Wal-Mart Gets Lawsuits Over Mexican-Bribery Claims Tossed

  • Investors claimed directors covered up real-estate payments
  • Delaware judge says shareholders can’t re-litigate claims

Wal-Mart Stores Inc. directors got a Delaware judge to throw out investors’ claims they bungled the handling of a probe into alleged bribes paid to facilitate Mexican real-estate deals, wiping out the majority of lawsuits over the scandal.

Disgruntled Wal-Mart shareholders accusing the retailer’s board of covering up the bribery scheme can’t re-litigate their claims over losses tied to the scandal, Delaware Chancery Court Judge Andre Bouchard ruled Friday. A federal judge in Arkansas already found directors shouldn’t face identical claims, Bouchard concluded.

Several pension funds, California State Teachers’ Retirement System and the New York City Employees’ Retirement System, argued the cases focused on different issues related to the scandal and the Delaware lawsuits should proceed.

Bouchard found the Arkansas complaint and the Delaware suits “present the same” issues and he was therefore bound by the federal judge’s decision to dismiss the bribery case.

‘Appropriate Authority’

Wal-Mart officials said they were pleased with Bouchard’s finding that directors could use their business judgment when overseeing the extent of internal reviews of the bribery claims. “We have said all along that the Wal-Mart board had the appropriate authority to conduct an investigation into the matters alleged in these cases,” Randy Hargrove, a company spokesman, said in an interview Friday.

U.S. and Mexican prosecutors are still investigating the bribery allegations, first reported by the New York Times, Hargrove added. The newspaper said an executive of Wal-Mart’s Mexican unit alerted company officials in 2005 about bribes paid to facilitate construction of new stores and warehouses.

At least $24 million in “suspect payments” were made as part of scheme, the Times said, citing internal files. The newspaper also said Wal-Mart executives in the U.S. and Mexico limited the company’s investigation into the scheme.

Internal documents showed Wal-Mart’s Mexican unit used a state governor in Mexico to facilitate $156,000 in bribes, Bloomberg News reported in 2013. The files were released by Henry Waxman, a former Democratic representative of California, and Maryland Representative Elijah Cummings, a Democrat, who started their own probe of the allegations.

Stuart Grant, Wal-Mart investors’ lead lawyer in the case, didn’t return a call for comment Friday on Bouchard’s decision to throw out the bribery claims against board members.

Directors Sued

Pension funds and individual Wal-Mart investors sued directors in Arkansas and Delaware claiming board members shut down some executives’ calls for a thorough probe of the bribery allegations. The board kept the scandal quiet until the 2013 New York Times story made the payments public.

Last year, U.S. District Judge Susan Hickey in Arkansas threw out the federal case, finding investors failed to show the board got all the details about the bribes and turned a blind eye.

The investors who sued in Delaware spent more than a year battling with Wal-Mart over access to internal files on what directors knew about the bribery claims and how they oversaw the review of allegations. In 2013, a judge ordered the documents turned over to shareholders.

The Delaware plaintiffs alleged shareholders in Arkansas didn’t have access to those internal files and therefore had a weaker case.

Bouchard concluded the Arkansas plaintiffs raised the same basic issues embodied in the consolidated suits in Delaware and they weren’t “inadequate representatives” of the rest of the retailer’s shareholders.

The case is In re Wal-Mart Stores Inc. Delaware Derivative Litigation, 7455-CB, Delaware Chancery Court (Wilmington).

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