Wal-Mart Stores Inc. is butting heads with the U.S. government over how to wrap up a long-running foreign corruption investigation.

Officials have proposed that the world’s biggest retailer pay at least $600 million to resolve probes by the Justice Department and the Securities and Exchange Commission into whether it bribed government officials in markets from Mexico to India and China, according to three people familiar with the matter. The retailer has rebuffed the government’s request, two of them said.

Such a settlement would rank among the largest in four decades under a U.S. law against bribing foreign officials to obtain business.

With the impasse, prosecutors have gone back to elicit more evidence from witnesses about alleged bribe-paying in Mexico, the people said. That will put further pressure on the company to settle. Some of those familiar with the matter said the U.S. could propose a penalty well above $600 million.

The government has some challenges, as well. Some of the behavior it’s been investigating in Mexico, where the bulk of Wal-Mart’s non-U.S. stores are located, may be too old to prosecute, those familiar with the matter have said.

Officials are working to wrap up an agreement with Wal-Mart before a new administration takes over in January, the people said. That would add to the wave of enforcement actions already announced this year, including last week’s agreement by Och-Ziff Capital Management LP to pay $415 million in penalties and fines to settle a U.S. investigation into bribe-paying across Africa.

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“As we’ve said from the beginning, we are cooperating fully with the government in this matter and have no further comment on that process,” Wal-Mart spokesman Greg Hitt said in an email. He added that the company’s compliance with anti-corruption laws is a priority and that the retailer was recognized this year by a New York Stock Exchange subsidiary for best governance program among large-cap companies.

The Justice Department and the SEC have spent half a decade investigating allegations that Wal-Mart representatives paid government officials over the course of 10 years to fast-track store openings.

The U.S.’s proposed penalty accounts for the profits Wal-Mart reaped from stores it was able to open quickly after allegedly paying officials to speed zoning and building permits, the people said. Calculating a fine based only on the amount of the alleged bribes, as the department has done in some cases, would yield a lower penalty, they said.

Even as the sides are grappling over the size of a penalty, they are also discussing whether there will be any criminal charges against any part of the company, the people said.

Wal-Mart has already spent $791 million on legal fees and an internal investigation into the alleged payments and to revamp its compliance systems around the world, the retailer said.


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