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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
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Bill Steinman
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Richard L. Cassin
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Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
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Julie DiMauro
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Thomas Fox
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Marc Alain Bohn
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Bill Waite
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Shruti J. Shah
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Russell A. Stamets
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Richard Bistrong
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Eric Carlson
Contributing Editor

Showdown in Delaware: Walmart fights to keep its secrets

Walmart argued Thursday to the Delaware Supreme Court that shareholders aren’t entitled to internal documents from an FCPA investigation that might show what executives and directors knew about alleged bribes paid to officials in Mexico.

The world’s biggest retailer is appealing a ruling last year by the Delaware Chancery Court requiring it to disclose files from an internal FCPA probe.

Among the files under review are some from directors, the audit committee, and Maritza Munich, the Walmart attorney and compliance officer who resigned when an early investigation into alleged bribery in Mexico was abruptly terminated.

The plaintiffs in the case say Walmart is withholding some documents from discovery to protect directors and others.

They’ve alleged that some directors engaged in illegal self-dealing to avoid liability, effectively misleading the board, and that the board failed to fulfill its duties of investigation and oversight.

Walmart contends the case is without merit and is fatally overbroad.

Judge Leo Strine of the Delaware Chancery Court last year ordered Walmart to give the plaintiffs files that Walmart said were covered by attorney-client privilege.

Strine is now chief justice of the Delware Supreme Court. He has recused himself from the current appeal.

A Congressional Committee last year released some internal Walmart emails and documents provided by a whistleblower that appeared to show early knowledge of the alleged Mexico bribery by some senior executives who served on or reported to the board.

Walmart said in its fiscal 2014 Global Compliance Program Report published in April that it has spent $439 million in legal fees and other costs associated with investigations of alleged FCPA violations, and to revamp its global compliance program.

The company said it is still dealing with inquiries and investigations about “allegations of potential FCPA violations” in Mexico, Brazil, China, and India, among other places.

Among the plaintiffs in the Delaware case are pension funds that bought Walmart stock, including the California State Teachers Retirement System, the New York City Employees€™ Retirement System, and the Indiana Electrical Workers Pension Trust Fund.

In April 2012, the New York Times reported in a Pulitzer Prize-winning story that Walmart’s Mexico unit paid $24 million in bribes to speed up licensing and permitting for new stores. The story said top managers in the United States covered up the bribery after learning about it.

Walmart said it self reported its internal investigation of the Mexico allegations in late 2011 and has cooperated since then with the DOJ and SEC, and with investigative agencies in other countries.

A Walmart lawyer told the Delaware Supreme Court Thursday that the documents sought by the plaintiffs relate to ongoing FCPA investigations and therefore “are indisputably protected by attorney-client privilege.”

The Delaware justices Thursday didn’t say when they would issue a decision.


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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