Wal-Mart shareholder sues over bribery scandal
WILMINGTON, Del (Reuters) - A shareholder sued the board and several officers of Wal-Mart Stores Inc (WMT.N) on Wednesday over allegations that the company's Mexican affiliate paid bribes to local officials, adding to the company's legal problems.
The lawsuit seeks to recover damage to the company's reputation as well as costs of investigating the claims, according to the complaint, which was filed in the Court of Chancery in Delaware, where Wal-Mart is incorporated.
The "illegal payments have and will continue to irreparably damage Wal-Mart's corporate image and goodwill and jeopardize its ability to do business in foreign countries," said the lawsuit, which was brought by Henrietta Klein.
The complaint was filed as a derivative lawsuit, which seeks to recover money on behalf of the company rather than shareholders.
"We've received the lawsuit and are reviewing it closely," said a statement from company spokesman Dave Tovar. "The claims in this complaint (relate) to allegations raised a few days ago against the company and are being investigated thoroughly."
On Saturday, the New York Times reported that a senior Wal-Mart lawyer received an email from a former executive at Wal-Mart de Mexico (WALMEXV.MX) in September 2005 that described how the Mexican affiliate, known as Walmex, had paid bribes to obtain permits to build stores in the country.
According to the Times, Wal-Mart sent investigators to Mexico City and found a paper trail of suspect payments totaling more than $24 million. But the company's leaders shut down the probe and did not notify U.S. or Mexican law enforcement officials until after the newspaper informed Wal-Mart it was looking into the issue, the Times reported.
The company's share price fell on Monday and Tuesday following the Times report, wiping out gains for the year. Shares of the world's large retailer closed Wednesday down 0.7 percent, or 41 cents lower, at $57.36 on the New York Stock Exchange.
Mexico's federal comptroller's office said on Wednesday it would open an investigation into the bribery allegations.
Wal-Mart has said it disclosed the bribery allegations to the U.S. Department of Justice and Securities and Exchange Commission.
In addition to the current members of the board, the lawsuit also named as defendants three people who were top officials with Walmex in 2005.
Eduardo-Castro Wright was the CEO of Walmex until 2005, when he was named chief executive of Wal-Mart Stores USA. According to the Times he was a driving force behind years of bribery.
Eduardo Solorzano was the CEO of Wal-Mart Mexico in 2005 and is currently the CEO of Wal-Mart Latin America.
Jose Luis Rodriguezmacedo Rivera was the general counsel in Mexico in 2005 and was president of legal, ethics and compliance at Walmex until he resigned on Friday, according to the lawsuit.
The lawsuit is the second action brought by the plaintiff over the bribery allegations, according to the complaint. In December, Klein's lawyers wrote to the Chairman Robson Walton to demand access to the company's records to determine if the board had breached its fiduciary duties after disclosing an internal bribery investigation.
Klein's request was refused because Wal-Mart determined that there was "no credible basis to infer that the company's board of directors has engaged in wrongdoing or mismanagement," according to the lawsuit.
The case is Henrietta Klein v S. Robson Walton et al, Delaware Court of Chancery, No. 7455.
(Reporting By Tom Hals; Editing by Gerald E. McCormick and Tim Dobbyn)
- Disruptive Hong Kong protests loom after China rules out democracy |
- Ukraine accuses Russia of 'open aggression' as rebels advance |
- Pakistani protesters clash with police, soldiers secure state TV |
- Europe holds nerve as Russia-Ukraine warnings ratchet up
- Dozens arrested at Made in America music festival in Los Angeles