Pension adviser says Ernst & Young was aware of Wal-Mart Mexico bribery allegations

May 25 (Reuters) - A labor-affiliated pension fund adviser is seeking an inquest into the auditor of Wal Mart Stores Inc , Ernst & Young LLP, accusing the auditing firm of knowing about possible bribery in Mexico long before the retailer disclosed it to U.S. authorities.

CtW Investment Group, an adviser to union pension funds holding about 0.15 percent of Wal-Mart’s shares, said an internal Wal-Mart memo released during shareholder litigation showed that Ernst & Young was informed by Wal-Mart’s internal audit services, or IAS, unit that a whistleblower had provided evidence of the alleged Mexico bribery scheme to Wal-Mart.

“E&Y was briefed by IAS over the course of the Company’s internal investigation from late 2005 through early 2006,” according to a letter sent last week by CtW to the Public Company Accounting Oversight Board, or PCAOB. The board, CtW wrote, should consider “whether E&Y responded appropriately after obtaining evidence of illegal acts and serious internal control deficiencies.”

CtW Executive Director Dieter Waizenegger said the group only realized the significance of the memo in recent months.

In 2014, the Delaware Supreme Court affirmed a lower court ruling that ordered Wal-Mart to provide a shareholder with documents related to the company’s internal probe of allegations the retailer had paid bribes in Mexico.

The alleged bribes and cover-up came to light with a New York Times story in 2012 that reported the company’s Mexican unit had been making illicit payments since 2005 to obtain permits needed to open 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 probe and instead covered it up.

Wal-Mart is currently under investigation by U.S. authorities who are trying to determine if crimes were committed.

“The investigation is ongoing and it would be inappropriate to comment further on specific allegations, or for us or others to come to specific conclusions until it is finished,” Wal-Mart spokesman Randy Hargrove said in an emailed statement.

A representative for PCAOB declined to comment, and Ernst & Young was not immediately available for comment. (Reporting by Ross Kerber in Boston and Shubhankar Chakravorty in Bengaluru; Editing by Peter Cooney)