Wal-Mart is trying to open a new store in LA's Chinatown area. Local labor groups, among others, are challenging the store's permitting. It's a fight with big stakes for Wal-Mart, as it goes right to the heart of the company's strategy of expanding in large cities. And now, one labor group says that an employee of a PR firm working for Wal-Mart actually posed as a reporter in order to infiltrate one of their meetings.

Warehouse Workers United, a group working to improve labor conditions for Wal-Mart's LA warehouse workers, says that its press conference last week was infiltrated by an undercover Wal-Mart functionary. WWU's Elizabeth Brennan tells us:

It was a closed press conference Wednesday June 6. She signed in on our media list as "Zoe Mitchell" a "USC student" (there's pic of that on our website). She talked to a warehouse worker for 20 minutes and she tape recorded the interview and asked lots of detailed questions about the bad conditions in which he worked. Warehouse worker said she was shaking the whole time...

Then yesterday, June 13, she showed up at another press conference we had in Downtown LA announce the largest anti-Walmart rally in US history. They are trying to open a store in Chinatown. She showed up there but was handing out business cards to all the reporters and telling people she works for Walmart. Her name on the business cards is Stephanie Harnett.

Stephanie Harnett is, indeed, an associate at Mercury Public Affairs—which, as you can see here, is being paid $60,000 to assist Wal-Mart on the Chinatown issue. WWU has photos of Harnett posing as "Zoe Mitchell." And since WWU asked its followers to scold Harnett on Twitter today, Harnett's Twitter page has been deleted.

Needless to say (actually, we do need to say, for you cynics out there), even within the PR industry it is considered horribly unethical and scandalous to pose as a reporter in order to spy for a client. It is not "fair play," even in the cutthroat world of Wal-Mart PR. We have contacted both Wal-Mart and Mercury, and we'll update with their responses when we receive them.

Update: Wal-Mart spokesman Steven Restivo tells us: "These actions were unacceptable, misleading and wrong. Our culture of integrity is a constant at Walmart and by not properly identifying herself, this individual's behavior was contrary to our values and the way we do business. We insist that all our vendors conduct themselves in a way that is transparent and honest and we will reinforce that expectation to help ensure this type of activity is not repeated."

Update 2: We received this statement from Becky Warren, managing director for Mercury Public Affairs: "The action taken by Ms. Harnett was in no way approved, authorized, or directed by Walmart or Mercury. Stephanie is a junior member of our team who made an immature decision. She showed very poor judgment and Mercury takes full responsibility. We are taking the necessary disciplinary actions. This is an isolated incident that has never happened before and will not happen again." She clarifies: "I can confirm that she is no longer with the company."

If you know any more about this case, email me.