Washington presence pays off for Wal-Mart in Medicare bill.

WASHINGTON -- Norm Lezy had an easy commute when he opened Wal-Mart Stores Inc.'s first Washington office in 1999: He worked from the basement of his suburban Virginia home.

Lobbying was not a priority for the retailer in those days. Four years later, Lezy heads a five-person office in downtown Washington that is giving the world's largest company by sales a string of legislative victories.

Wal-Mart managed to include language in a $400 billion Medicare bill that may allow it to gain a bigger share of the $33.5 billion mail-order drug business. Wal-Mart was among the corporate leaders in beating back a government effort to establish rules covering repetitive-motion injuries. And it won an exemption from lawsuits under the proposed Patients' Bill of rights legislation in 2001.

The company this year overtook United Partel Service Inc. as the biggest corporate giver to Congress. "We don't have any problems getting to see whomever we want," said Lezy, 61, a retired Air Force general who once commanded a nuclear missile battery. "A lot of members have figured out that we create a lot of jobs."

Consider that Wal-Mart has stores in 406 of the nation's 435 congressional districts.

The retailer's growing clout in Washington is rallying opposition from labor and business groups. Pending legislation that would have allowed it to put banking branches in its 3,500 U.S. stores faces an amendment designed to keep Wal-Mart and other non-financial firms from entering the banking business.

"We excluded Wal-Mart," said Rep. Barney Frank, a Massachusetts Democrat who sponsored the amendment with Republican Paul Gillmor. "We are not talking about selling soap, but insured deposits. When you are talking about that, you need better safeguards than cost cutting," Frank said, referring to Wal-Mart's practice of discounting prices.

The opposition isn't slowing Bentonville, Ark.-based Wal-Mart. The Washington team plans to spend next year working with companies such as Procter & Gamble Co. and General Motors Corp. to win new tax benefits for its international operations.

Wal-Mart, which has donated more than $1 million to 193 congressional candidates this year, will build on the success it had influencing the Medicare bill, which expands prescription-drug coverage for 41 million elderly people.

On page 178 of the 678-page bill, the Federal Trade Commission is directed to study whether the Medicare system pays more to pharmacy-benefit managers--mail-order companies that act as middlemen to buy medicines in bulk for clients--than it does to other companies such as Wal-Mart that sell drugs.

During the 2001 debate on the Patients' Bill of Rights, which would have expanded employees' ability to sue their health-care provider, Wal-Mart surveyed its workers and found that they would rather not pay the added insurance premiums that the legislation might entail, Win-born said. The legislation ultimately failed.

Even had the bill been signed into law, Wal-Mart was exempted from liability though a provision offered by Sen. Blanche Lincoln of Arkansas, recipient of $22,200 in campaign contributions from Wal-Mart in the past four years, according to the Center for Responsive Politics, a non-profit group.

Wal-Mart does much of its lobbying through business groups such as the International Mass Retail Association. Through the National Coalition on Ergonomics, it worked with other companies to repeal workplace rules three months after they went into effect in 2001. Wal-Mart's efforts sometimes draw the ire of Congress, uniting Republican and Democratic lawmakers, who see the company as a threat to small businesses and a laggard on wages and health benefits.

In April, lawmakers on the House Financial Services Committee were preparing to approve a bill making it easier for banks to expand across state lines. The measure was co-sponsored by Republican Shelley Moore Capito, who received $7,500 in contributions from Wal-Mart this year, among other lawmakers.

The night before the committee met to send the bill to the House of Representatives for a vote, Frank and Gillmor learned that a provision would allow Wal-Mart to enter the banking business by purchasing an industrial loan corporation, which can take deposits and make loans.

The fact that Wal-Mart didn't have a representative in Washington until 29 years after it first sold shares to the public stems from the philosophy of founder Sam Walton. He didn't believe in spending money on anything not having to do with customer service or distribution.

But Wal-Mart's continued growth after Walton's death in 1992 meant it attracted the attention of lawmakers and government agencies.

The decision to set up a Washington office "was very much an evolution," said Jay Allen, Wal-Mart's vice president for corporate affairs, who hired Lezy. "We realized that it was time to engage politically."

Wal-Mart's lobbying team is small compared with companies of similar market capitalization, such as Microsoft Corp. and Pfizer Inc.

Still, Lezy says the company's dominance over the retail industry makes it a big target. "When you're No. 1, whether the New York Yankees or Wal-Mart, there are folks on the sidelines who don't like what you do," he said.