Dive Brief:
-
Wal-Mart Stores Inc. faces a class-action lawsuit alleging the retailer defrauded shareholders by concealing suspected bribery to help it expand faster in Mexico, U.S. District Judge Susan Hickey ruled Tuesday in Fayetteville, AR.
-
Hickey rejected Wal-Mart's argument that a Michigan pension fund had no standing to lead the case because it had not suffered losses, Reuters reports.
-
The ruling will allow shareholders to collectively sue Wal-Mart and former CEO Mike Duke, potentially leading to a larger payout at a lower cost than if individual suits were filed. Wal-Mart spokesperson Randy Hargrove told Reuters that the company deems the class action certification "not appropriate," and that the retailer may appeal the decision.
Dive Insight:
A longstanding federal probe into Wal-Mart Stores Inc.’s Mexico operations, where Wal-Mart employees allegedly used bribes to help establish new stores, has found little in terms of bribery or misconduct, the Wall Street Journal reported last year, although investigators found such problems elsewhere. And Wal-Mart nevertheless could end up paying up if shareholders move forward with the class-action suit.
The U.S. Department of Justice, which has declined to comment on its investigation, began its probe after a Pulitzer Prize-winning New York Times report in 2012 on the alleged bribes Wal-Mart made to obtain permits for new stores. After four years, there still may not be any charges filed, though there may be a fine against individuals who work for Wal-Mart, including for suspected bribes made in India discovered as part of the investigation.
When it comes to the permit process and other deals in foreign countries, there are grey areas. In some countries, "gifts" are expected during business negotiations.
It’s not exactly copacetic from the perspective of the U.S. government, however. The Justice Department has a guide — including case studies — on how to comply with the Foreign Corrupt Practices Act of 1977, which outlaws the kind of alleged activity that landed Wal-Mart Stores in hot water, while still keeping up with business gift customs.