Roehm Accuses Wal-Mart CEO of Ethics Violation

42-Page Reply to Wal-Mart Counterclaim Details Alleged Improprieties

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BATAVIA, Ohio (AdAge.com) -- Roehm-gate, chapter 832: Exiled ad woman claims CEO got more than a ride in an Aston Martin.
Julie Roehm
Photo: Scott Breithaupt
Julie Roehm
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point bug Roehm's Rebuttal to Walmart's Counterclaim

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After several months of getting spattered by mud in her lawsuit against Wal-Mart Stores, former marketing executive Julie Roehm is flinging back hard at the retailer's highest-level executives.

42-page reply
In a 42-page reply to Wal-Mart's scorching counterclaim over her wrongful discharge and breach-of-contract suit, Ms. Roehm accuses Wal-Mart CEO Lee Scott of ethics violations -- specifically buying yachts and a pink diamond at "preferential prices" -- via an improper business relationship during his time as VP-merchandising.

The filing also accuses other Wal-Mart executives of receiving gratuities that would be deemed improper under company policy. They include former chief marketing officer and current Chief Merchandising Officer John Fleming, as well as Raul Vazquez, now CEO of Wal-Mart.com, who as VP-marketing of that unit helped Ms. Roehm lead Wal-Mart's now infamous 2006 agency review.

Those two, along with three other executives, flew to Barcelona, Spain, to meet with executives of Tyson Foods, Hanes and the entertainment manager of the Eagles rock band, according to the filing. The Wal-Mart executives received Eagles concert tickets worth an estimated $300 each and backstage passes and souvenirs, according to the lawsuit, which alleged none of the executives returned the gifts.

An assistant for Mr. Fleming said he was on vacation and could not be reached for comment; a voicemail left for Mr. Vazquez went unreturned.

The filing also said Wal-Mart did not immediately terminate, as it did Ms. Roehm, a former general counsel alleged to have had a widely known affair with a subordinate he later married after divorcing his wife.

Detailed description of Draft review
Ms. Roehm also provides the lengthiest and most detailed description to date of the review process that selected Interpublic Group of Cos.' Draft FCB last year, alleging that eight of nine male colleagues who have not been accused of receiving gratuities from Draft voted to select the agency before Ms. Roehm ever cast a vote.

The filing also alleges Wal-Mart had little regard for advertising and that it showered more resources and staff on her male colleague, Stephen Quinn, at the time senior VP and now chief marketing officer, than it did on her.

Ms. Roehm's legal rejoinder follows a March filing by Wal-Mart that accused her of having an affair with former subordinate Sean Womack and accepting improper gratuities from Draft FCB, among others, in last year's agency review process.

The current filing hits roughly a week before Mr. Scott and his management team are to appear in the company's annual shareholder meeting in Arkansas.

"This lawsuit is about Julie and her misconduct," said a Wal-Mart spokesman. "Her document shows how weak her case is."

As for the allegations in Ms. Roehm's filing, "We will address these issues in court. Certainly, we dispute the allegation involving our CEO and Irwin Jacobs."

But Mr. Scott, who has presided over the high-profile firing (later leading to prosecution for embezzlement) of his former No. 2 executive, Tom Coughlin, in 2005, as well as Ms. Roehm's dismissal last year in part over alleged ethics violations, will inevitably face pressure to answer the new allegations, even if Wal-Mart isn't forced to address them in court.

CEO's "preferential prices"
Ms. Roehm's filing alleges that Mr. Scott, when he was VP-merchandising, formed a close association with entrepreneur Irwin Jacobs, whose business, Jacobs Trading Co., later secured exclusive right to sell Wal-Mart's unsold merchandise. The suit alleges Mr. Scott later purchased several yachts "at preferential prices" from another of Mr. Jacobs' companies and a large pink diamond for his wife at preferential prices from another of Mr. Jacobs' companies. The suit adds that Mr. Scott's son, Eric, after being employed as a Wal-Mart buyer, later left Wal-Mart for employment with Jacobs Trading Co.

A message left for Mr. Scott for comment was not returned by press time.

Ms. Roehm specifically denied all of Wal-Mart's charges that she received improper gratuities or discussed employment for herself or Mr. Womack with Draft FCB executives. But her filing also points to Wal-Mart's tolerance of Mr. Scott's alleged relationship with the Jacobs businesses as evidence of its ethics policies not being evenly applied.

Likewise, while denying evidence of any affair with Mr. Womack, she maintains Wal-Mart's tolerated an alleged affair involving a former general counsel and his secretary, citing that as evidence of uneven application of its policy regarding fraternization. The former Wal-Mart counsel, Robert Rhoads, now a lawyer in private practice after leaving Wal-Mart in 2002, couldn't be reached for comment, as an assistant said he was in court.

Ms. Roehm, moreover, also dismisses her purported affair as a reason for her firing, charging that Wal-Mart sought evidence from Shelly Womack, wife of her former subordinate, only after she was let go.

Ms. Roehm's answer also denies, in detail, allegations that she showed favoritism to Draft or any other agency. She notes, among other things, having supplied incumbent GSD&M, Austin, with a list of people she believed to be the best thinkers in marketing, all of whom the Omnicom Group agency later hired as consultants for its pitch, according to the filing.

Ms. Roehm's filing said she forwarded all e-mails between herself and agencies involved in the review each week to Mr. Fleming, including those later cited by Wal-Mart as evidence of an improper relationship between her and Draft FCB.

Fleming's Draft decision
Mr. Fleming was among the executives who voted for Draft, Ms. Roehm's filing said, adding that he expressed surprise to her after the vote that she had favored Draft, since he thought she favored WPP Group's Ogilvy & Mather. The filing also said Mr. Fleming told her GSD&M "didn't stand a chance" because "change was needed at Wal-Mart." And it alleges Mr. Fleming dismissed Ogilvy's advertising as "too Target-like" and that he didn't like its "New York culture," which he considered a bad fit with Wal-Mart.

"It was not surprising that Mr. Fleming favored Draft/FCB," according to the filing, "since he consistently told Roehm that Wal-Mart's in-store environment was more important than media and advertising."
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