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A New Twist on Snooping at Wal-Mart

NY Times | April 21, 2007 

A former Wal-Mart computer technician, who asserted that company employees eavesdropped on board meetings and conducted clandestine surveillance on shareholders, has reversed himself and denied both claims in sworn testimony, the giant retailer said yesterday.

Bruce D. Gabbard, who was fired in March for taping telephone calls between Wal-Mart employees and a reporter for The New York Times, had told The Wall Street Journal that he was part of an elaborate operation that snooped on employees, stockholders and company critics.

After receiving angry letters from shareholders, who demanded an investigation of the accusation, Wal-Mart's chief executive, H. Lee Scott Jr., took the unusual step of publicly denying several of Mr. Gabbard's most damaging charges in a statement and released portions of his sworn testimony conducted after the Journal articles were published.

“Some of the most disturbing assertions,” made by Mr. Gabbard, the chief executive wrote, “simply are not true.”

In a transcript of Mr. Gabbard's testimony, conducted by a lawyer for Wal-Mart on April 18, the former technician said several statements were taken out of context or inaccurately attributed to him in the articles, Wal-Mart said.

For example, Mr. Gabbard denied that he secretly listened in on or taped board meetings, seemingly contradicting his assertion in an article on April 9 when he said, “I'm the guy listening to the board of directors when Lee Scott is excused from the room.”

Wal-Mart said it sought Mr. Gabbard's sworn testimony after publication of the Journal articles and that he had voluntarily agreed, adding that it had not made any financial settlement with Mr. Gabbard to secure his testimony.

Mr. Gabbard did not respond to a message and his lawyer, W. H. Taylor, declined to comment on Wal-Mart's claims.

Wal-Mart did not deny several other assertions in the Journal articles — that, for example, company employees conducted surveillance on groups critical of the company, like Acorn, and firms hired by the company, like McKinsey & Company, the consultant.

Mr. Gabbard worked in Wal-Mart's Threat Research and Analysis Group, a special team inside Wal-Mart's information technology department. The team is responsible for, among other things, securing the flow of information among senior executives and directors, the company said.

A spokesman for The Wall Street Journal, Robert Christie, said the newspaper was “confident that the information provided to The Journal by Mr. Gabbard, who is being investigated by the criminal arm of the United States attorney's office for conduct relating to Wal-Mart, was accurately reported.” Mr. Christie noted that Mr. Gabbard made similar statements to The Associated Press.

Wal-Mart said that its own investigation into Mr. Gabbard's assertions showed that no employee had either secretly listened in on board meetings or conducted surveillance on shareholders.

Wal-Mart did concede, however, that employees have in the past researched the background of shareholders expected to attend its annual meeting in Arkansas. It justified this to prepare for investors with “a history of being disruptive” who “might use this high-profile forum to stage an inappropriate or disruptive protest.”

In one case, for example, publicly available Web sites, found through Google, were searched regarding PETA, or People for the Ethical Treatment of Animals, before a member of the group was scheduled to present a shareholder proposal at the 2006 annual meeting, the company disclosed.

But Wal-Mart said the research did not prevent PETA members from speaking at the meeting.

Chris Kofinis, the head of communications for WakeUpWalmart.com, a union-financed group critical of the company, called for an independent investigation of Mr. Gabbard's claims “to determine, once and for all, who is telling the truth.”

Wal-Mart fired Mr. Gabbard after discovering that he had taped telephone conversations between this reporter and members of Wal-Mart's public relations staff and intercepted electronic text messages sent by employees. Wal-Mart said it had not authorized those activities.

For Wal-Mart, Mr. Gabbard's most inflammatory accusations surrounded the surveillance of shareholders. An internal memorandum dated January 2007, provided to The Journal, suggested that Wal-Mart might conduct “background work on the potential threat assessment” of certain shareholders submitting proposals for its annual meeting in June.

In a statement yesterday, Wal-Mart's general counsel, Thomas A. Mars, said that the company had never carried out any such research on those shareholders in preparation for this year's annual meeting — “not even through Google,” he wrote.

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