Wal-Mart Stores Inc. officials were sued by a group of New York pension funds for alleged mismanagement in failing to prevent bribery as the world’s largest retailer expanded operations in Mexico.
Investors including the New York City Employees’ Retirement System, Police Pension Fund, Fire Department Pension Fund and Board of Education Retirement System contend that company officials were duty bound to control alleged “widespread corruption” and a subsequent cover-up at Wal-Mart de Mexico, according to a complaint filed today in Delaware Chancery Court.
“We take our responsibility to our shareholders very seriously,” David Tovar, a spokesman for Wal-Mart, said in an e-mailed statement. “We will review the lawsuit closely and are thoroughly investigating the issues that have been raised,” he added.
Both U.S. and Mexican prosecutors said in April that they had started probes of allegations that Wal-Mart bribed Mexican officials to help fuel growth in the country. The retailer’s expansion in Mexico has turned the company into the country’s largest private employer, with more than 209,000 workers.
“The defendants knew or should have known that violations of law were occurring” and “made no good-faith effort to prevent or remedy the situation,” the funds said in their complaint.
The case is one of four filed this year in Delaware since allegations of bribery were reported. The funds, which hold 5.62 million shares of Bentonville, Arkansas-based Wal-Mart, seek unspecified restitution from officials on behalf of the company and reforms “to improve its corporate governance and internal procedures,” according to the complaint.
The U.S. government investigation into $24 million in alleged Mexican bribes might cost Wal-Mart hundreds of millions of dollars, former federal prosecutors have said.
“A thorough investigation will take time and we are in the early stages,” Tovar said in the e-mail. “It would be inappropriate for us or others to come to conclusions before the investigation is complete.”
The case is New York City Employees’ v. Alvarez, CA7612, Delaware Chancery Court (Wilmington).