Wal-Mart Sued by New York City Pension Funds

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On Monday, the New York City’s pension funds filed a derivative lawsuit against Wal-Mart Stores Inc on reported allegations of bribery in Mexico and a possible cover-up by Wal-Mart officials. The lawsuit has been filed in the Delaware Chancery Court and alleges that the officers and board of directors of Wal-Mart breached their fiduciary duty to the company and to shareholders.

The issue was first exposed by the New York Times in a report on April 21. The report mentioned that the management of Walmex or Wal-Mart de Mexico had arranged bribes amounting to $24 million to spur its growth over the last decade, and that the top officials at Wal-Mart had tried to cover up the misdeeds.

New York City Comptroller John C. Liu issued a statement observing, “Rooting out the directors and executives responsible for the current crisis would be a first step, but Wal-Mart also needs corporate governance reforms and an independent board that will protect outside shareholders and safeguard against another breakdown of internal controls.”

  

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At least 11 derivative suits against Wal-Mart have already been filed over the matter, including one by the California State Teachers’ Retirement System. The City of Pontiac General Employees Retirement System in Tennessee has filed a securities lawsuit over the same causes against Wal-Mart.

Wal-Mart spokesman David Tovar told the media, “We take our responsibility to our shareholders very seriously. We will review the lawsuit closely and are thoroughly investigating the issues that have been raised … It is also important to remember that the filing of a lawsuit does not indicate the ultimate merits of the case or how the case will be resolved.”

The allegations of bribery are also being investigated by the U.S. Department of Justice, the U.S. Securities and Exchange Commission and a number of government agencies in Mexico. The Wal-Mart spokesman told the media that the company is conducting its own internal investigation, but it was too early to make conclusive comments.

The New York City funds held $5.6 million in Wal-Mart shares as of March 31, and the New York City Comptroller’s Office had voted against certain board members in Wal-Mart’s recent election.