Despite Walmart’s positioning as retail’s new poster child for sustainability, some may think its campaign rings a little hollow right now. Its growing reputation as retail’s leader in corporate social responsibility has been tainted by reports of unscrupulous behavior that, according to some, permeated company management south of the border.

The New York Times dropped the bomb over the weekend. An online article reported that executives of Walmart de Mexico, Walmart’s Mexican subsidiary, were complicit in a pattern of systematic bribery.

News of this activity first came to light in 2005, according to the story, when a former executive alleged that Walmart de Mexico had paid bribes to obtain building permits and fast-track the construction of new stores throughout the country, winning market dominance in the process.

According to the Times piece, Walmart launched an investigation, ultimately confirming the flow of money from its Mexican operation. According to reports, hundreds of suspects could be responsible for a paper trail adding up to more than $24 million.

The takeaway here is that, particularly when caught in such an unfavorable position, communicated behavior is what yields credibility. Many believe that the employees involved were not disciplined appropriately and that Walmart could have (and should have) taken a different (some would say higher) road and meted out consequences.

While the Times story represents only a single account of the goings on in Mexico and is by no means the final word, this issue surely will make a dent in what has been an admirable run at sustainability for this retail giant. How big the dent is, or becomes, remains to be seen.