Bloomberg

 Walmart Stores Inc was accused by investors of ignoring a court order to turn over more internal files on what directors knew about claims that officials doled out bribes to facilitate Mexican real-estate deals in an effort to expand the chain’s presence in the country.

Officials of the world’s largest retailer should be ordered to pay more than $1mn in sanctions for ignoring a Delaware Chancery Court judge’s demand to provide more documents and e-mails about the internal probe of the bribery allegations, according to a pension fund that contends Walmart directors didn’t properly oversee company operations.

“These sanctions will serve to bring Walmart’s deliberate two-plus year foot-dragging campaign to an end,” the Indiana Electrical Workers Pension Trust Fund IBEW’s lawyers said in a court filing on Thursday.

Walmart said it has spent the past two years investigating allegations of bribery and corruption in Mexico and other countries, and is co-operating with a federal probe into those claims. In April, it said it had racked up legal fees and compliance costs of more than $400mn so far, and estimated it could spend as much as $240mn this year.

The Bentonville, Arkansas-based chain said today that officials have worked hard to comply with the court order on the Mexican bribery files and reviewed more than 265,000 pages of information.

“We are revisiting the document-review process to make sure we have given the IBEW all of the documents it should receive,” Randy Hargrove, a Walmart spokesman, said in a phone interview yesterday. “If we discover errors, they will be addressed and the appropriate documents will be provided.”

US and Mexican prosecutors are investigating the bribery allegations, first reported by the New York Times. The newspaper said an executive of Walmart’s Mexican unit alerted company officials in 2005 about bribes paid to facilitate construction of new stores and warehouses.

At least $24mn in “suspect payments” were made as part of scheme, the Times said, citing internal files. The newspaper also said Walmart executives in the US and Mexico limited the company’s investigation into the scheme.

Internal documents showed Walmart’s Mexican unit used a state governor in Mexico to facilitate $156,000 in bribes, Bloomberg News reported last year. The files were released by Democratic representatives Henry Waxman of California and Elijah Cummings of Maryland, who started their own probe of the allegations.

Besides the Indiana fund, investors suing over directors’ handling of the bribery claims include the California State Teachers’ Retirement System and the New York City Employees’ Retirement System.

Last year, a Delaware Chancery Court judge ordered Walmart to turn over internal files on what directors knew about the bribery claims and how they oversaw the internal review of the allegations. In July, the Delaware Supreme Court upheld that order.

Despite the court orders, Walmart has continued to balk at handing over e-mails and files that investors’ lawyers have learned about through pretrial information exchanges, according to the Indiana fund’s filing.

“There are numerous examples of documents that plaintiff’s counsel is aware of that Walmart counsel knows to exist, but has nevertheless failed to produce,” the fund said.

For example, the company is refusing to turn over e-mails about the allegations to former Chief Executive Officer Michael Duke and notes prepared by Scott Draper, a Walmart vice president who oversees internal audits, according to the filing.

Hargrove said yesterday Walmart officials handed over the e-mails to Duke and Draper in October to comply with the final order in the case.

Earlier this month, Walmart officials certified to a judge that they’ve fully complied with court orders requiring them to hand over files about the bribery allegations, according to court filings.

Besides the $1mn penalty, Walmart should be ordered to pay $10,000 a day until it complies with the court order on the bribery files, the fund said. The retailer also should be ordered to pay the fund’s costs in continuing to seek the records, they added.

 

 

 

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