When you’ve got shareholders with a lot invested in your company, and you’re caught up in the midst of a bribery scandal, well, said shareholders might not be too happy. A California pension fund that holds more than 5.3 million shares of Walmart is none too pleased with the company and how it’s handled the alleged bribery situation in Mexico.
The California State Teachers’ Retirement System is suing Walmart executives, saying they had breached their responsibility in how they dealt with the claims of bribery. The fund filed a derivative suit, says the Associated Press, in state court in Delaware, seeking “changes in corporate governance and improvements in its internal procedures” at Walmart.
The pension fund wants any damages that are sustained as a result of potential violates to be awarded to Walmart. A derivative suit is one that is brought by a shareholder on behalf of a corporation against a third party. It doesn’t seek lots of money or anything, just changes in how the corporation governs itself.
“By utilizing the derivative action, (the pension fund) is seeking to remedy the damages sustained by Wal-Mart as a result of alleged gross misconduct by Wal-Mart’s executive officers and directors,” said Jack Ehnes, the pension fund’s chief executive officer in a statement. “The focus of this action….is corporate governance reform to ensure that similar misconduct is not repeated in the future. We need truly independent directors who will set the right tone from the top.”
The lawsuit comes in the wake of a scandal that hit Walmart a few weeks ago, after the New York Times published a report alleging that not only did the company use bribes to expand its dominion in Mexico, but that when that scheme was uncovered, it moved to cover up any wrongdoing. If the bribery allegations are proved true, Walmart could be in violation of the Foreign Corrupt Practices Act.
Those named in the lawsuit include several current as well as former executives, including CEO Mike Duke and Vice Chairman Eduardo Castro-Wright, and former executives, including John Menzer, who was vice chairman at the time of the alleged bribery scheme. All of Walmart’s board members are also named in the suit.
Greg Rossiter, a spokesman for Wal-Mart said in a statement, “We take our responsibility to our shareholders very seriously. We are reviewing the lawsuit closely and are thoroughly investigating the issues that have been raised.”
Previously in WalmartMexicoGate, another shareholder sued on behalf of the company as well, also in a Delaware court.
California pension fund sues Wal-Mart leaders [Associated Press]