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Fired Wal-Mart advertising executive Julie Roehm, accused by the giant retailer of unethical behavior and even adultery, did her own share of mud-slinging last Friday, charging Wal-Mart CEO Lee Scott and other executives of a range of violations of the chain’s ethics standards.

"While Wal-Mart suggests that its officers should not be swayed by personal gratuities and considerations, its executives do in fact accept personal gratuities and considerations, and create the appearance of impropriety," the statement by Roehm said. The charges came just a week before Wal-Mart’s annual meeting is scheduled to take place in Arkansas.

Advertising Age reports that the Roehm document accuses “Wal-Mart CEO Lee Scott of ethics violations -- specifically buying yachts and a pink diamond at ‘preferential prices’ -- via an improper business relationship during his time as VP-merchandising.

“The filing also accuses other Wal-Mart executives of receiving gratuities that would be deemed improper under company policy. They include former chief marketing officer and current Chief Merchandising Officer John Fleming, as well as Raul Vazquez, now CEO of, who as VP-marketing of that unit helped Ms. Roehm lead Wal-Mart's now infamous 2006 agency review.

“Those two, along with three other executives, flew to Barcelona, Spain, to meet with executives of Tyson Foods, Hanes and the entertainment manager of the Eagles rock band, according to the filing. The Wal-Mart executives received Eagles concert tickets worth an estimated $300 each and backstage passes and souvenirs, according to the lawsuit, which alleged none of the executives returned the gifts.”

According to Ad Age, Roehm also charged that “Wal-Mart did not immediately terminate, as it did Ms. Roehm, a former general counsel alleged to have had a widely known affair with a subordinate he later married after divorcing his wife.”

MarketWatch elaborated on these latter charges, writing that Roehm said that “Robert Rhoads, a lawyer who held a variety of top positions in the company's legal department…is said to have had a romantic relationship with Lauren Beamon, a legal-department employee. The suit claims he paid for her apartment and college tuition, divorced his wife and then married Beamon but suffered no retribution.”

The New York Times emphasizes in its piece that while the countercharges are voluminous, the document does not offer specific evidence in a number of cases, such as suggesting that Lee Scott “bought yachts and a large diamond ring at ‘preferential prices’ from companies owned by Irwin Jacobs, a Minnesota entrepreneur who employed Mr. Scott’s son Eric, and owns a company that buys unsold merchandise from Wal-Mart.”

Ironically – or perhaps not - it was reported last Friday that Rhode Island state treasurer Frank T. Caprio has asked the US Securities and Exchange Commission (SEC) to investigate whether Wal-Mart violated securities laws by not disclosing in its filings that Scott’s son works for a company that does business with the retailer. Wal-Mart responded to the charge by saying that the law has no such requirement and that it is a “non-issue.”

The charges came in a 42-page reply to Wal-Mart’s lawsuit against her, which charged Roehm with having an illicit romantic relationship with Wal-Mart marketing executive Sean Womack as well as ethical breaches in her dealings with Draft FCB, the advertising agency she helped to choose to work on the Wal-Mart account. Draft FCB was dismissed from the Wal-Mart account at the same time as Roehm and Womack were fired.

Wal-Mart made those charges in response to a wrongful discharge and breach-of-contract suit filed against it by Roehm, who had been brought into the company to overhaul its advertising and marketing approach – an effort that seemed to dilute the company’s legendary strengths rather than amplify them.

Wal-Mart spokesman John Simley responded to the charges: “The allegations of impropriety involving our C.E.O. Lee Scott are untrue…This lawsuit is about Julie and her misconduct. Her document shows how weak her case is."

And the Times writes, “Mr. Jacobs, in an interview, denied that his companies sold Mr. Scott anything at a discount. He said Mr. Scott had insisted on paying full price for a boat bought from one of his companies — and Mr. Jacobs said he was considering suing Ms. Roehm for making false accusations against him.

“Mr. Scott ‘went overboard to make sure there was nothing not right about it, beyond what I imagine anyone doing to make sure it was in the Wal-Mart way,’ Mr. Jacobs said.”
KC's View:
This thing is beginning to play out like an episode of “The Sopranos,” except without the violence. So far.

It is awful for everybody involved, but it is also is awfully entertaining. Not that we want to revel in the agonies of others…

We read all the charges and countercharges, and we have to say that we’re sure Roehm and her lawyers are going to try to get as many Wal-Mart executives as possible to be deposed under oath. Which they are going to do to her as well.

But at this point, Roehm doesn’t have nearly as much to lose as Lee Scott and his fellow executives. After all, she’s already been fired amid charges of infidelity and questionable relationships and payments – none of which is going to shock anyone in the ad biz. We can’t imagine Roehm not getting a job because of all the original charges with any company that thought she could help it.

At Wal-Mart HQ, however, it is a different story. High moral and ethical standards have always sort of been the coin of the realm, and they aren’t supposed to be arbitrary and about positioning – they go back to founder Sam Walton’s basic approach to life and business, and as such are sacrosanct.

Roehm may be shooting at everything that moves without ammunition. But if she’s right on just 25 percent of what she’s charging, then her 42-page document could have enormous implications for the company and its leadership.

At Wal-Mart, management’s noses have to be completely clean, because the numbers haven’t been all that great lately.