It won't take long for Wal-Mart to pay off U.S. fine

CHICAGO (MarketWatch) -- While it is Uncle Sam's largest-ever payoff from a single immigration action, the $11 million the government is set to collect from Wal-Mart represents a mere 21 minutes worth of the retail giant's 2004 sales.

On Friday, the Homeland Security Department's Immigration and Customs Enforcement division announced the civil settlement with Wal-Mart. It arose from an investigation into the hiring of illegal aliens for janitorial services by independent contractors at dozens of the company's U.S. stores from 1998 through 2003.

The government will get $11 million from Wal-Mart (WMT) and an additional $4 million from the dozen janitorial services who directly employed the workers. The forfeited funds will be used for future investigations of much the same type. See full story.

The $11 million works out to 21 minutes worth of Wal-Mart sales by averaging out the company's more than $285 billion in revenue during 2004. The figure represents sales spread out over a 24-hour period for each of the year's 366 days. Some Wal-Marts are open 24 hours but many are not, and hours of operation vary from store to store.

The company also made $10 billion in profits last year.

Wal-Mart spokeswoman Mona Williams said the company considers the settlement "a lot of money" that will go "to help support enforcement of immigration laws." Wal-Mart also has put in place new initiatives aimed at preventing future problems.

The company told reporters it had not yet calculated the cost of those programs. But it could be lot more than the settlement amount.

"It may be that the fine itself is only a small part of the cost. There is a pretty major oversight system the company is going to have to develop," said Greg Siskind, an attorney who specializes in immigration law at Siskind Susser in Memphis, Tenn. "For a company the size of Wal-Mart to put in the kind of system that is in this decree will cost well in excess of $11 million."

For the government, it is a very big deal as it dwarfs by more than four times the next largest immigration settlement.

It also gives it back some luster following the loss of its last big immigration action against a well-known corporation: The March 2003 jury acquittal of Tyson Foods (TSN) and a handful of its managers in an alleged alien-smuggling case. See full story.

"This is a really good win for the government," Siskind said. "The Tyson loss took a lot of wind out of their sails."

He pointed out that not only will the feds get an extra something in the enforcement budget as a result but the news of the settlement could well have a deterrent effect on other would-be corporate malefactors.

"The strategy is to go after some high-profile companies with the idea that if these cases make the headlines, it has more impact than going after 100 small companies that nobody has ever heard of," Siskind said.

Shares of Wal-Mart ended the day down 88 cents, or 1.7 percent, to $51.45.