Implicated by Roehm, Billionaire Defends Dealings With Wal-Mart CEO

Says of Ousted CMO's Accusations: 'She's Obviously Off the Wall'

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BATAVIA, Ohio (AdAge.com) -- When you're already duking it out in court with the biggest company on earth, how much worse can it be to take on a billionaire, too?

Julie Roehm may be about to find out. Irwin Jacobs, the Minnesota billionaire Ms. Roehm accused in a court filing last week of currying favor with Wal-Mart Stores by selling its Chairman-CEO Lee Scott cut-rate yachts and a pink diamond for his wife, as well as by hiring his son, has given Ms. Roehm until today to issue a retraction.

"We received nothing from them," Mr. Jacobs said, "so you wait and see what happens."

Ms. Roehm's lawyer didn't return a call for comment.

Denies allegations
Mr. Jacobs denies the allegations in a May 24 filing by Ms. Roehm in U.S. District Court for Eastern Michigan, part of the former Wal-Mart marketing executive's wrongful discharge and breach-of-contract lawsuit against the retailer. In the filing, she pointed to the alleged favors from Mr. Jacobs to Mr. Scott as examples of Wal-Mart tolerating breaches of its ethics code for some executives while firing her for allegedly breaking the rules. She also denied breaking the rules.

In an interview with AdAge.com, Mr. Jacobs acknowledged that Mr. Scott bought a Wellcraft boat, made by boat supplier Genmar Holdings, which Mr. Jacobs chairs. "He got no special deal on it," Mr. Jacobs said. "This has all been reviewed by the [Wal-Mart] board and Wal-Mart compliance as well as everyone else who's looked at it going back to the Coughlin case," he said, referring to Wal-Mart's investigation of self-dealing by former No. 2 executive Tom Coughlin, who later was convicted of embezzlement.

Mr. Scott has "gone out of his way" to avoid taking advantage of their relationship, Mr. Jacobs said, by insisting, for example, on paying full retail price for $12 "ranger hats" he took a fancy to in one of his company's showrooms.

Boards reviewed hiring of son
Mr. Jacobs acknowledged that Genmar did hire Eric Scott, Lee's son. But he said the boards of both companies had reviewed the hire and found nothing improper, adding that Eric Scott has been barred from any dealings with Wal-Mart in his duties at Genmar. "This wasn't done behind some dark curtain somewhere," Mr. Jacobs said.

A Wal-Mart spokesman declined to comment on whether Wal-Mart's board reviewed Eric Scott's employment at Genmar. He said he would check on details, but did not respond by press time.

As for the diamond, Mr. Jacobs said he knows nothing of it. The Wall Street Journal reported earlier this week that Mr. Scott did purchase a diamond ring from another Wal-Mart vendor, the Aaron Group, though it found no evidence of a discount.

"I've never met [Ms. Roehm]," Mr. Jacobs said. "She's obviously off the wall. But to think that her lawyers would put this in a legal document with absolutely no basis or truth to it ... there's going to be a lot of embarrassed people before this thing is over with."

No comment on other allegations
Wal-Mart's spokesman declined to comment on other specifics of Ms. Roehm's allegations, including that Wal-Mart tolerated, at least for a time, an affair between former legal counsel Robert Rhoads and a subordinate, and that Chief Merchandising Officer John Fleming and Wal-Mart.com CEO Raul Vazquez received concert tickets worth $300 from an executive of the Eagles rock band. Wal-Mart sponsored an Eagles concert last year.

Messrs. Rhoads, Fleming and Vazquez did not return calls for comment.

Last week, Wal-Mart said it would answer all the allegations in court and said the allegations against Mr. Scott were untrue.
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