A Delaware judge Friday dismissed a shareholder lawsuit against the directors of Wal-Mart Stores Inc. that alleged the directors failed to conduct a proper investigation into allegations of bribery in Mexico.
Chancery Court Judge Andre Bouchard said the shareholders had already lost a federal lawsuit in Arkansas on the same claims.
In 2012, the New York Times alleged that in Mexico Walmart paid $24 million in bribes to public officials. The bribes allegedly help Walmart win approvals to open more stores.
After the New York Times story appeared, Walmart stockholders filed fifteen law suits asserting derivative claims on behalf of company. The suits were consolidated into two actions, one in federal court in Arkansas and the other in the Chancery Court in Delaware.
Two lead plaintiffs in the Delaware action were the California State Teachers’ Retirement System and the New York City Employees’ Retirement System.
They claimed board members stopped an investigation of bribery in Mexico and covered up the allegations until the New York Times published its story.
In a 58-page decision Friday, Chancery Court Judge Bouchard said the Arkansas complaint and the Delaware complaint alleged the same facts. Because the case was fully litigated in federal court in Arkansas and dismissed there, Judge Bouchard said he was bound to dismiss the Delaware complaint.
The Delaware plaintiffs had said the case in Arkansas wasn’t fully litigated because the plaintiffs there didn’t have access to some of Walmart’s internal documents. The Delaware plaintiffs gained access to those documents after two years of legal battles.
But Judge Bourchard said,
The Arkansas plaintiffs neither sought Wal-Mart’s records nor waited for the outcome of the Section 220 [document discovery] case in Delaware. They instead proceeded with their case, which defendants moved to dismiss. In March 2015, before plaintiffs in Delaware had completed the Section 220 litigation and filed their amended complaint, the district court in Arkansas granted defendants’ motion to dismiss.
Walmart, based in Bentonville, Arkansas, spent about $700 million over three years investigating potential FCPA offenses and enhancing its anti-bribery compliance program.
In October 2015 the Wall Street Journal reported that a three-year investigation by the DOJ and SEC found little or no evidence of large-scale bribery.
The Wall Street Journal said it spoke to multiple sources at the DOJ. The federal investigation and Walmart’s own internal probe found evidence of bribery only in India, the WSJ said, and then only relatively small payments, mostly under $200 each.
The DOJ and SEC haven’t commented on the Walmart investigation or the Wall Street Journal report.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He’ll be the keynote speaker at the FCPA Blog NYC Conference 2016.