Investor case over Wal-Mart bribes hangs on judge's advice
By Tom Hals
WILMINGTON, Del. (Reuters) - Big pension funds have been fighting for years to hold Wal-Mart's board of directors liable for covering up a purported bribery scandal in Mexico.
The outcome of the case turns in part on an unusual question: if a top judge offers unsolicited legal advice to plaintiffs, is it negligent to ignore it?
The case stems from an investigation by The New York Times in 2012 over allegations that Wal-Mart Stores Inc, the largest U.S. retailer, covered up $24 million in bribes paid by its Mexican subsidiary to build stores.
A federal investigation is underway, and Wal-Mart has said it is cooperating with authorities.
California State Teachers’ Retirement System, or CalSTRS, and New York City pension funds sued Wal-Mart in Delaware, where the retailer is incorporated, with allegations that the board members failed to investigate the bribery, which Wal-Mart has denied. The funds brought what is known as a derivative lawsuit, and typical of such cases, the funds are seeking governance changes.
Earlier this year, a nearly identical case in Arkansas was dismissed for procedural reasons.
Wal-Mart on Thursday asked the Delaware court to dismiss the pension fund case, saying it would be unfair for the retailer to face the allegations twice.
The pension funds' lawyer, Stuart Grant, countered that the funds should not be bound by the Arkansas case, which he claimed was so poorly handled it amounted to negligence. Continued...