Bloomberg News

Wal-Mart Loses Bid to Block Use of Bribery Files in Case (1)

May 16, 2013

Wal-Mart Stores Inc. (WMT:US) can’t block investors from using publicly disclosed internal files in lawsuits that claim directors failed to properly oversee executives accused of bribing Mexican officials, a judge said.

Pension funds that are suing Wal-Mart can rely on e-mails and other records published by the New York Times (NYT:US) and two congressmen to make the case that the company must provide more information about the board’s probe of the scandal, Delaware Chancery Court Judge Leo Strine concluded.

“You don’t strike from a public proceeding material that is already public,” Strine told Wal-Mart’s lawyers at a hearing in Wilmington today. He did bar the pension funds from using any documents that hadn’t already been made public and ordered them returned to Wal-Mart.

Wal-Mart, based in Bentonville, Arkansas, faces a May 20 trial of the pension funds’ claims that the world’s largest retailer hasn’t turned over relevant documents showing when directors learned about the bribes and how thoroughly the allegations were investigated.

Both U.S. and Mexican prosecutors said last year they are investigating the bribery allegations, first reported by the Times. The newspaper said an executive of Wal-Mart’s Mexican unit alerted company officials in 2005 about bribes paid to facilitate construction of new stores and warehouses.

‘Suspect Payments’

At least $24 million in “suspect payments” were made as part of scheme, the Times said, citing internal files. The newspaper also said Wal-Mart executives in the U.S. and Mexico limited the company’s investigation into the bribery scheme.

Internal documents showed Wal-Mart’s Mexican unit used a state governor in Mexico to facilitate $156,000 in bribes, Bloomberg News reported this year. The files were released by Democratic representatives Henry Waxman of California and Elijah Cummings of Maryland, who are investigating the bribery allegations.

The suing funds include the California State Teachers’ Retirement System, the New York City Employees’ Retirement System and the Indiana Electrical Workers Pension Trust Fund.

Wal-Mart’s lawyers asked Strine to bar the pension funds from using the documents in their case seeking more information about directors’ actions. The files were stolen from the company and covered by “attorney-client privilege,” which applies to confidential communications between Wal-Mart and its lawyers, they argued.

Stolen Material

The material obtained by the Times, as well as Waxman and Cummings, came from a former Wal-Mart employee who pilfered reams of internal e-mails and documents, Stephen Norman, one of the company’s lawyers, told the judge.

Strine said Wal-Mart “republished” some of the internal documents in court filings and didn’t try to force the Times or the congressmen to remove the documents from their websites and return them to the company.

“It would be ridiculous if information that is already publicly available” was barred from a public trial, he said.

Stuart Grant, a lawyer for the pension funds, said in court filings he got the documents about a whistle-blower’s bribery allegations in an unmarked envelope last May.

The funds contend that Wal-Mart officials may have violated the U.S. Foreign Corrupt Practices Act of 1977 and other anti-bribery statutes in connection with the alleged payments to Mexican officials.

‘Woefully Deficient’

The Indiana fund sued to force Wal-Mart to hand over records about internal probes of the bribery allegations and contends that the company had been “woefully deficient” in producing documents.

Wal-Mart said in March it had spent $157 million on probes of bribery allegations in its international operations and expects to rack up more costs as the investigations continue. The company has said it’s investigating possible FCPA violations in Brazil, India and China along with Mexico.

The case is Indiana Electrical Workers Pension Trust Fund IBEW v. Wal-Mart Stores Inc., CA No. 7779-CS, Delaware Chancery Court (Wilmington.

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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  • WMT
    (Wal-Mart Stores Inc)
    • $75.5 USD
    • -0.40
    • -0.53%
  • NYT
    (New York Times Co/The)
    • $12.38 USD
    • 0.03
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