FAYETTEVILLE, Ark. — The two top executives of Wal-Mart Stores gave shareholders their unequivocal commitment to get to the bottom of alleged bribery charges in Mexico that have surfaced against the company.
“If any violations occurred, then appropriate actions will be taken. That is my personal commitment to each of you,” S. Robson Walton Jr., chairman, said during the company’s annual shareholder meeting here. “We will do the right thing the right way. You have my word on that.”
The New York Times reported in April that WalMex, the company’s Mexico-based subsidiary, had paid $24 million in bribes to local officials to sidestep regulations and obtain construction permits — actions that were known to various Wal-Mart executives.
At the meeting, Walton said Wal-Mart is cooperating with investigations by the Department of Justice and the Securities and Exchange Commission. In addition, he said the company’s own investigation, launched seven months ago, is being conducted by the audit committee of its independent directors working with outside counsel.
Mike Duke, president and chief executive officer, addressed the company’s employees, saying, “If you work for Wal-Mart, there is no gray area between right and wrong. It’s either the right thing to do, or we shouldn’t do it at all.”
The allegations led large numbers of shareholders to vote against several directors. The vote against Walton was 12.63%; against Duke, 13.07%; against Christopher J. Williams, chairman of the chain’s audit committee, 13.26%; and against H. Lee Scott Jr., who was president and CEO at the time of the alleged bribery, 15.65%.
The bribery allegations were mentioned by a shareholder during her presentation of a proposal calling for greater transparency in executive compensation programs — a proposal that was ultimately voted down.
Jackie Goebel, who identified herself as a 24-year employee, said Wal-Mart was opening too many stores in the U.S. and acquiring too many stores overseas, “which makes us less profitable and puts more pressure on store managers to cut costs. Ask any associate, and they’ll tell you cutting costs means understaffing at the stores, which results in associates who can’t provide the type of customer service Sam Walton built this company on.”
The genius of James L. Kraft, the Canadian-born founder of Kraft Foods, lay not in artisanal cheesemaking but in taking a milk-based product and making it long-lasting, consistent in quality and easy to slice. In 1916, after a series of experiments at his Chicago boardinghouse, the former grocery clerk received a patent for “process cheese”: a sterilized product made by heating Cheddar at 175 degrees for 15 minutes while whisking it continuously. The invention helped turn cheese into a shippable commodity with a longer shelf life — and transform Kraft’s company into a cheese empire. James’s brother Norman, who became Kraft’s head of research, wanted to make things even easier for the consumer by precutting the cheese into slices. The idea was easier to conceive than to execute: process cheese was packaged and sealed while still fluid and hot, and cutting hot cheese was like trying to slice molten lava.
Around 1935, Norman began to imagine a solution. He poured some liquefied cheese onto a cold stainless-steel table. He then flattened the cheese out with an iced rolling pin. Norman was able to slice it. “It took another 15 years for Norman and Kraft engineers to perfect the technology and bring the product to market,” says Becky Haglund Tousey, associate director of archives for Kraft Foods. The manufacturing difficulties were solved in part by an elaborate contraption that ran liquid, pasteurized cheese through a “chill roll” — a machine that resembled a large rolling pin. The roll created a long ribbon of cheese that was then cut into three-inch-square slices. Eight slices were stacked on top of one another and packaged to create a peelable block. When “Kraft De Luxe Process Slices” made their debut in 1950, Modern Packaging magazine raved that “all of the handicaps of store-sliced cheese — variations in thickness of slices, slivered edges, imperfect packages, drying out, curled ends, etc. — are overcome.” The Progressive Grocer noted that “many grocers report cheese sales increases as high as 150 percent.”
The cheese single’s finishing touch came from outside Kraft. In August 1956, an Indiana-born engineer named Arnold Nawrocki shocked the processed-cheese world with a patent for an “apparatus for producing individually wrapped cheese slices.” Nawrocki noted that for products like Kraft De Luxe and its imitators, the “cheese slices often stick together, and a consumer has considerable difficulty in trying to separate the individual slices without tearing them.” His machine showed an elegant method for wrapping “a slicelike slab of cheese in a transparent, pliant wrapper.” Kraft later developed a similar technology, and individually wrapped Kraft Singles were introduced in 1965.
JUST SAY CHEESE
Elaine Khosrova, editor of the specialty-cheese magazine Culture, talks about processed cheese.
Why were Kraft Singles so popular?
After World War II, food production was going industrial. Cheese was a part of that. If it came from a factory and was standardized, it was considered a high-quality food. I have a soft spot for Kraft Singles. I grew up on them in the 1960s. My mother made me bologna-and-cheese sandwiches.