WAL-MART DETAILS ACCUSATIONS AGAINST COUGHLIN

Mark Hamstra

BENTONVILLE, Ark. -- Former Wal-Mart Vice Chairman Tom Coughlin used gift cards that were meant as rewards for other employees to purchase items for himself, according to a filing with the U.S. Department of Labor.

The company, based here, filed a report on Coughlin's activities this month in response to a lawsuit by Jared Bowen, a former vice president of operations development who claims he had been fired after revealing suspicious expense-report activity that he said led to the investigation of Coughlin. Wal-Mart asked for Bowen's lawsuit to be dismissed.

Coughlin retired as an officer of the company in December and was removed from the company's board of directors in March, at which time the company said he was being accused of misusing between $100,000 and $500,000 in company funds. Wal-Mart released the more detailed report to explain how it had uncovered Coughlin's activities without Bowen's assistance and to show that Bowen was also involved in what Wal-Mart said was a scheme to steal from the company using false expense reports and other means.

"Jared Bowen is not a 'whistle-blower,' and he was not terminated for attempting to prevent misconduct at Wal-Mart," the company said in the filing. "Rather, his termination resulted from an extraordinarily professional investigation conducted by two former FBI officials, two former United States attorneys and the former director of the Arkansas State Police."

The 25-page filing goes on to state that Bowen "facilitated, permitted and participated in" theft from the company by approving "patently bogus" expense reports and by allowing funds from his department's budget to be "raided."

In what the company said was an example illustrating Bowen's capacity for deception, Wal-Mart also accused him of altering his college transcript to obtain a job at the company in 1996. According to Wal-Mart, Bowen said he expected to graduate later that year and had a grade point average of 3.5. However, the retailer said it obtained an actual copy of the transcript showing that Bowen's grade point average was 2.1 and that he could not have expected to graduate when he said he would.

Neither Bowen nor his attorneys could be reached for comment last week.

In a lawsuit filed in May, Bowen had alleged that his termination was a violation of the Sarbanes-Oxley Act, the financial accountability regulation that includes protections for whistle-blowers. Bowen had reported two suspicious incidents of suspected expense-account falsification, but Wal-Mart claims his actions were taken only after the investigation of Coughlin and a handful of his associates was under way. Three other Wal-Mart employees, including one officer, were terminated in connection with the alleged activities.

"[Bowen] was caught between the Coughlin scheme on the one hand and the company's determination to root out fraud and abuse on the other," Wal-Mart said in the filing.

The investigation of Coughlin began, the company said, after an employee working in the contact-lens department of a store set up at the company's annual meeting questioned a purchase by Coughlin using a company gift card that had been designated for use by Wal-Mart's "All-Star" employees. Wal-Mart alleges that Coughlin secured 51 of the gift cards, valued at $100 each, through Coughlin, and then used them to purchase various personal items like compact discs, a rib roast, charcoal briquettes, wine, a Scrabble game and three shotguns.

Wal-Mart said in the filing that Coughlin often told others that the company funds he allegedly used for personal purchases were compensation for expenses he incurred in rewarding union informants about organizing activity at union stores. The company said in the filing that its investigation found that none of the funds Coughlin was accused of taking were used "to pay informants or otherwise deter unionization."