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American Morning

Wal-Mart Busts

Aired October 24, 2003 - 07:14   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


SOLEDAD O'BRIEN, CNN ANCHOR: The largest retailer in the United States is suddenly caught up in one of the most controversial issues facing the country today: illegal immigration. Across the country yesterday, federal agents raided Wal-Mart stores in an operation they called "Operation Rollback."
Here's CNN's Jason Carroll.

(BEGIN VIDEOTAPE)

JASON CARROLL, CNN CORRESPONDENT (voice-over): Immigration officials raided this Wal-Mart store in Shelton, Connecticut, making four arrests. In all, they targeted 61 stores from 21 states, arresting more than 250 allegedly undocumented workers.

PATRICIA MANCHA, IMMIGRATION AND CUSTOMS ENFORCEMENT: Everyone in this country gets due process, so if someone is placed in immigration proceedings, they have the right to hire an immigration attorney and go through due process.

CARROLL: all of the undocumented workers were members of cleaning crews Wal-Mart had hired through a contractor.

TOM WILLIAMS, WAL-MART SPOKESMAN: We understand that at a number of our stores this morning, early morning hours, third-party cleaning crews that Wal-Mart has in place to clean stores after hours a number of people were arrested as illegal aliens. When we hire these crews, it's understood that everybody is a legal worker.

CARROLL: Federal law enforcement sources tell CNN some Wal-Mart managers allegedly had direct knowledge of immigration violations. A company spokeswoman could not confirm that. Federal sources also tell CNN some information in the government's investigation was gathered through the recording of conversations between store managers and contractor executives.

Immigration lawyer Allan Wernick says the government's investigation will come down to who at Wal-Mart knew what and when.

ALLAN WERNICK, IMMIGRATION ATTORNEY: I think Wal-Mart is probably going to have a brush but it's probably not going to be touched by the paint. I think that they have a right to contract out, unless they had actual knowledge that the company they were contracting with was hiring undocumented workers.

CARROLL (on camera): And what do Wal-Mart's customers have to say about all of this? Well, the ones that we talked to say, despite all that has happened, they would come back to Wal-Mart and shop again.

Jason Carroll, CNN, Shelton, Connecticut.

(END VIDEOTAPE)

O'BRIEN: More on Operation Rollback now. Let's talk to Andy Serwer.

Good morning.

ANDY SERWER, "FORTUNE" MAGAZINE: Good morning, Soledad.

O'BRIEN: Give me a sense of what kind of an impact this could have for Wal-Mart, when you're talking about a company that has hired out another company...

SERWER: Right.

O'BRIEN: ... so a third-party relationship with these now- arrested illegal immigrants. What kind of an impact do you think that will have on the company?

SERWER: Well, you know, it's a significant problem for a Wal- Mart. It's a black eye, and you have to remember, this is a company that's faced other labor issues, Soledad. They've had problems with litigation involving women suing the company, also allegations involving them suggesting workers work off-the-clock.

This is part of a series of investigations the government has had against the company with outsourcing and contracting. They were investigated in '98 and 2001.

And, again, you know, Wal-Mart is the biggest company in the world, the biggest company in the United States. It's America's store. So, they're sort of the standard bearer when it comes to labor practices. This is going to take up a lot of time. And, of course, as Jason Carroll said, did executives at Wal-Mart know about this?

O'BRIEN: That's going to sort of be the $64,000 question. I know it's early on in the investigation. Do we have any information about the extent that they did know? It sounds, at least from the leaks that are coming from the government side, that maybe they did know.

SERWER: Right. Well, the government is clearing suggesting that. They're suggesting there were wiretaps, where Wal-Mart executives were overheard discussing this. Also, there are news reports that Wal-Mart executives will be subpoenaed. So, clearly the government is pointing the finger at Wal-Mart right now, saying that it did not know about these contractors.

And, of course, in Wal-Mart's defense, this is very difficult stuff. You hire an outside contractor, you take a cursory or even a serious look at the documents of the workers, and everything looks OK. So, you know, you really have to drill down very far to find out whether or not the workers are legal or not. O'BRIEN: What's going to be the reaction of investors, do you think?

SERWER: Well, the news came out yesterday and...

O'BRIEN: Shoppers said they would still go there, in Jason's piece. So, what do you think investors will do?

SERWER: I think that's right. And the news did come out yesterday while the markets were open, and Wall Street really shrugged off the news. In fact, the stock was up at the end of the day.

So, are workers -- I mean, are employees really going to hurt this situation? Are people going to shop there less? I mean, no. You know, it's the biggest company. There are 3,000 stores in the United States. They do $245 billion of sales, and for a lot of people that's the store they go to. There is really almost no choice.

O'BRIEN: Well, it depends on how the investigation goes as well, I would imagine.

SERWER: That's right.

O'BRIEN: Andy Serwer, as always, thanks. We'll check in with you a little bit later this morning as well.

SERWER: OK, Soledad.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.







Aired October 24, 2003 - 07:14   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: The largest retailer in the United States is suddenly caught up in one of the most controversial issues facing the country today: illegal immigration. Across the country yesterday, federal agents raided Wal-Mart stores in an operation they called "Operation Rollback."
Here's CNN's Jason Carroll.

(BEGIN VIDEOTAPE)

JASON CARROLL, CNN CORRESPONDENT (voice-over): Immigration officials raided this Wal-Mart store in Shelton, Connecticut, making four arrests. In all, they targeted 61 stores from 21 states, arresting more than 250 allegedly undocumented workers.

PATRICIA MANCHA, IMMIGRATION AND CUSTOMS ENFORCEMENT: Everyone in this country gets due process, so if someone is placed in immigration proceedings, they have the right to hire an immigration attorney and go through due process.

CARROLL: all of the undocumented workers were members of cleaning crews Wal-Mart had hired through a contractor.

TOM WILLIAMS, WAL-MART SPOKESMAN: We understand that at a number of our stores this morning, early morning hours, third-party cleaning crews that Wal-Mart has in place to clean stores after hours a number of people were arrested as illegal aliens. When we hire these crews, it's understood that everybody is a legal worker.

CARROLL: Federal law enforcement sources tell CNN some Wal-Mart managers allegedly had direct knowledge of immigration violations. A company spokeswoman could not confirm that. Federal sources also tell CNN some information in the government's investigation was gathered through the recording of conversations between store managers and contractor executives.

Immigration lawyer Allan Wernick says the government's investigation will come down to who at Wal-Mart knew what and when.

ALLAN WERNICK, IMMIGRATION ATTORNEY: I think Wal-Mart is probably going to have a brush but it's probably not going to be touched by the paint. I think that they have a right to contract out, unless they had actual knowledge that the company they were contracting with was hiring undocumented workers.

CARROLL (on camera): And what do Wal-Mart's customers have to say about all of this? Well, the ones that we talked to say, despite all that has happened, they would come back to Wal-Mart and shop again.

Jason Carroll, CNN, Shelton, Connecticut.

(END VIDEOTAPE)

O'BRIEN: More on Operation Rollback now. Let's talk to Andy Serwer.

Good morning.

ANDY SERWER, "FORTUNE" MAGAZINE: Good morning, Soledad.

O'BRIEN: Give me a sense of what kind of an impact this could have for Wal-Mart, when you're talking about a company that has hired out another company...

SERWER: Right.

O'BRIEN: ... so a third-party relationship with these now- arrested illegal immigrants. What kind of an impact do you think that will have on the company?

SERWER: Well, you know, it's a significant problem for a Wal- Mart. It's a black eye, and you have to remember, this is a company that's faced other labor issues, Soledad. They've had problems with litigation involving women suing the company, also allegations involving them suggesting workers work off-the-clock.

This is part of a series of investigations the government has had against the company with outsourcing and contracting. They were investigated in '98 and 2001.

And, again, you know, Wal-Mart is the biggest company in the world, the biggest company in the United States. It's America's store. So, they're sort of the standard bearer when it comes to labor practices. This is going to take up a lot of time. And, of course, as Jason Carroll said, did executives at Wal-Mart know about this?

O'BRIEN: That's going to sort of be the $64,000 question. I know it's early on in the investigation. Do we have any information about the extent that they did know? It sounds, at least from the leaks that are coming from the government side, that maybe they did know.

SERWER: Right. Well, the government is clearing suggesting that. They're suggesting there were wiretaps, where Wal-Mart executives were overheard discussing this. Also, there are news reports that Wal-Mart executives will be subpoenaed. So, clearly the government is pointing the finger at Wal-Mart right now, saying that it did not know about these contractors.

And, of course, in Wal-Mart's defense, this is very difficult stuff. You hire an outside contractor, you take a cursory or even a serious look at the documents of the workers, and everything looks OK. So, you know, you really have to drill down very far to find out whether or not the workers are legal or not. O'BRIEN: What's going to be the reaction of investors, do you think?

SERWER: Well, the news came out yesterday and...

O'BRIEN: Shoppers said they would still go there, in Jason's piece. So, what do you think investors will do?

SERWER: I think that's right. And the news did come out yesterday while the markets were open, and Wall Street really shrugged off the news. In fact, the stock was up at the end of the day.

So, are workers -- I mean, are employees really going to hurt this situation? Are people going to shop there less? I mean, no. You know, it's the biggest company. There are 3,000 stores in the United States. They do $245 billion of sales, and for a lot of people that's the store they go to. There is really almost no choice.

O'BRIEN: Well, it depends on how the investigation goes as well, I would imagine.

SERWER: That's right.

O'BRIEN: Andy Serwer, as always, thanks. We'll check in with you a little bit later this morning as well.

SERWER: OK, Soledad.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.