Photographer: Susana Gonzalez/Bloomberg
Wal-Mart Beats Back Suits Against Directors Over BribesBy
Delaware Supreme Court upholds dismissal of funds’ cases
Investors blamed board for failing to ferret out bribes
Wal-Mart Stores Inc.’s lengthy legal fight over lawsuits claiming directors turned a blind eye to bribes paid to speed construction of Mexican stores came to an end after Delaware’s top court upheld a ruling throwing out the cases.
A judge correctly dismissed suits filed by a dozen pension funds blaming directors for failing to properly investigate the bribery reports and covering them up, the Delaware Supreme Court said Thursday. The Delaware judge was obligated to honor an Arkansas judge’s finding that the cases wouldn’t fly, the justices said.
“This is an important decision for Delaware corporate law and shareholder derivative actions, and provides greater clarity” for companies incorporated in the state, said Randy Hargrove, a Wal-Mart spokesman.
The Supreme Court ruling resolves the last civil claims against Wal-Mart’s board stemming from the bribery allegations, first reported in 2012 by the New York Times. At least $24 million in “suspect payments” were made, the Times said, citing internal files. Company officials in the U.S. and Mexico limited the investigation into the payoffs and hid the plot for more than seven years, the paper said.
The world’s largest retailer acknowledged in regulatory filings that U.S. Justice Department lawyers have been investigating allegations that employees paid bribes in Mexico, China, India and Brazil. In November, the company set aside $283 million to cover a settlement with the U.S. government. Hargrove said settlement negotiations are continuing.
The funds, which own a combined total of 11 million Wal-Mart shares worth more than $750 million, asked Delaware’s highest court to overturn Judge Andre Bouchard’s finding that the consolidated Delaware case raised identical claims against the retailer’s directors as the Arkansas case.
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 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.
The state’s highest court concluded the Arkansas investors represented all Wal-Mart shareholders in the lawsuit.
The case is California State Teachers Retirement System v. Aida Alvarez, No. 295, 2016, Delaware Supreme Court (Dover).