Ten billion dollars have been wiped off the value of Walmart shares - as investigations begin into allegations that its Mexican subsidiary bribed officials to grow its business.

Walmart store in Mexico

It takes Walmart just two hours to earn this kind of cash, but allegations that its Mexican subsidiary paid out $24m in bribes to officials, in order to speed up permits for new stores, could cost it far, far more. The retail giant has already lost some 4.7 per cent of its market value, wiping off any gains it made this year. And the political ramifications of the scandal could last for years to come.

According to an investigation by the New York Times, Walmart sent investigators to Mexico in 2005 to track down the paper trail behind the alleged bribes. However, the newspaper says it then shut down the investigation without telling anything it had learned to the authorities. Furthermore, the Times claims that the current Walmart chief executive Mike Duke, and the former CEO Lee Scott, were among the executives allegedly aware of what was going on.

We will do what is right - not just what is legal. Mike Duke, Walmart CEO

The man accused of being the driving force, former Walmex CEO Eduardo Castro-Wright, is set to retire in July this year "to spend more time with his family". He served as head of e-commerce at the firm until January of this year, after five years as CEO of Walmart US. He has not been available for comment on the allegations.

Walmart, which has 2.2 million employees and 10,000 stores around the world, says it is "deeply concerned" about the scandal. It strongly denies trying to shut down the investigation and insists it has already started a voluntary review of its global anti-corruption programme, insisting: "We are committed to getting to the bottom of this matter".

Integrity memo

Amid a veritable sea of bad publicity, CEO Mike Duke sent a memo to all staff on Monday, entitled "Ingegrity", complete with a link to the company's global ethics office website. He said the company took compliance with anti-bribery laws very seriously, and went on: "We will do what is right - not just what is legal - and our actions will show the utmost ingegrity at all times."

Under the Foreign Corrupt Practices Act, or FCPA, it is an offence for a company to pay, or even offer anything of value "to any foreign official for purposes of influencing any act or decision of such foreign official in his official capacity." The Obama administration has repeatedly stressed its commitment to cracking down on such practices, and the Securities and Exchange Commission set up its own FCPA unit in 2010, with the power to impose fines of up to $25m.

A number of leading companies have disclosed that they are currently subject to FCPA probes, including Avon, Kraft and Marathon Oil. The biggest case so far came in 2008, when the electronics multinational Siemens paid more than $1.5bn to the US and German authorities, over thousands of illegal payments worth a total of $1.4bn, to officials around the world.

Tarnished image

That kind of amount makes the Walmart allegations seem like small change, but two US Congressmen, Elijah Cummings and Henry Waxman, have launched their own investigation and are seeking a meeting with Duke. In a statement, they said the Times report "raises significant questions about the actions of top company officials in the United States who reportedly tried to disregard substantial evidence of abuse".

And this is the bigger nightmare looming over Walmart, which has been trying to rebuild an image battered by allegations of low pay, unequal treatment of women, and claims that it is driving smaller, individually owned stores out of business. Efforts to promote a cleaner, greener image have been overshadowed by some rather less welcome headlines.

Critics are claiming there's a broader problem with the company's culture, like Joe Hansen, international president of the United Food and Commercial Workers International Union, who said: "The reported cover-up by Walmart executives at the highest levels exposes a core truth: Walmart cannot be taken at its word." It has also emerged that Walmart has been active inside a lobbying group, the US Chamber Institute for Legal Reform, which is trying to roll back key provisions of America's anti-bribery laws.

Culture under fire

Experts say the investigation into the bribery scandal could involve years of scrutiny, around the world: a highly time-consuming internal investigation which could cost Walmart millions of dollars before it can turn over its findings to the authorities. There is a chance that some senior executives might have to fall on their swords, if only to make the prospect of a non-prosecution settlement more likely.

And the Washington Post is reporting that the Department of Justice has already begun a criminal investigation, although there is no official confirmation, and senior offiicals could face criminal lawsuits. Once again, the world's biggest retailer is finding that there is a high price that comes with low cost.

Felicity Spector writes about US affairs for Channel 4 News