Coughlin Expected to Plead Guilty to Greed

Discussion
Jan 09, 2006
George Anderson

By George Anderson


Some people simply can’t get enough even when they’re getting millions.


In apparently another in a long line of cases of business leaders run amok, the former number two at Wal-Mart, Tom Coughlin, is expected to plead guilty later this month to federal crimes including wire fraud and tax evasion, according to a report by The Wall Street Journal.


Mr. Coughlin has been accused by Wal-Mart of misusing company funds through fraudulent reimbursements for his own personal purposes.


The former vice chairman of Wal-Mart initially sold the scheme to subordinates as a secret union busting campaign by the company. He reiterated that charge when his alleged misdeeds came to light.


The New York Times reports the company’s aggressive anti-union position made Mr. Coughlin’s accusations seem plausible to many but, ultimately, it appears he was unable to back up his claims with proof. 


Moderator’s Comment: What will a guilty plea by Tom Coughlin mean for the public’s perception of Wal-Mart? How does the public perception of Wal-Mart
affect the company’s performance?

George Anderson – Moderator

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18 Comments on "Coughlin Expected to Plead Guilty to Greed"


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David Zahn
Guest
15 years 1 month ago
As each of us looks into our crystal balls and tries to prognosticate the likely impact of Coughlin’s plea (if in fact, he does go ahead and plead guilty when before the court) on consumer perception of Wal-Mart, count my vote among those that perceive the consumer is already jaded by the excesses of executive compensation, unscrupulous activities, and will probably turn a blind eye to even reading much about it or thinking about it… after all, “the Wal-Mart price is lower than I can get the product elsewhere…so who cares whether an executive went hunting, bought a CD, or used a gift card inappropriately?” I think it is fun for pundits and others to speculate…but the consumer is probably less concerned than “we” are about these things when they are not directly seeing a negative impact to THEIR price paid or variety offered, etc. Cynical of me…likely…but I just don’t see consumers staying away in droves because Coughlin pleads guilty. It is not like Wal-Mart was seen as the bastion of morality and ethics… Read more »
Race Cowgill
Guest
Race Cowgill
15 years 1 month ago
I find that my accuracy when it comes to predicting, even in areas I am expert, is pretty low, so I’ll not guess what the outcome of this will be. But the Coughlin problem raises an issue that I think is of critical importance to all of us, retailers and advisors alike: The organizational forces that promote, allow, and hide this kind of behavior are pervasive throughout the business world, difficult to detect, and extremely resistant to change. I am definitely not someone who believes that Coughlin acted as he did simply because of his own morals and personality. Our many studies show that actions like Coughlin’s are simply a more exaggerated form of thinking and behavior that every organization we have studied accepts, and even encourages — executives are more important than others, especially line staff; get what you want at the cost of others; stay in control; the more authority and influence you have, the better an executive you are, so get as much authority and influence as you can; and the outcomes… Read more »
Bernice Hurst
Guest
15 years 1 month ago

Count me in with the cynics. First, the only thing most shoppers seem to be interested in is getting what they want, when they want it, at a low enough price to make them feel they have achieved a bargain, or value, or saved money – take your pick on the terminology. Secondly, I also think there are few people left who expect executives in any company not to be tempted by easy pickings or such trivia as ethics or morality. Really, truly, apart from pundits and analysts (and the families of people who are fined or sent to jail), why should anyone care?

Art Williams
Guest
Art Williams
15 years 1 month ago

The effects on Wal-Mart will be negligible in my opinion. I agree that if this wasn’t Wal-Mart, it wouldn’t even be considered news. I am surprised that Tom was able to get by with as much as it sounds like he was considering how strict Wal-Mart has always been. Undoubtedly his high level position was the main reason.

jared colautti
Guest
jared colautti
15 years 1 month ago

I agree with YourBoys. The average Wal-Mart consumer is motivated by economics, not by their dedication to Wal-Mart as an entity. As long as the consumer still gets to enjoy every day low prices, they’ll keep on shopping.

Bob Houk
Guest
Bob Houk
15 years 1 month ago

I agree that the Coughlin scandal is small-scale and that it probably has only minimal visibility among consumers.

But the cumulative effect of all the stuff going on with Wal-Mart (e.g., hiring illegal aliens, discriminatory hiring and promotion practices) is having an impact.

David O'Neil
Guest
David O'Neil
15 years 1 month ago

I agree with my fellow panelists that Coughlin’s indiscretion will not have any impact on Wal-Mart’s image amongst the consumers. The infraction is so small in comparison to Enron, Worldcom and Tyco, that it will never have the publicity or news following that will affect the consumer’s image of Wal-Mart.

Edward Herrera
Guest
Edward Herrera
15 years 1 month ago

I am a little more concerned with the five farmers dying in Turkey then someone committing white collar crimes. This type of behavior is almost expected from American companies. People will be willing to forgive and forget. Just keep those prices low.

John Rand
Guest
John Rand
15 years 1 month ago

What continuously gets me thinking is how often these sorts of scandals are enabled or funded by vendors. Never mind the consumer reaction, which I agree is likely minimal. What will suppliers do in their relationships with retailers who, as we mostly all acknowledge, extract large amounts of discretionary funding from their vendors, not always with the best of intentions?

David Livingston
Guest
15 years 1 month ago

Most people probably don’t follow these kinds of stories. Its big news to people in retail but compared to the multi-billion dollar scams at Enron and such, this is small potatoes. A half million dollar scam is nothing. Wal-Mart has probably spent more on lawyers than the $500k embezzled by Mr. Coughlin. Over the years I’ve seen much larger embezzlement schemes at much smaller companies than Wal-Mart and they have mostly gone unoticed. Currently we have one supermarket wholesaler that is facing a mulititude of shareholder lawsuits involving millions more than Mr. Coughlin’s nickel and dime scam, and it hasn’t even made the local papers. We are hearing about this only because it’s Wal-Mart and the media is facinated with them. I have a feeling that even if only $5,000 was involved we would still be hearing about this.

Doug Fleener
Guest
15 years 1 month ago

I think a guilty plea will help move it on and have very little impact externally. I guess by pleading guilty the union activity excuse will be moot. (Which I understand neither the government nor Wal-Mart has been able to substantiate. Maybe he should have tried the Twinkie defense instead.)

The bigger issue is the impact internally. Coughlin was one of the strongest links back to Sam himself. I would think the guilty plea while sad for the employees will bring closure to the employees and let them focus on the real issue, how to get back to sustainable and profitable growth.

Matt Werhner
Guest
Matt Werhner
15 years 1 month ago

Amidst an already shaky public perception, this news cannot be good for a company trying very hard to improve its overall image. The damage and repercussions from this can only be measured over time and if history is any indicator, Wal-Mart’s rep will take a hit.

Gene Hoffman
Guest
Gene Hoffman
15 years 1 month ago

Parallels abound — and Wal-Mart will be negatively affected.

When 19 Vikings football players went out on a boat ride in October and the alleged activities of at least four players will take those four to court, it made the whole Vikings team not only the laughing stock of the league but also damaged the total team’s professional reputation. Furtive activities of one or a few in an organization can be damaging to the whole organization. A possible Coughlin conviction will make Wal-Mart vulnerable to additional perceptions and claims that it isn’t a totally fair-minded company. A pity!

Ryan Mathews
Guest
15 years 1 month ago

I think — as it stands — Tom Coughlin will just take his place among the ranks of business leaders who prove themselves to be exactly as venial as many people believe they are. What will happen to Wal-Mart? What happened to Martha Stewart’s company when she went to prison? There is one caveat here though. It’s hard to believe that Coughlin’s actions went completely unnoticed until some plucky proletarian accountant caught him, so there’s always the chance that he might try to better himself at the expense of his fellows. If corruption proves widespread that MIGHT hurt Wal-Mart.

Mark Lilien
Guest
15 years 1 month ago

Wal-Mart needs to avoid becoming known as “scandal-plagued Wal-Mart.” If there are more labor violations or more high-level executive scandals soon, the cumulative effect on Wal-Mart’s image will get a lot more serious.

Warren Thayer
Guest
15 years 1 month ago

It’s generally understood that there are bad apples in every barrel, so this won’t be a major turning point in opinions. The critics will have one more thing to scream about for awhile, but in terms of “American opinion of Wal-Mart,” including Wal-Mart shoppers, here’s what it will mean: nothing.

Joe Leathers
Guest
Joe Leathers
15 years 1 month ago

Just look backwards with the scandal with Stew Leonard, the consumers didn’t bulk a bit! People forgive and forget very fast as long as they get lower prices.

Michael Brown
Guest
Michael Brown
15 years 1 month ago

What is really too bad is that Tom Coughlin was a phenomenal merchant and leader who was so looked up to by the 1 million+ Wal-Mart employees before this happened and deserved a lot of credit for the phenomenal growth at Wal-Mart. Yes, his actions were stupid and petty, but hopefully the positive part of his legacy will somehow survive this.

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