striking workers, offer reinstatement to those workers who have been unlawfully dismissed, and recognize the union and begin bargaining," the WRC said in a report.

Wal-Mart did not immediately return calls seeking comment.

The WRC said Chong Won has produced casual apparel for a number of brands and retailers, including university licensees. But it said that since mid-2006, all of Chong Won's production has been for Wal-Mart.

Yesterday, the University of Michigan’s American Customer Satisfaction Index (ACSI) provided new statistical evidence of how poor Wal-Mart’s customer service compares to competitors in both the grocery and department/discount divisions. Compared to all grocery stores, including union grocers like Kroger and Safeway, Wal-Mart’s customer service scored at the very bottom of the grocery category with a score of 69.

In addition, among department/discount stores, Wal-Mart scored near the bottom of the category with a score of 72. Wal-Mart’s current score is 10 points lower now than it was in 1994 when Wal-Mart scored an industry leading 80 in the ACSI index. The full report and results are available at www.theacsi.org.

The following statement is attributable to Paul Blank, campaign director for WakeUpWalMart.com:

University Of Michigan’s American Customer Satisfaction Index Scores Wal-Mart At Or Near Bottom For All Grocery And Department/Discount Stores

“Wal-Mart’s abysmal customer satisfaction scores are further proof that mistreating your employees and their families is not only immoral, but bad for business.

As we have argued from day one, if Wal-Mart would change and treat its employees decently and fairly, Wal-Mart would become a better, more profitable business. Instead, Wal-Mart has eliminated its standard and traditional health care plans, imposed salary caps, adopted a restrictive attendance policy, and pursued a series of policies to push out loyal, full-time Wal-Mart employees.

As a result, Wal-Mart has gone from the industry leader to the industry laggard and both its image and its sales continue to suffer."

"One would have hoped, after posting its worst annual same-store sales in 27 years, that Wal-Mart’s executives would finally realize the only way to restore employee morale, improve its declining public image and reverse its faltering sales is for Wal-Mart to change for the better by improving its health care, paying a living wage and treating its employees with dignity and respect. Unfortunately, though, Wal-Mart stubbornly refuses to adopt any positive changes that could actually reverse the company’s real problems.

Now, Wal-Mart faces a serious choice. Is Wal-Mart serious about limiting the damage it is doing to its own business? Is Wal-Mart serious about changing its public image for the better? Is Wal-Mart serious about improving health care for its employees? Because, if Wal-Mart is serious then it will work with us toward a set of real solutions and changes that will not only better its workers lives, but will make Wal-Mart a better, more profitable business.”

From Forbes.com:

Consumers are poised to carry the economy for at least awhile longer, if the historic pattern of the University Michigan's American Customer Satisfaction Index holds again this year.

Only don't expect major retailers like Wal-Mart Stores and Circuit City to share in the riches. Both ranked at the bottom of their respective categories--Wal-Mart under supermarkets, Circuit City under specialty stores--with their scores dipping from last year.

Call it the result of Wal-Mart's crowded aisles and Circuit City's inability to keep up with rival Best Buy's famed "geek squad," the popular customer service group. Their dropoff flies in the face of the University's latest overall survey, which showed that consumers' overall happiness with the goods and services they received during the fourth quarter of 2006 was the highest since the report began in 1994...

There will be plenty of satisfied customers going back to spend in 2007 if the latest results are any indication. But it's likely that fewer of them will be headed to Circuit City and Wal-Mart.

Today, Wal-Mart reported annual same-store sales of 2.1 percent - the slowest in the last 27 years.

In response, Paul Blank, Campaign Director for WakeUpWalMart.com issued the following statement:

"It is apparent that Wal-Mart's public image woes have not only contributed to the company's slowest same-store sales in 27 years, but also pose a serious threat to the future success of this company.

Wal-Mart's ‘stubborn refusal to change’ into a better and more responsible employer has not only impeded Wal-Mart's ability to appeal to different demographic consumers, but has fed an explosion of community and political opposition that will not wane.

The bottom line is that Wal-Mart is now at a serious crossroads. Wal-Mart can choose to continue down a path of empty publicity stunts that further alienate the American public and result in sluggish sales growth. Or, Wal-Mart can choose to embrace a new path where the company makes substantive changes and becomes a responsible employer who pays a living wage, provides affordable health care, and protects American jobs. To date, it is obvious to all that are watching that Wal-Mart has chosen the path of publicity stunts.

At a minimum, as we now look to the year ahead, it is clear that our nation's political leaders, especially those who choose to stand with the American people and who care about the future of this nation's economy and security, will increasingly challenge Wal-Mart to change for the better. For Wal-Mart’s sake, and for the betterment of our nation, we hope that Wal-Mart will wake up and realize that what is best for the company is that they finally change into a responsible and moral employer."

From Reuters via The Financial Express:

Wal-Mart Stores Inc investors will be focused on the retailer’s forecast for its new fiscal year and indications as to when sales at its US store base may finally strengthen when the world’s largest retailer reports fourth-quarter results on Tuesday.

Wal-Mart ended its fiscal on January 31 after posting a string of paltry sales gains at its US stores opened at least a year ago, including a 0.1% decline in November.

In the face of store remodeling projects, limited opportunities for US growth, problems with its apparel offerings and a recent drop in temperatures that could pinch shoppers when heating bills roll in, investors are wondering when it US business will get back on track.

“That’s the $64,000 question,” said Patricia Edwards, a portfolio manager with Wentworth, Hauser and Violich, who tracks retail companies.

The retailer has already forecast tepid gains for February, saying it expects US same-store sales to rise 1% to 2%. Smaller rival Target Corp Research, on the other hand, expects February sales at its stores open at least a year to rise 4-6 %.

If the forecasts hold, Target's same-store sales gains would have exceeded Wal-Mart's in 42 of the last 43 months, according to Think Equity Partners. It looks to me like Target is humming on all cylinders,” said James Hardesty, president of Hardesty Capital Management, which owns Target shares. “They’ve found a niche that is above the discount chains, but below the high-end franchise department stores.”

Wal-Mart is struggling as it has tried to widen its niche. Last year, it downplayed its discount roots to try to expand its image beyond that of a low-priced retailer. It stocked more upscale items such as organic food and plasma T Vs?, hoping wealthier shoppers would spend more in its stores. But its lower-income customers balked at some of the changes and, in the face of disappointing sales, Wal-Mart vowed its “most aggressive pricing strategy ever” for the holidays.

“Getting back to really every day low prices and making sure we were the price leader,” said Charles Holley, Wal-Mart’s treasurer, at a Citigroup conference this week. “That was very important to us in the fourth quarter.” In January, Wal-Mart maintained its fourth-quarter earnings forecast of 88 cents to 92 cents per share. Analysts, on average, expect it to earn 90 cents per share, according to Reuters estimates.

Three months ago, a blog called Bent Corner revealed that Wal-Mart was selling a t-shirt with the insignia of Nazi Germany’s 3rd SS Division Totenkopf.

On Nov. 13, 2006, Wal-Mart said it would stop selling and immediately remove the t-shirts with the Nazi insignia. But, last week, bloggers from Consumerist were still able to buy the offensive t-shirt at a Wal-Mart store in Georgia.

Sadly, this is not the first time that Wal-Mart has used Nazi imagery, but with your help we can make it the last.

Sign our petition today and end Wal-Mart's use of Nazi Imagery, once and for all.

From the Merced Sun-Star:

Two Central Valley doctors publicly joined the campaign to stop Wal-Mart from building a distribution center in southeast Merced on Wednesday morning.

Dr. John Holmes, a Merced orthopedic surgeon, and Dr. Bob Vizzard, a Stockton emergency room physician, charged that fumes from diesel trucks driving to and from Wal-Mart's warehouse facility would damage Merced's already poor air quality and trigger asthma attacks and premature deaths.

Up to 450 trucks could drive in and out of the 1.2 million- square-foot distribution center daily, which Wal-Mart wants to build on a 275-acre parcel between Childs and Gerard avenues west of Tower Road.

Consultants are studying the project's possible environmental impacts now; it won't go before the City Council for a vote until at least August, said Planning Manager Kim Espinosa.

Proponents of the warehouse facility say it will eventually provide 900 jobs that pay $13 to $14 hourly.

Vizzard said the facility's air quality impacts outweigh economic benefits.

"This is not an area that can sustain damage to the air," said Vizzard at a press event outside Mercy Medical Center Merced on East 13th Street. "It doesn't help to create jobs in a community where people can't live."

Vizzard is a member of Physicians for Social Responsibility, a Washington D.C.-based organization that advocates on issues including nuclear weapons proliferation and gun control.

Wal-Mart spokesman Keith Morris said his company is "absolutely aware" of residents' concerns about how the distribution center would affect Merced's air. He said Wal-Mart agreed to expand the project's environmental review to help better address those concerns.

That extra analysis added $38,695 to the environmental report's $344,655 price and delayed it by a few months.

"It delays the project, but if it gives everybody a comfort level that these things have been thoroughly evaluated, then it's absolutely the right thing to do," Morris said.

Morris said Wal-Mart had recently taken steps to make the company's 7,000 trucks more environmentally friendly, outfitting the vehicles with auxiliary power units that allow drivers to run air conditioning without turning on engines that emit toxic fumes.

Wal-Mart also has a company policy that prohibits drivers from letting trucks idle while they're loaded and unloaded, Morris said.

Those two measures mean the center's trucks won't spew nearly as much pollution as they would have a few years ago, Morris said.

But Holmes said measures to lessen the facility's impacts on air quality weren't sufficient. He accused the San Joaquin Air Pollution Control District of acting irresponsibly by working with Wal-Mart to lessen possible air quality damage.

"How can you allow a polluting project in here when you can't even control or mitigate the pollution that you already have?" said Holmes, who was also a vocal opponent of the Riverside Motorsports Park. "It's obvious this is inappropriate."

Air district spokeswoman Jaime Holt said the agency does not have the power to deny or approve the Wal-Mart project, because that decision rests with the City Council. Instead the air district's role is to suggest ways Wal-Mart could control pollution, she said.

In August 2006, the air district requested that the environmental impact report on the proposed distribution center include what's called a human health risk assessment.

The assessment will analyze whether diesel exhaust from the distribution center's trucks would pose a cancer risk to people who live or attend school nearby.

When the draft of the environmental report is released, the public will have 45 days to submit comments on the document, Espinosa said.

After consultants prepare written responses to each comment, the Planning Commission will vote on whether to recommend certification of the environmental report and on whether to approve the project.

That vote probably won't happen until late summer, Espinosa said.

After the Planning Commission's vote, the City Council will issue the final decision on the project, Espinosa said.

From the Kansas City Star:

A federal appeals court Tuesday reinstated a lawsuit alleging that Wal-Mart Stores violated the Americans with Disabilities Act when it refused to hire a job applicant with cerebral palsy.

The case was filed by the Equal Employment Opportunity Commission in January 2004 on behalf of Steven J. Bradley Jr.

In August 2005, U.S. District Judge Gary Fenner in Kansas City granted Wal-Mart’s motion for summary judgment and threw the suit out. Fenner found that Bradley’s mobility limitations rendered him unsuitable for the positions of greeter and cashier.

In reinstating the suit, the 8th U.S. Circuit Court of Appeals did not rule on the merits of the case. Rather, it concluded that significant facts remained in dispute, making summary judgment inappropriate.

“We’re obviously delighted with the decision,” said Robert Johnson, regional attorney for the EEOC. “We presented substantial evidence that Mr. Bradley was totally qualified to be either a greeter or a cashier, and it’s really up to the jury to decide that question, not the court, as was done here.”

A Wal-Mart spokesman did not return a call seeking comment.

The 8th Circuit’s decision was significant because, for the first time, it ruled that when an employer claims it didn’t hire a disabled applicant because the applicant posed a threat to the safety of himself or others, the burden is on the employer — not the applicant — to prove it.

“It places the emphasis where it’s supposed to be,” Johnson said.

The case was the first EEOC disability-related lawsuit against Wal-Mart since the agency and the retailer signed a $6.8 million consent decree in December 2001. The decree resolved 13 disability-related lawsuits, including one out of Clinton, Mo., that involved Wal-Mart’s failure to hire a man who used a wheelchair.

Bradley originally applied for a greeter/customer assistant position at Wal-Mart in July 2000. He reapplied in early 2001, when Wal-Mart was expanding its Supercenter in Richmond, Mo., and needed additional employees.

Bradley used forearm crutches for short-distance walks and a wheelchair for longer distances. Standing for more than 10 or 15 minutes was difficult for him, but he could climb stairs and get on and off a stool. His hand dexterity was limited, but he could write and hold things and lift heavy objects from his wheelchair.

He was called in for an interview for a position at the Supercenter and arrived in his wheelchair. He was turned down for the job.

In pretrial testimony, Chris Fevurly, a medical expert for Wal-Mart, concluded that Bradley wasn’t qualified to perform the essential functions of either greeter or cashier. But an expert for the EEOC, vocational rehabilitation consultant Kent Jayne, found that he could do either job with reasonable accommodation.

In its decision, a panel of the 8th Circuit ruled that Wal-Mart had offered “no evidence that Bradley cannot perform the essential functions of the greeter and cashier positions with reasonable accommodation; instead, it attacks the credibility of Jayne’s testimony. Such a credibility determination is best reserved for juries.”

The panel also found that the EEOC had mustered sufficient evidence that the reasons Wal-Mart gave for not hiring Bradley — namely his limited availability and his job history — were a pretext.

Finally, the court ruled that an employer asserting a “direct threat” defense bears the burden of proof. Wal-Mart, it said, had failed to explain how Bradley, “using a wheelchair or other similar device, poses any more of a threat than Wal-Mart customers who shop using such devices.”

From the Austin American-Statesman:

Sofie Cruse and five of her middle school friends, spending their Saturday as neophyte activists, jumped up and down and screamed at drivers waiting at the busy intersection of Anderson Lane and Burnet Road to look at their sign.

"No Wal-Mart SuperCenter — Do it neighborly. Do it right," the sign read.

The girls were among what organizers said was a crowd of about 2,500 at Northcross Mall in North Austin lending their voices to a growing spat between an Austin neighborhood and a worldwide corporation.

"If they put that Wal-Mart here, it's going to ruin the feel of my neighborhood. That's where I skate . . . and I get parts for my bike right there," Sofie, 15, said as she pointed at different parts of Northcross Mall.

Cruse and her red-clad fellow activists formed a human chain along the streets ringing Northcross Mall on Saturday morning in protest of a planned Wal-Mart that would anchor a makeover of the long-struggling mall.

Responsible Growth for Northcross, a coalition opposing the project, organized the protest, which began at about 10 a.m. The single line of demonstrators was about a mile long, organizers said.

Read more about Responsible Growth for Northcross on the community group's web page.

The hand-to-hand chain remained linked for about 10 minutes.

But the anti-Wal-Mart protesters stayed for about a half-hour after breaking the chain, yelling and cheering at cars as they passed. Many of the motorists honked their horns in a seeming show of support.

"I had my first kiss at this mall. I don't want to see it go," said Kelly Brenich, who has lived for most of her life in the Allandale area, which lies to the south of the mall. "Now I take my kids ice skating here."

Wal-Mart Stores Inc. and land owner Lincoln Property Co. were not available for comment Saturday.

But supporters of Wal-Mart's plans have pointed out that the mall, surrounded by acres of parking and situated alongside busy Anderson Lane and Burnet Road, was built as an intense retail center originally.

The mall, which opened in 1975, has struggled for the past decade and generated far less traffic than in its early years.

The opposition to having a store at Northcross, they have said, has more to do with Wal-Mart's overall political problems — the mega-chain has been criticized for its labor practices and effect on small, local businesses — than it does to the specifics of the situation.

Nineteen-year-old Kate Branam said she would consider moving back to the area — she grew up near the mall — if the Wal-Mart is completed.

"The prices are hard to beat, and it stays open all night," said Branam, an Austin Community College student.

The city approved the Lincoln Property plan for Wal-Mart in August, but neighbors in the area took immediate action to try to stop construction.

In December, another rally was held outside Austin City Hall to protest the approval.

All construction plans and applications for permits ceased in December for a 60-day period.

Wal-Mart spokesman Keith Morris said last month that company representatives have met with six neighborhood associations since November but haven't received an invitation from Responsible Growth for Northcross.

Responsible Growth is calling for residents of Austin to boycott local Wal-Mart stores beginning today, and state Rep. Elliott Naishtat, D-Austin, said he would take part.

"I hope that Wal-Mart gets the message (today)," said Naishtat, who was strolling around in a red-checked shirt after the human link broke. "Getting nearly 3,000 people to stand tall on an overcast, cold morning in Austin is incredible."

From The Hindu:

NEW DELHI: Leading trade unions have joined hands with cooperative stores, retail associations and small-scale traders to launch a campaign against retail giant Wal-Mart's backdoor entry into India and the Government's move to open up the retail sector for Foreign Direct Investment (FDI).

Over a score groups have signed a memorandum against Wal-Mart's entry and FDI in retail which will be submitted to Prime Minister Manmohan Singh and United Progressive Alliance chairperson Sonia Gandhi on Tuesday.

The memorandum — an initiative of India FDI Watch — states that Wal-Mart's entry and FDI in retail would result in widespread unemployment and massive displacement of people.

Quoting media reports which suggest that corporate retail chains would invest over 50 per cent into food retail — entering directly into contract farming where the implications on farmers has till date not been studied — the memorandum notes that with agriculture and unorganised retail sectors being the country's largest and second largest source of employment respectively, "there is no place for giant corporates like Wal-Mart and other multi-national retail chains, known for their monopolistic business practices abroad, in India."

Demanding that Wal-Mart, Carrefour and Tesco be denied entry, the signatories have called for a close examination of the impact of corporate retail chains till safeguards are put in place.

Among others, the memorandum has been endorsed by the Centre for Indian Trade Unions, All-India Kisan Sabha, All-India Trade Union Congress, Apna Bazaar, The Confederation of All-Indian Traders, Federation of Associations of Maharashtra, Bangalore Merchants Chamber; National Consumer Cooperative Federation, Khadi and Village Industries Commission, National Hawkers Federation, Hind Mazdoor Sabha, National Alliance of Peoples' Movements, Mumbai Grahak Panchayat, Youth in Unity for Voluntary Action, Swadeshi Jagran Manch, Consumer Cooperative Forum (Maharastra), Maniben Kara Institute, Mumbai Hawkers Union, Super Bazaar and Vikas Adhyayan Kendra.

From the Associated Press via the Seattle Post-Intelligencer:

SEATTLE -- Wal-Mart Stores Inc. has agreed to pay $125,000 to settle a racial harassment and retaliation lawsuit stemming from a complaint by an Idaho employee, the U.S. Equal Employment Opportunity Commission said Thursday.

Travis Woods, a night maintenance supervisor at a Lewiston, Idaho, store, endured two years of racial harassment in the form of epithets and graffiti and was then fired after he complained, according to the lawsuit filed against the company by the EEOC in U.S. District Court in Idaho.

Woods, who is black, had worked for the company for seven years.

Wal-Mart agreed to pay Woods $125,000. The EEOC said the company also agreed to train managers, supervisors and employees about prohibited racial harassment, and voluntarily provide information to the federal agency about its handling of discrimination and harassment complaints for a period of two years.

"An employer with the size and sophistication of Wal-Mart should have investigated and addressed the racial harassment against Mr. Woods within hours of its occurrence," EEOC regional attorney William Tamayo said in a statement.

In response, Wal-Mart spokesman John Simley said Thursday night, "We do not tolerate discrimination of any kind, anywhere in our operations.

"We do not comment specifically on settlement criteria but the facts as they are described in this news release are not correct," Simley added in a telephone interview. "The EEOC's lawsuit never established that Mr. Woods suffered discrimination and in our settlement agreement we admitted no liability and the EEOC accepted that."

Simley confirmed the $125,000 figure and said he was not able to discuss exactly what part of the EEOC statement Wal-Mart considered incorrect.

The Bentonville, Ark.-based retailer has 1.8 million employees.

So those t-shirts with the Nazi "death head" emblem that Wal-Mart promised to remove back in November...well they're still selling them.

You can read the original blog by Rick Rottman who discovered this in November here.

From today's Chicago Tribune:

WASHINGTON -- Rep. Jan Schakowsky went after Wal-Mart on Thursday in an effort to prod the giant retailer to make good on a 3-month-old promise to remove Nazi-themed T-shirts from its stores.

In a letter to Wal-Mart Chief Executive H. Lee Scott Jr., Schakowsky (D-Ill.) asked company officials to tell Congress what steps they are taking to remove the remaining shirts that display the Nazi Totenkopf--the "death head" emblem worn by soldiers in Adolf Hitler's personal guard--from store shelves. Twenty-one other lawmakers from both parties also signed the letter.

"Everyone agreed that these shirts have to go, including Wal-Mart; it's just that they didn't do anything about it," Schakowsky said. "Either at the time they really weren't serious, or their capacity to do that is limited, which makes one wonder about recalls of potentially dangerous products."

Blogger Rick Rottman of BentCorner.com was first to recognize the T-shirt's skull-and-crossbones design as the infamous Nazi emblem, and posted his discovery online in November. At the time, Wal-Mart responded quickly to the public outcry, promising to ban the sale of the shirts and remove them from stores.

Despite the corporate order, it appears the shirts were never removed from at least three dozen of Wal-Mart's 3,300 U.S. stores, according to Consumerist.com, which has been tracking discoveries of the shirts.

Wal-Mart Stores Inc. spokesman David Tovar said the firm was not aware of the sordid origins of the symbol when it first stocked the shirts in the fall. "We never would have placed this T-shirt on our shelves had we known the origin and significance of this emblem," he said.

Wal-Mart said it has removed 99.5 percent of the shirts and deactivated cash register bar codes throughout its retail empire to prevent them from being scanned and sold at the register. "We're working as quickly as we can to get them off," Tovar said. "We expect to reach 100 percent completion of this task in a few days."

Yet as recently as Thursday, bloggers at Consumerist.com were fielding reports from readers who said they had successfully purchased the shirts from Wal-Marts.

"The average blue-vest employee just isn't aware of it," said Consumerist.com editor Ben Popken, who explained that when bar codes failed, readers easily persuaded employees to scan similarly priced items, or did so themselves at self-checkout counters.

Popken says he also blames unconscientious fashion designers, who likely saw the emblem of death as just another in-vogue skull-and-crossbones design, with the added bonus of being a copyright-free image. "The skull-and-crossbones is popular," he said, "but designers need to be aware of the history of the iconography that they're appropriating ad hoc."

In its efforts to remove the remaining shirts, Wal-Mart reiterated a directive to its employees to refuse to sell the shirts, and informed Schakowsky's office of its plans Thursday.

"As a Jew, and as a consumer, and as it happens, a member of Congress, I'm hoping that Wal-Mart resolves this quickly," Schakowsky said. "There's a lot of organizations and constituencies out there that will get on their case if they don't. And we'll give them a little bit of time, but not much."

From IndiaPost.com:

NEW DELHI: Congress President Sonia Gandhi is understood to have written to Prime Minister Manmohan Singh advising caution on allowing US retail giant Wal-Mart entry into India.

Her letter in this regard comes in the midst of a raging controversy over entry of the American retailer, whose presence political parties, especially the Left, feel can threaten millions of neighborhood stores run by families and small traders in the country.

Gandhi is said to have counseled the government on the need to examine thoroughly, various issues like whether there were any loopholes in the Bharti-Wal-Mart venture and whether it complied with Foreign Direct Investment norms.

The Left parties have strongly opposed the Bharti-Wal-Mart joint venture, saying it was a backdoor entry for the US giant which would stamp out mom and pop stores in India.

The joint venture company proposes to open hundreds of supermarket and hypermarkets in the coming days.

From the Associated Press via BusinessWeek:

Executives from Wal-Mart and three other large U.S. employers on Wednesday joined union leaders in calling for "quality, affordable" health care for every American by 2012.

However, they did not propose any specific policies to achieve this goal, or commit to spending any extra money in the near-term to provide health coverage to more workers.

Joining Wal-Mart Stores Inc. CEO Lee Scott and Service Employees International Union leader Andrew Stern at a Washington press conference were top executives from Intel Corp., AT&T Inc. and Kelly Services Inc., a temporary staffing agency. Yet some critics of Wal-Mart's health care policy remained unsatisfied.

"2012 is a still long way away. What about now?" said Dana Rezaie, a widow with three children who works nights stocking shelves at a Wal-Mart store in Fridley, Minn...

Joseph T. Hansen, president of the United Food and Commercial Workers union, was critical of other union leaders for teaming up with Wal-Mart.

"It's not appropriate to take the stage with a company that refuses to remedy its mistreatment of workers," Hansen said in a prepared statement. The union he represents funds the WakeUpWalMart campaign, which challenged the company to immediately provide health care to all of its uninsured employees and their families.

The Bentonville, Ark.-based company, which employs more than 1.3 million U.S. workers, has made several changes to its health care policy since 2005, including lowering premiums and shortening eligibility periods.

Yet Scott said Wednesday he would not withhold financial support from lawmakers and candidates who oppose universal health care. WakeUpWalMart spokesman Chris Kofinis called that stance "hypocritical," pointing out that Scott blamed politics as the main reason the nation lacked universal health care.

"Anybody can say they support something. They need to show they really do," said Rezaie, a six-year Wal-Mart employee who says she cannot afford the company's existing health plan and instead relies on state-funded care. WakeUpWalMart supplied Rezaie's name to The Associated Press.

Click here for the full article.

The following statement is attributable to Paul Blank, Campaign Director for WakeUpWalMart.com:

“Without question, WakeUpWalMart.com and the UFCW strongly support the goal of universal health care and we have long offered to work with genuine partners who want real health care reform.

Given the intense public pressure brought by our campaign, it is not surprising, albeit disingenuous, that Wal-Mart now wants to support universal health care despite having one of the worst health care records in America. But, what is surprising is how anyone, in good conscience, would give Wal-Mart a stage to make empty statements that will not give health care to one more uninsured Wal-Mart worker.

While we support every corporation endorsing the idea of universal health care, simply talking about it does not address the serious health care problem we face in America today. We cannot excuse any corporation, including Wal-Mart, for failing to live up to its health care responsibilities and not providing affordable health care to its employees today.

Even though we could have pursued a similar path with Wal-Mart, we decided that no one, in good conscience or without a real commitment from Wal-Mart to make substantive changes, could look the other way and ignore the awful fact that Wal-Mart is not committed to substantive change that will address the fact that so many of its workers and their families will have no company health care for the many years ahead.

So, if Wal-Mart is truly serious about universal health care, we challenge the company to provide universal health care to all of its uninsured employees and their families today. And, secondly, make universal health care a litmus test for every one of its political contributions. Sadly, we believe Wal-Mart will refuse on both fronts - but we await their answer.

Unfortunately, until Wal-Mart makes real change our campaign cannot simply ignore the fact that Wal-Mart, a company with over $11 billion in profits, has chosen to do nothing - nothing - to substantively address the ongoing and terrible health care crisis in its own stores. More importantly, our campaign cannot and will not ignore this company's record of gender discrimination, its pattern of repeated child labor violations, its destruction of the American middle class by shipping American jobs overseas, and a brutal history of paying poverty level wages.

So, on behalf of the American people, let it be clear to all, especially Wal-Mart, our campaign will never end - never - until we see real and substantive changes from Wal-Mart on health care and an array of other social issues. And, when that day comes, we will proudly stand on the stage with Wal-Mart and celebrate a new and genuine better day for America.”

Today, in a 2 to 1 decision, the U.S. Court of Appeals for the 9th Circuit affirmed the class action status of the largest gender discrimination case in U.S. history, Dukes v. Wal-Mart. In the case, more than 2 million former and current female employees of Wal-Mart are suing the company for gender discrimination. In total, Wal-Mart faces over 57 wage and hour lawsuits across the nation.

The following statement is attributable to Paul Blank, campaign director for WakeUpWalMart.com:

"Today's decision by the court is a huge victory not only for the women who work at Wal-Mart, but for all Americans who care about equal rights and a discrimination-free workplace.

With over 57 wage and hour lawsuits, it appears more obvious everyday that Wal-Mart suffers from a systemic pattern of ignoring labor laws which has resulted in the mistreatment and exploitation of its employees.

As America’s largest employer, it is now time for Wal-Mart to take responsibility for its actions and do the right thing for its employees. Hopefully, today’s decision will help ‘wake-up’ Wal-Mart to the fact that this company must change into a responsible and moral employer because the American people will not tolerate discrimination or unfairness in the workplace.”

Last week, more than 7,000 Wal-Mart store managers went to Kansas City, MO for Wal-Mart's annual managers meeting, and so did we.

We went to Kansas City to take our fight for change directly to the store managers who are responsible for implementing Wal-Mart's anti-family policies. We unveiled a new initiative to specifically target store managers and ask them to join our movement for change.

Now, it's your turn.

Please download a copy of our "open letter" to Wal-Mart store managers and give it to the store manager at a Wal-Mart in your area.

As you may recall, it was at this very same managers meeting in Kansas City last year that Wal-Mart turned its back on Sam Walton's dream and rolled out a series of anti-family policies that have wreaked havoc on its employees.

For example, in 2006, Wal-Mart capped salaries, cut hours, replaced full-time jobs with part-time jobs, eliminated the standard and traditional health care plans for new hires, and, even, instituted a restrictive attendance policy that doesn't allow an employee to take care of sick child.

These anti-family policies must be reversed. Please download this flyer and pass it out to Wal-Mart workers inviting them to be on a national conference call this Thursday where we will talk about what they can do to fight back!

Unfortunately, Wal-Mart has turned its back on Sam Walton's vision, but it's not too late. With over 314,000 Americans we have the power to end these anti-family policies and change Wal-Mart for the better by making sure people and America come first.

From the Wall Street Journal:

Wal-Mart Stores Inc. posted a same-store sales gain of 2.2% for January, beating its own conservative projection, but capping a lackluster fiscal year.

The retailer had predicted a gain of 1% to 2% for the five-week period ended Feb. 2 over the same span a year earlier. The January result is the latest in a string of paltry monthly results, including a 1.6% gain in December, a 0.1% drop in November and a 0.5% gain in October.

Wal-Mart's latest fiscal year, which ended Jan. 31, is shaping up to deliver the lowest annual same-store sales gain in the 27 years the Bentonville, Ark., company has reported such figures. Through December, it was tracking at a 2% gain for the year.

"Overall, while certainly a step in the right direction, particularly in light of the company's management changes a few weeks back and well-documented challenges, Wal-Mart is still not out of the woods, in our view," Charles Grom, an analyst with J.P. Morgan & Chase Co. unit JP Morgan Securities, wrote Saturday in an e-mail. "And [it] will continue to face an uphill battle versus Target and other moderately priced department store chains."

Among Wal-Mart's recent executive shifts in recent weeks was moving Chief Marketing Officer John Fleming into a top merchandising role.

Same-store sales figures chart sales trends at stores open for at least a year, providing insight into a retailer's gains or losses against the relatively fixed costs of operating established stores. They are an important indicator of a retailer's return on the money spent on stores, which in turn reflects on overall profitability. Many U.S. retailers plan to release January sales results Thursday, and Wal-Mart will provide a final, more comprehensive view of its results at that time.

January typically isn't a big month for Wal-Mart, accounting for 6.5% of its total sales over the past five years, according to Mr. Grom. It is a month in which retailers often attempt to clear out leftover holiday merchandise and reap sales from redemptions of gift cards bought in December.

While slight at just 2.2%, Wal-Mart's latest monthly gain still had a high hurdle to clear: In last year's period, the retailer notched a 5% gain.

Wal-Mart's weak results can be traced to several factors, many of which analysts don't expect to abate this year. The retailer has blamed its efforts to remodel sections of 1,800 stores this year and last for disrupting shoppers and driving some away.

At last public notice, Wal-Mart planned to overhaul apparel sections in nearly as many stores this year -- 451 -- as it did last year, when it made the changes at 461 stores. And it plans to overhaul home-décor sections in more stores this year -- 170 -- than last, when it made changes at 54.

Perhaps most significantly, the retailer has opened most of its new stores in recent years in urban and suburban markets, where it faces stronger competition and where shoppers aren't as enamored of its low-price merchandise as are those in its rural strongholds.

As well, Wal-Mart's effort last year to lure more trendy, affluent shoppers by airing commercials with lifestyle themes rather than trumpeting low prices yielded uneven results and has been toned down.

Beginning with its February results, Wal-Mart will switch to reporting on the first Thursday of the following month along with most other retailers.

From the Morning News out of Arkansas:

Wal-Mart Stores Inc. will have to wait another year, at least, to find out if it can open an industrial bank after the Federal Deposit Insurance Corp. on Wednesday extended for one year a moratorium on considering applications of nonfinancial companies that want to establish or acquire banks.

The decision puts on hold pending applications from Wal-Mart, Home Depot Inc., DaimlerChrysler AG and American Pioneer, and gives Congress time to consider legislation that would prohibit such companies from owning so-called industrial loan corporations, or ILCs.

John Kelly, director of financial services for Wal-Mart in Washington, said the company was disappointed with the FDIC’s decision.

“We’re mainly disappointed for our customers. This effort has always been about cutting unnecessary costs and saving customers money, and that is all this bank application is about,” he said in a phone interview.

Critics say the growth of ILCs risks blurring the line between banking and commerce, concentrating assets in the hands of a few big companies and stifling competition, which hurts consumers. They also have expressed concern that Wal-Mart opening an industrial bank would lead to it starting a commercial bank in the future.

But Kelly said the company has repeatedly said it would not engage in branch banking.

“We would welcome restrictions put on our application that would prevent that. You will never see a Wal-Mart bank in a Wal-Mart store,” he said. “I think it was clear by the FDIC decision today that this was a broad policy issue, and we will be working closely with Congress on those issues.”

Wal-Mart could save millions of dollars by processing its own financial transactions, the company has said.

A group of House lawmakers on Monday renewed a push for legislation that would block commercial companies from owning these special sorts of banks that have been proliferating in recent years.

The FDIC said it received more than 1,500 letters and comments from individuals opposing Wal-Mart applying to open an industrial loan corporation in Utah, a type of bank that regulators let commercial businesses operate for specific purposes, such as processing payments.

Most of the negative comments stressed the dangers of an unregulated commercial company owning a federally insured bank. Besides banks, others who sent letters of opposition to Wal-Mart’s application include the Consumer Federation of America, the University of California and several unions.

“This (FDIC) decision recognizes that Wal-Mart’s lack of transparency and pattern of disregarding legal accountability are legitimate issues that deserve scrutiny. If Wal-Mart can’t be trusted to abide by wage and discrimination laws, then the FDIC shouldn’t trust it with a bank,” said David Nassar, executive director of Wal-Mart Watch in Washington, in an e-mailed news release.

Wal-Mart Watch is a union-backed group that has an ongoing campaign against Wal-Mart over its employment policies.

The House bill is sponsored by Reps. Barney Frank, D-Mass., chairman of the House Financial Services Committee, and Paul Gillmor, an Ohio Republican. Similar legislation sailed through the House last year, but is stuck in the Senate.

From the Wall Street Journal:

As the world's biggest retailer, Wal-Mart Stores Inc. pays billions of dollars a year in rent for its stores. Luckily for Wal-Mart, in about 25 states it has been paying most of that rent to itself -- and then deducting that amount from its state taxes.

The strategy is complex, but the bottom line is simple: It has saved Wal-Mart from paying several hundred million dollars in taxes, according to court records and a person familiar with the matter. And Wal-Mart is far from alone.

IT'S A DEAL

Below, an excerpt from the lease agreement signed between a Wal-Mart-owned REIT and another Wal-Mart unit.

The arrangement takes advantage of a tax loophole that the federal government plugged decades ago, but which many states have been slower to catch. Here's how it works: One Wal-Mart subsidiary pays the rent to a real-estate investment trust, or REIT, which is entitled to a tax break if it pays its profits out in dividends. The REIT is 99%-owned by another Wal-Mart subsidiary, which receives the REIT's dividends tax-free. And Wal-Mart gets to deduct the rent from state taxes as a business expense, even though the money has stayed within the company.

Partly thanks to sophisticated financial strategies like these, states' tax collections from companies have been plummeting. On average, Wal-Mart has paid only about half of the statutory state tax rates for the past decade, according to Standard & Poor's Compustat, which collects data from SEC filings. The so-called "captive REIT" strategy alone cut Wal-Mart's state taxes by about 20% over one four-year period. Now several state regulators are trying to crack down on the strategy, used largely by retailers and banks, and some other states have changed their laws to try to end the practice. Yesterday, New York Gov. Eliot Spitzer included elimination of the loophole as part of his proposed budget, a fix he said would bring the state $83 million a year.

RELATED DOCUMENTS

In a June 2002 affidavit, a Wal-Mart executive laid out the relationship between the REIT and its owner, another Wal-Mart subsidiary. H. Lee Scott Jr., now Wal-Mart's CEO, served as the REIT's "managing trustee," according to a property deed from 1996.North Carolina tax authorities are challenging Wal-Mart, saying its REIT strategy was intended to "distort [the company's] true net income," according to its filings in the case in Superior Court in Raleigh, N.C. The state calls captive REITs a "high priority corporate tax sheltering issue" and in 2005 ordered Wal-Mart to pay $33 million for back taxes, interest and penalties stemming from the REIT. The company paid it and last year sued the state for a refund.

The structure Wal-Mart is using features some unusual elements. Because REITs must have at least 100 shareholders to gain tax benefits, roughly 100 Wal-Mart executives were enlisted to own a combined total of around 1% of the REIT's shares, without any voting rights. H. Lee Scott Jr., now Wal-Mart's CEO, was listed as the REIT's "managing trustee" from 1996 to 2004.

A single Wal-Mart real-estate official, Tony Fuller, represented the company both as tenant and landlord in its lease with itself. Ernst & Young LLP, the accounting firm that sold the strategy to Wal-Mart, also is the company's outside auditor. In its internal sales training materials, the accounting firm explicitly labeled the strategy as a method to reduce taxes -- a red flag to tax authorities, who often demand that tax shelters have other business purposes.

Wal-Mart attorneys say in court filings that the strategy is perfectly legal and that North Carolina is exceeding its authority. A spokesman for the Bentonville, Ark., company, John Simley, said Wal-Mart "is comfortable with its current structure and is in compliance with federal and state tax laws." He added that the REIT structure was adopted to "more effectively and efficiently manage the company's real-estate portfolio, including the impact on the company's overall state tax planning."

Regulators in at least a half-dozen states are going after companies that have trimmed their taxes through similar arrangements, including Regions Financial Corp.'s AmSouth Bancorp. unit; AutoZone Inc. of Memphis, Tenn.; and two units of Bank of America Corp. In a Massachusetts case against Bank of America unit Fleet Funding Inc., authorities call Fleet's REIT arrangement a "sham" in court filings. They note that Fleet increased the salaries of the roughly 100 employees whom it made REIT shareholders to compensate them for personal income taxes stemming from ownership. The Multistate Tax Commission, an association of state revenue authorities, says it has started examining the use of captive REITs to avoid taxes, alerting states to the issue and proposing legislative fixes to close the loophole.

States collected more than $44 billion last year in corporate income taxes, out of $607 billion in total state tax receipts, according to the Nelson A. Rockefeller Institute of Government, a nonpartisan think tank associated with the State University of New York. But the average effective corporate state and local tax rate has dropped from 6.7% during the 1980s to about 5% during the first half of this decade, according to a recent report by the Congressional Research Service. This is in part because of the proliferation of state and local tax breaks, as well as tax shelters, according to several academic and government studies.

Some corporate state tax planners say arrangements like these are merely smart business, and that the loopholes exploited by companies should be fixed by state legislatures rather than litigated by state lawyers. Critics of the shelters complain they let companies use public services provided by local governments -- such as police and fire protection or new highways -- without having to shoulder their fair share of the costs. Meanwhile, the portion of state taxes borne by individuals is steadily rising.

Congress created REITs in 1960 as a way to allow smaller investors to put money in a wide portfolio of commercial real estate, spreading their risk. Congress also gave them a tax benefit: REITs aren't subject to corporate income tax on the profits they pay to shareholders as long as they pay out at least 90% of the profits. The shareholders still usually get federally taxed on the dividends, which still count as income for them.

After a boom in REITs in the early 1990s, big accounting firms including Ernst & Young and KPMG LLP figured out that on the state level, they could pair the tax break on REIT dividends with a separate tax rule that allows companies to receive dividends tax-free from their subsidiaries. With the REIT as a subsidiary itself, two rules aimed at avoiding double taxation could be combined to effectively avoid any taxation at all.

The strategy worked especially well if the REIT was owned by a company incorporated, and claiming to do all its business, in a state such as Delaware or Nevada that often wouldn't tax the corporate income anyway. That created an extra hurdle for other states to challenge the practice if they caught onto it.

Ernst & Young early on targeted the banking industry as a possible beneficiary of the captive REIT strategy. Like retailers, banks have branches in many states and often are liable for lots of state-level corporate tax. Ernst & Young targeted at least 30 banks, some of them its audit clients. The SEC generally permits that dual role as long as the firm's fee isn't contingent on the tax savings.

According to documents from a 1995 internal Ernst & Young sales training meeting reviewed by The Wall Street Journal, the accounting firm suggested banks put some of their income-producing assets, such as a portfolio of mortgages, into a REIT subsidiary, then use the double-tax break to "shelter" the income from state taxes. The REIT would issue a tiny number of non-voting shares to bank "officers and directors" to meet the 100-shareholder rule that REIT law requires.

U.S. banks "pay millions of dollars each year in state and local taxes," read the Ernst & Young presentation to its sales force. "The FSI State Tax Financial Product we have developed can significantly reduce or eliminate this heavy tax obligation..." One section of the Ernst & Young sales package featured hypothetical questions from clients about the REIT shelter, and the proposed answers. To pass legal muster, many corporate tax shelters purport to have additional business purposes behind merely saving taxes. Ernst & Young, however, was blunt about the reason for its proposed strategy:

"Q: What's the business purpose?

"A: Reduction in state and local taxes.

"Q: What if the press gets wind of this and portrays us as a 'tax cheat'?

"A: That's a possibility....If you are concerned about possible negative publicity, you can counter it by reinvesting the savings in the community."

An Ernst & Young spokesman declined to comment on its REIT work, saying the firm was "prohibited from commenting on client matters." The spokesman said he could not verify the authenticity of the internal sales training documents based on quotes provided by the Journal. However, he said the "limited language communicated in the internal memo does not reflect the quality and nature of the advice we provide to our clients."

State authorities have had mixed records so far in pursuing back taxes and penalties in captive-REIT cases. AutoZone, the big auto-parts chain, won the right to deduct the dividends from its taxes in Kentucky but lost a preliminary round in Louisiana. The Hawaii Department of Taxation won a case involving a REIT used by Central Pacific Financial Corp., a bank holding company. AmSouth is in litigation with Alabama over tax benefits from its REIT.

Fleet Funding's REIT, on which the company was advised by KPMG, has led Massachusetts to seek more than $42 million in back taxes, interest and penalties. BankBoston Corp. is in similar litigation with Massachusetts. Both banks have been acquired by Bank of America, which declined to comment on the litigation.

Fleet's attorneys have said in court papers that its REITs were legitimate, and the fact that they were partly motivated by tax considerations does not legally undermine their valid business purpose -- to raise capital, they say. A KPMG spokeswoman declined to comment on the Fleet case, but said it had stopped any involvement with "prepackaged tax products" before a 2005 agreement it made with the U.S. Justice Department over improper tax strategies that also led to the indictment of 17 former KPMG officials.

It's unknown how many disputes have been raised over the strategy used by Wal-Mart and others, because such tax disputes are generally not disclosed unless lawsuits are publicly filed or the company reveals them in SEC filings.

Wal-Mart adopted its captive-REIT structure just as it was unwinding a previous strategy to reduce taxes that states had begun to challenge. For the first half of the 1990s, the retailer used a so-called intangible holdings company structure also used by many other corporations. Wal-Mart transferred its trademarks to a subsidiary called WMR Inc. in Delaware, which does not tax many forms of corporate income. Then it paid the subsidiary for the use of the brands. That allowed Wal-Mart to deduct those payments from its local income taxes in some states, while WMR's income wasn't taxed by Delaware.

Several states won challenges to the strategy, used by various retailers. Wal-Mart settled a dispute over its use of WMR in Louisiana -- the details of the settlement are sealed -- and lost on the main points of a case in New Mexico. Wal-Mart merged with WMR in February of 1997 and its use as a state tax avoidance vehicle was apparently discontinued, according to New Mexico court records.

In the meantime, Wal-Mart set up a new vehicle to control its state tax bill: captive REITs. In the summer and fall of 1996, Delaware corporate records show, Wal-Mart created a new hierarchy of subsidiaries: a REIT called the Wal-Mart Real Estate Business Trust; a Delaware-based parent company for the REIT, called the Wal-Mart Property Co.; and Wal-Mart Stores East Inc., parent of the Delaware firm. Wal-Mart Property owned 99% of the REIT's shares, and 100% of the voting shares, according to Wal-Mart court filings in North Carolina and West Virginia. The company also set up a similar arrangement for its Sam's Club stores.

To meet the 100-shareholder threshold required for REITs, Wal-Mart distributed a minimal amount of nonvoting stock, to approximately 114 Wal-Mart employees, according to a person familiar with the arrangement. The dividend payouts were nominal. The structure involved Wal-Mart's top executive tier. The shareholders were generally executive vice presidents and above. David Glass, then Wal-Mart's president and CEO, was listed as president of Wal-Mart Stores East on the lease agreement, and Paul Carter, then a Wal-Mart executive vice president, was listed as the president of the REIT.

Wal-Mart began transferring to the REIT ownership of the properties -- the land and buildings -- for hundreds of its stores in 27 states, real-estate records show. Then Wal-Mart Stores East signed a 10-year lease agreement with its REIT that took effect on Jan. 31, 1997, agreeing to pay a fixed percentage of the stores'"gross sales" as rent, according to a copy of the arrangement filed in the North Carolina case. Mr. Fuller, the Wal-Mart real-estate official, is listed as the contact for both the tenant and the landlord. The original lease was due to be renewed this week.

Wal-Mart could deduct from its state-taxable income the rent paid by Wal-Mart Stores East to the REIT. The REIT paid the majority of its rental earnings to its 99% owner, Wal-Mart Property Co., in the form of dividends. That company's base in Delaware gave it another way to avoid liability for state taxes, since some states do require that dividends a REIT pays to its corporate owner be taxed, as the federal government does.

The Delaware subsidiary then paid the money back to Wal-Mart Stores East, the same subsidiary that made the payments to the REIT to begin with. Those payments to Wal-Mart Stores East weren't taxed either, because dividends paid to a corporation by a subsidiary normally aren't counted as taxable income for the parent company.

The result of the circuitous transaction: Wal-Mart could effectively turn rental payments to itself into state level tax-deductions in most of the states where the payments have been made. Under typical circumstances, rent paid to a third-party landlord also would reduce taxable income. But that would ordinarily be cash out the door, like most other tax-deductible expenses. Here, the majority of the tax-deductible rental payments came straight back to Wal-Mart.

The national tax savings have been significant. Over a four-year period, from 1998 to 2001, Wal-Mart and Sam's Club paid company-controlled REITs a total of $7.27 billion that eventually came back to Wal-Mart in states across the country, according to a North Carolina Department of Revenue auditor's report filed in court by Wal-Mart. Based on an average state corporate income tax rate of 6.5%, three accounting experts consulted by The Wall Street Journal estimated the REIT payments led to a state tax savings for Wal-Mart of roughly $350 million over just those four years. SEC filings show the company paid $1.18 billion in state taxes during that period. The loss of federal deductions that bigger state tax payments would have triggered brought the company's effective tax savings overall down to about $230 million. Wal-Mart declined to comment on the figures.

It is not clear how much Wal-Mart has paid to its own REITs in the most recent five years. The yearly rental payments -- on which the tax savings are based -- are pegged to the "gross sales" of the stores, according to the lease agreement.

Underscoring that the rental payments were cashless Wal-Mart accounting moves, an affidavit filed in North Carolina by the company's former controller, James A. Walker Jr., states that the payments were made by simply debiting the account of one subsidiary and then crediting the account of the other. "Wal-Mart Stores, Inc. served, in effect, as a bank for" both sides, the affidavit stated.

In 2005, after an audit, the North Carolina Department of Revenue issued a notice to Wal-Mart challenging the REIT structure. The state is site of about 140 of the company's roughly 3,900 U.S. stores, including Sam's Clubs. Wal-Mart paid the $33 million the state sought, and in March 2006 sued for a refund.

The company argues that the state does not have the authority to essentially combine the results of the subsidiary that did business in North Carolina with those of the Delaware-based unit and the REIT. The Delaware-based subsidiary, the company says, did no business in North Carolina and therefore was not taxable there. The company says in court filings that the REIT was qualified under federal law, that all the deductions were properly taken and that its North Carolina tax returns reflect its "true income."