> Layered vendor relationships—where prime contractors sublease work to secondary vendors, who in turn engage tertiary providers—have created opaque financial structures that obscure accountability while enabling systematic exploitation.
It’s wild to me that big companies with all the resources would expose their IT systems in this way where they have no idea who is doing the work….
pjmorris · 7h ago
What's funny to me is that, not only is this also how the financial industry is structured, but that a) this is the currently fashionable means of reducing risk and b) it is seen as a feature not a bug.
Citation: Any book about the 2008 financial crisis, or the 1998 crisis, or the 1987 crisis, e.g.
[0] 'The Quants', Scott Patterson
[1] 'When Genius Failed', Lowenstein.
[2] 'Demon of Our Own Design', Richard Bookstaber.
reactordev · 8h ago
You should see the financial industry…
hammock · 8h ago
Or manufacturing. Or mining/oil. (I know we are getting away from the sensitive data part of the comment though. But this is how you get children digging thru cobalt pits with their bare hands)
ActionHank · 8h ago
Literally any industry.
I only have recruiters from companies that do this sort of work reaching out to me on LinkedIn. Whole companies where you are hired based on resume keywords.
reactordev · 7h ago
Yuuup, there’s at least 4 layers there…
koliber · 8h ago
In my experience, even though there are layers of subcontractors, the individual ultimately doing the work is vetted thoroughly.
Source: 1st hand experience being a provider of such services.
reactordev · 7h ago
They want to make sure someone is going to do it, do it right, and make everyone looks good so they can continue fleecing.
newsclues · 8h ago
Once your CS is offshore and you don’t control it, the vetting process is a formality and doesn’t actually have to be anything more that a compliance process.
Having worked in call centres where strict compliance and security was critical, the reality is that doing things properly is expensive.
koliber · 6h ago
Good background checks are expensive. I am paying for it to make sure things turn out well.
I'm sure there are organizations and outsourcing companies that skip it or treat it purely as a formality. I don't do that with my clients.
dkdcio · 8h ago
but they have bank-level encryption!
dlcarrier · 2h ago
I once submitted a bug report to my bank, through 3rd party that they had hired to administer their bug bounty program. The 3rd perty determined that it was a pretty high severity issue, because the setting to require a password could be disabled without entering a password. The bank closed it as works as intended, because they had only meant for the password to be optional, out of convenience.
I gues this is in line with their normal practices, as they were unable to issue me a debit card that only works with a PIN, and can only issue cards where the PIN is optional.
If this was a sourced article, it'd have the name of the exec.
djohnston · 8h ago
Want to place a bet to quantify our confidences of whether this happened or not?
postalcoder · 7h ago
It could be real. Doesn't make the article less bad.
djohnston · 7h ago
I understand - I'm asking where you weigh the probability of it having happened based on the available evidence.
hammock · 7h ago
So what. Can we please keep this thread and have a discussion?
wavemode · 7h ago
Almost none of the facts alleged in the article are verified.
This thread isn't going anywhere, you can feel free to discuss. But it doesn't belong on front page, flagging was the right move.
VoidWhisperer · 7h ago
It is hard to have a discussion about an article with no details or evidence.
franktankbank · 7h ago
"Walmart confirms it qualifies for Justice Department probe due to criminal acts engaged by C-level staff"
coderatlarge · 8h ago
“When you have four or five layers between the client and the actual worker, each taking a cut, it becomes impossible to track where influence ends and legitimate business begins."
wow i would think that for all the money paid to ERP vendors tracking five layers of contracts would not be a major issue.
but i guess unless people in positions of authority subject themselves to some sort of financial audit then it’s almost impossible to detect corruption related payments.
kace91 · 8h ago
When I worked for a B2B startup years ago (VR sector, hype of the moment back then), it was common to have our bid/proposal rejected in favor of a larger company that would then hire us to make the full project for a fraction of the price.
I wouldn’t be surprised to know there were agreements between this bigger company and the person in charge of selecting a contractor, it seems to be an extremely common practice.
lan321 · 8h ago
Sounds more like covering your ass. Instead of hiring some startup, get a large company. It's not your money, and if the startup fail,s you don't have a real excuse. If a giant corpo fails the project, it's not your fault.
franktankbank · 7h ago
> If a giant corpo fails the project, it's not your fault.
Why does this make sense? Failing is failing. The only reason it could be true is that the giant corpo has deep projects to pay back for the failure (in theory) but does that work in practice? They've got lawyers for their lawyers and more lawyers for those lawyers. Guess who is going to out lawyer who.
lan321 · 6h ago
You paid extra for the large, experienced corporation to do it. If it failed, it was outside of your power since they have a reputation and resources, but it just did not work out.
Startups have no reputation. If they fail, you'll be asked why you picked them, and any answer you give is based on your judgment of their abilities, which was wrong since they failed. If you say it was to get X done cheaper, you're the cheapskate who wasted X$ trying to save Y$.
There are also very often situations where your corpo has used corpo X for 5 prior/current projects and is satisfied, so picking them also gives you the backing of those other projects, should something go wrong.
It partially makes sense, but it's also largely office politics. You really don't want to have a complex explanation when you're in the crosshairs of some angry bossman 2 tiers above your boss.
scotty79 · 6h ago
Nobody ever got fired for buying Microsoft. Buying bigger for more money just isn't perceived as risky as buying small and unproven for little.
wat10000 · 8h ago
There’s also the “nobody ever got fired for choosing IBM” effect. If they hire a small vendor and the project fails, that might be a resume-generating event for the person responsible for that choice. But if you choose a big vendor and it fails you’re probably safe.
stuartjohnson12 · 8h ago
"Only at this point did Brady realize that it was the CEO himself who was fiddling with the numbers. The entire dual reporting system that the CEO had personally initiated was in part an elaborate spy network to guard against discovery of the slush fund manipulation, and perhaps other finagling, rather than a system to ensure financial honesty."
- Moral Mazes (1988), Robert Jackall
weeznerps · 7h ago
I just read that book and I can't believe it's not more well-known in tech circles
raverbashing · 8h ago
5 layers of contracts is a lot of reputation and responsibility laundering
(and sometimes it's by design)
burnstek · 8h ago
Reminiscent of the Netflix drama when Mike Kail was accused & eventually convicted of similar.
So this definitely sounds salacious and could be believable, but is this a reputable source? It's supposedly an IT consultant's website, a strange place for a news article of this kind to appear...
bediger4000 · 8h ago
At the very end of the post:
Disclaimer: The identity of the news submitter has been verified by us. However, we have not received any confirmation or verification from Walmart regarding the information provided
I take this to mean it's garbled at best, and just might be fictitious.
jtbayly · 8h ago
This (same link I believe, not just same story) was on the front page a couple of days ago and quickly flagged dead. I’m surprised to see it again so quickly. I would have thought a flagged link wouldn’t be possible to submit again and get to the front page.
vjvjvjvjghv · 8h ago
When I did contracting at Siemens in Germany, the son of the CTO ran a staffing firm. He took around 30-50% of what Siemens paid. We did a rough calculation and concluded that the guy must make millions for not doing much. It’s hard to understand why countries are contracting with staffing firms that take a high cut but they do.
sillyfluke · 3h ago
I always find Germans as a collective weirdly naive about the top-level corruption that goes on in their country. Don't get me wrong, I don't claim that it exceeds the US in anyway but Americans don't have any illusions about the possible corruption the top brass can be engaging at any point in time. Germans seem to be way too ocd about following the rules at the individual level themselves and policing those around them at an individual level that they don't seem to have much energy left for contemplating top-level or systematic corruption. German pride seems to also discourage them from engaging in devil's advocating when it comes to auditing German darling companies. I'm guessing the VW, Deutsche bank, and Wirecard scandals have at least made a healthy little dent in that collective psyche.
VoidWhisperer · 7h ago
If this did happen, you would think this would be better substantiated by now. All the articles I'm finding on it are very clear at the top that it is an 'unverified' report - you'd think they'd be able to find atleast one of the 1200 engineers willing to talk to them.
Perhaps I'm too cynical but I'm not sure I believe this until a credible news source names the exec or has it substantiated by an engineer.
franktankbank · 7h ago
It took UnitedHealth several months to go back on their original refutation that they were under DOJ investigation for Medicare fraud.
ulf-77723 · 8h ago
Not knowing how the game works: What is legal in the US regarding kickbacks? Is it ok to get someone tickets for a gameday? To get invited to a party or taking a holiday? Pure cash seems a little odd to me - this must have been found in some company booking accounts, I guess
Moto7451 · 8h ago
Most employee handbooks will spell out what’s ok for most of the examples you gave. A lot of that will be ethics oriented but if you follow the rules you’re also behaving in a way the company isn’t going to find to be fraudulent and you’ll avoid those legal issues.
Pure cash is a problem, but for employees in Sales there’s basically a schedule for when you give and when you expect exchanges of tickets/events/small gifts and rules for what can be accepted and it scales with the position. When I worked in the same office as sales the gifts that came in made Christmas a bonanza. Those really expensive luxury fruit baskets I personally won’t buy for myself were very common. Junior’s Cheesecake from prior to their mail order and grocery store business taking off was a huge deal. Sometimes we got socks and ties. A LOT of socks. They addressed it to the whole office so the 30 or so engineers got to partake with the 500 or so sales and support members.
At one company the CEO took a client to the Super Bowl (they wanted to go also, win win). Totally fine. I’ve been the technical lead on some deals and have gotten some of the perks like very expensive dinners, some token gifts (on the scale of a very nice box of chocolates), branded merch, etc. At one place I worked a gift card or cash equivalent was ok if it was reimbursing something (like your parking or flight) but otherwise had to be less than $100.
For most places I’ve worked the rules are essentially that if it’s “fun”, legal, and substantially less than your pay/commission it’s probably allowed; if it’s clearly a bribe it is not.
hammock · 8h ago
Ignore the comments about handbooks. Ethics is not the same as law. In US law, generally (federal and/or state statutes apply) the line between legal conduct and illegal bribery is crossed when a payment, gift or benefit is made with corrupt intent to influence someone in a position of trust to act improperly
solardev · 7h ago
I mean, when the highest levels of government routinely operate on bribes... it kinda sets the expectation that this is normal. It's one thing when you're a rank and file employee subject to HR rules. At the higher levels, the same rules do not apply.
lotsofpulp · 8h ago
>Is it ok to get someone tickets for a gameday?
Not if there is a record of the tickets being given as a personal favor in exchange for a business favor.
delfinom · 8h ago
Depends, it can come down to your corporate employment contracts and corporate policies. Also, if you work for a public company, you usually have a fiduciary duty to shareholders at a certain managerial level, so it falls into the illegal territory.
If you own your own company, it's usually not a big deal to let people wine and dine you lol
It is illegal if you're a government employee or working as a government contractor. What most people get in trouble for is laundering the money that they're taking in bribes.
jongjong · 8h ago
This is a brave move by Walmart. If all companies follow suit, I suspect this will affect almost every major tech company. This is not an isolated case, but the norm in the industry. I've seen this over and over; specific SaaS providers being given preferential treatment because somebody high up in the tech leadership of a major corporation is either receiving kickbacks or they've been promised a future highly paid job at the SaaS provider. That's why you see a lot of corporate folks get hired into leadership positions by smaller SaaS providers who received business from the corporation.
The corporation almost always overpays and it's the same providers getting all the money from all the corporations because they have a similar strategy for all of them.
It's been going on for a LOT longer than 2023.
adolph · 8h ago
It'll be interesting to see if this is true or if it just validates people's priors.
Disclaimer: The identity of the news submitter has been verified by us. However, we have not received any confirmation or verification from Walmart regarding the information provided.
Unfortunately, this is a lot more common than people think… :/
duxup · 8h ago
I’ve seen a lot of outsourcing efforts that end up costing more money than previously.
franktankbank · 8h ago
For the company sure, but the decision-maker probably did well.
jongjong · 7h ago
The "Everyone in tech has been receiving kickbacks scandal" has been averted successfully. Phew... So many people involved, so much pressure.
This thing got flagged so fast, I didn't even have time to unmoor my ill-gotten yacht.
hopelite · 7h ago
This is an odd story. The VP of global tech for WM is fired, but no name is given?
I found who that person is in that role, but there is also an x account that claims it is all not true and he is not fired.
tiffanyh · 8h ago
Why is this framed as “Daily Payments”?
Isn’t that kind of vs just saying something like “VP received $X amount of money from Y vendor to be selected”
raincom · 7h ago
Kickbacks in the IT subcontracting is per head per hour. 8 billable hours per day * 1000 contractors a day * 5 dollars per billable hour = 40,000 USD a day.
djohnston · 8h ago
Surprise surprise, eh?
hammock · 8h ago
It may already be obvious to the average HN reader, but this seems to be about offshore staff.
“Contingent workforce infrastructure” is a term of art I haven’t heard yet, but in Google terms this is about red badges, likely offshore ones from staffing agencies.
And frankly, as someone who requests these kind of teams, it makes me question every interaction I’ve had in the past with the people who build these that has “pushed back” on me asking that we keep the recruiting network open globally and not just from some executive’s preferred country/area. For example I have in mind one exec who told me “I promised (unnnamed person) we would build a team in (redacted city)” and it was a lot of work to sidestep that
franktankbank · 7h ago
I bet you made a lot of enemies doing that sidestep.
JCM9 · 8h ago
It’s unclear from the article exactly what happened, but the general implication/allegation one takes away is that Walmart tech operations looks more like waste management contracting from the Sopranos.
koakuma-chan · 8h ago
Can you elaborate? I am confused by the language used here. What is "kickback" and what is "waste management contracting from the Sopranos"
TehCorwiz · 8h ago
Broadly and imprecisely speaking, kickbacks are illicit payments by a vendor or contractor to a specific member of the customer company for maintaining the relationship regardless of value or worth. It’s a type of bribery.
The Sopranos was a TV show about the Mafia. The Mafia is a criminal syndicate whose operations consist primarily of providing illegal drugs, prostitution, and charging companies in their territory for “protection” often from other groups, but also often from themselves. The show had the mafia use a waste management company’s services as a superficially legal reason to be paying these protection payments.
At least that’s my interpretation.
oersted · 7h ago
The Mafia does actually provide real waste-management services, also in Italy at large scale as far as I know.
They do engage in racketeering to ensure that they own all the contracts in a certain region, and compete for territory, but they do often actually go and collect the waste, it's not just a front. And I think they did in the Sopranos too, although it was not explicitly depicted as far as I remember, just off-hand references.
The illegal part is in how they get rid of it. Often they take on high-value contracts for toxic waste products that are complex to handle in a compliant manner, and they just dump it wherever.
westmeal · 8h ago
A kickback is money you take for a favor that isn't legal or allowed or for being in charge of a project, organization etc. Waste management contracting from the sopranos refers to a TV show about new jersey mobsters entitled the sopranos. In the show, they use a garbage disposal corporation to launder the money they make from their racketeering schemes. Whenever the boss is asked about what job he does, he just replies with 'waste management'.
matteotom · 8h ago
Kickback: usually refers to a company (or sales rep) giving a large "gift" to the individual at a company responsible for making a purchase decision (influencing that person to make a decision not in their company's best interest).
The Sopranos was a HBO show about a mob family. Historically, waste management in some cities has been controlled by the mob.
lambda · 8h ago
A kickback is a bribe; specifically, a bribe to someone on one side of a larger financial transaction, for facilitating it. As in, vendors A, B, and C are competing for a ten million dollar contract with Walmart to provide some service, so vendor A pays someone at Walmart in a decision making role ten thousand dollars to ensure that they are selected. A small portion of the money that vendor A receives is "kicked back" to the person who facilitated that transaction.
Obviously, this is quite corrupt; that person is supposed to be paid by Walmart to best represent their interests, not select the vendor based on who will best financially compensate them personally.
The Sopranos part is a reference to a TV show about the Mafia, in which (presumably, I haven't seen it), bribery schemes like this are common.
kortilla · 8h ago
If you’re selecting a contractor or vendor, they give you either money or some special payment to do so.
Mostly illegal.
The biggest kickback exceptions are airline mileage programs and hotel points where employees become incentivized to pick higher cost routes or stays to earn points.
BolexNOLA · 8h ago
Folks I think he gets it lol
lotsofpulp · 8h ago
Seems pretty clearly explained here.
>Technology executives with authority over contractor requisitions and interview processes can direct substantial volume toward "preferred" staffing shops. In exchange, these vendors provide kickbacks that, in Walmart's case, generated what sources estimate as millions in illicit payments over multiple years.
It’s wild to me that big companies with all the resources would expose their IT systems in this way where they have no idea who is doing the work….
Citation: Any book about the 2008 financial crisis, or the 1998 crisis, or the 1987 crisis, e.g.
[0] 'The Quants', Scott Patterson
[1] 'When Genius Failed', Lowenstein.
[2] 'Demon of Our Own Design', Richard Bookstaber.
I only have recruiters from companies that do this sort of work reaching out to me on LinkedIn. Whole companies where you are hired based on resume keywords.
Source: 1st hand experience being a provider of such services.
Having worked in call centres where strict compliance and security was critical, the reality is that doing things properly is expensive.
I'm sure there are organizations and outsourcing companies that skip it or treat it purely as a formality. I don't do that with my clients.
I gues this is in line with their normal practices, as they were unable to issue me a debit card that only works with a PIN, and can only issue cards where the PIN is optional.
If this was a sourced article, it'd have the name of the exec.
This thread isn't going anywhere, you can feel free to discuss. But it doesn't belong on front page, flagging was the right move.
wow i would think that for all the money paid to ERP vendors tracking five layers of contracts would not be a major issue.
but i guess unless people in positions of authority subject themselves to some sort of financial audit then it’s almost impossible to detect corruption related payments.
I wouldn’t be surprised to know there were agreements between this bigger company and the person in charge of selecting a contractor, it seems to be an extremely common practice.
Why does this make sense? Failing is failing. The only reason it could be true is that the giant corpo has deep projects to pay back for the failure (in theory) but does that work in practice? They've got lawyers for their lawyers and more lawyers for those lawyers. Guess who is going to out lawyer who.
Startups have no reputation. If they fail, you'll be asked why you picked them, and any answer you give is based on your judgment of their abilities, which was wrong since they failed. If you say it was to get X done cheaper, you're the cheapskate who wasted X$ trying to save Y$.
There are also very often situations where your corpo has used corpo X for 5 prior/current projects and is satisfied, so picking them also gives you the backing of those other projects, should something go wrong.
It partially makes sense, but it's also largely office politics. You really don't want to have a complex explanation when you're in the crosshairs of some angry bossman 2 tiers above your boss.
- Moral Mazes (1988), Robert Jackall
(and sometimes it's by design)
https://www.justice.gov/usao-ndca/pr/former-netflix-executiv...
Disclaimer: The identity of the news submitter has been verified by us. However, we have not received any confirmation or verification from Walmart regarding the information provided
I take this to mean it's garbled at best, and just might be fictitious.
Perhaps I'm too cynical but I'm not sure I believe this until a credible news source names the exec or has it substantiated by an engineer.
Pure cash is a problem, but for employees in Sales there’s basically a schedule for when you give and when you expect exchanges of tickets/events/small gifts and rules for what can be accepted and it scales with the position. When I worked in the same office as sales the gifts that came in made Christmas a bonanza. Those really expensive luxury fruit baskets I personally won’t buy for myself were very common. Junior’s Cheesecake from prior to their mail order and grocery store business taking off was a huge deal. Sometimes we got socks and ties. A LOT of socks. They addressed it to the whole office so the 30 or so engineers got to partake with the 500 or so sales and support members.
At one company the CEO took a client to the Super Bowl (they wanted to go also, win win). Totally fine. I’ve been the technical lead on some deals and have gotten some of the perks like very expensive dinners, some token gifts (on the scale of a very nice box of chocolates), branded merch, etc. At one place I worked a gift card or cash equivalent was ok if it was reimbursing something (like your parking or flight) but otherwise had to be less than $100.
For most places I’ve worked the rules are essentially that if it’s “fun”, legal, and substantially less than your pay/commission it’s probably allowed; if it’s clearly a bribe it is not.
Not if there is a record of the tickets being given as a personal favor in exchange for a business favor.
If you own your own company, it's usually not a big deal to let people wine and dine you lol
*per se
https://en.wiktionary.org/wiki/per_se
The corporation almost always overpays and it's the same providers getting all the money from all the corporations because they have a similar strategy for all of them.
It's been going on for a LOT longer than 2023.
Disclaimer: The identity of the news submitter has been verified by us. However, we have not received any confirmation or verification from Walmart regarding the information provided.
See also:
* Unverified Walmart H-1B Scandal Rumors Claim VP Got Kickbacks, 1,200 Terminated, Spark Fears Among Indians: https://inews.zoombangla.com/unverified-walmart-h-1b-scandal...
* Walmart H-1B scandal rumors spark anxiety among Indian workers, company responds: https://www.financialexpress.com/world-news/us-news/walmart-...
* Walmart visa scandal fears unfounded, company says firings not linked to H-1Bs: https://www.hindustantimes.com/world-news/us-news/walmart-h-...
This thing got flagged so fast, I didn't even have time to unmoor my ill-gotten yacht.
I found who that person is in that role, but there is also an x account that claims it is all not true and he is not fired.
Isn’t that kind of vs just saying something like “VP received $X amount of money from Y vendor to be selected”
“Contingent workforce infrastructure” is a term of art I haven’t heard yet, but in Google terms this is about red badges, likely offshore ones from staffing agencies.
And frankly, as someone who requests these kind of teams, it makes me question every interaction I’ve had in the past with the people who build these that has “pushed back” on me asking that we keep the recruiting network open globally and not just from some executive’s preferred country/area. For example I have in mind one exec who told me “I promised (unnnamed person) we would build a team in (redacted city)” and it was a lot of work to sidestep that
The Sopranos was a TV show about the Mafia. The Mafia is a criminal syndicate whose operations consist primarily of providing illegal drugs, prostitution, and charging companies in their territory for “protection” often from other groups, but also often from themselves. The show had the mafia use a waste management company’s services as a superficially legal reason to be paying these protection payments.
At least that’s my interpretation.
They do engage in racketeering to ensure that they own all the contracts in a certain region, and compete for territory, but they do often actually go and collect the waste, it's not just a front. And I think they did in the Sopranos too, although it was not explicitly depicted as far as I remember, just off-hand references.
The illegal part is in how they get rid of it. Often they take on high-value contracts for toxic waste products that are complex to handle in a compliant manner, and they just dump it wherever.
The Sopranos was a HBO show about a mob family. Historically, waste management in some cities has been controlled by the mob.
Obviously, this is quite corrupt; that person is supposed to be paid by Walmart to best represent their interests, not select the vendor based on who will best financially compensate them personally.
The Sopranos part is a reference to a TV show about the Mafia, in which (presumably, I haven't seen it), bribery schemes like this are common.
Mostly illegal.
The biggest kickback exceptions are airline mileage programs and hotel points where employees become incentivized to pick higher cost routes or stays to earn points.
>Technology executives with authority over contractor requisitions and interview processes can direct substantial volume toward "preferred" staffing shops. In exchange, these vendors provide kickbacks that, in Walmart's case, generated what sources estimate as millions in illicit payments over multiple years.
For more info:
https://en.wikipedia.org/wiki/Principal–agent_problem