(Adds comment from Wal-Mart, shareholder attorney in paragraphs
By Tom Hals
July 23 The Delaware Supreme Court affirmed on
Wednesday a lower court ruling that ordered Wal-Mart Stores Inc
to provide a shareholder with documents related to the
company's internal probe of allegations the retailer had paid
bribes in Mexico.
Wal-Mart had appealed a ruling by Delaware's lower Court of
Chancery that ordered the company to produce documents to an
Indiana union pension trust, which owns the company's stock. The
trust had sued Wal-Mart for access to the documents, saying it
needed them to determine if the company's board breached duties
to shareholders by failing to investigate bribery allegations.
The alleged bribes and cover-up first came to light with a
New York Times story in 2012 which reported that the company's
Mexican unit had been making illicit payments since 2005 to
obtain permits needed to open new stores.
The story said Wal-Mart's investigators found evidence of
widespread payments and suspected that laws had been broken. The
story also said Wal-Mart leaders rejected an investigator's
recommendation to expand the investigation and instead covered
Wal-Mart is under investigation by U.S. and Mexican
authorities who are trying to determine if crimes were
Wal-Mart spokeswoman Brooke Buchanan said the ruling was
procedural and did not address the merits of the allegations.
"The allegations against the company have been the subject of an
ongoing, thorough internal investigation that has not yet
reached final conclusion," she said.
The shareholder's attorney, Stuart Grant of Grant &
Eisenhofer, said the ruling resolved significant legal issues.
"We are very pleased with the result. After almost two years we
eagerly await these documents and the truth they will reveal,"
The Indiana Electrical Workers Pension Trust Fund IBEW
exercised its right as a stockholder in 2012 to demand company
provide documents related to the bribery probe. Eventually a
dispute over information requested led the trust to sue in
Delaware, where Bentonville, Arkansas-based Wal-Mart is
Wal-Mart appealed a ruling by then-Chancellor Leo Strine in
2013 ordering the retailer to provide seven years of documents,
including some never reviewed by the board and others Wal-Mart
said were subject to attorney-client privilege.
The Delaware Supreme Court's unanimous ruling rejected
Wal-Mart's arguments and said in a 39-page opinion that certain
lower-ranking officials had a "reporting relationship" to
members of the board, making their communications relevant.
In addition, the Supreme Court held that the attorney-client
privilege could not protect information if the documents are
essential to proving a breach of fiduciary duties.
Books-and-records requests like the one by the pension trust
often lead to a shareholder filing what is known as a derivative
lawsuit. In such cases, a shareholder sues the board on behalf
of the corporation to recover damages caused by directors acting
in their own interests.
Successful derivative cases often result in corporate
governance changes rather than monetary damages that are more
common in successful securities class actions.
(Reporting by Tom Hals in Wilmington, Delaware; Editing by Lisa