Retail giant Wal-Mart will face claims that it defrauded shareholders by concealing corruption linked to the ongoing bribery allegations and violations of the Foreign Corrupt Practice Act in Mexican business unit. U.S. Judge Susan Hickey signed the dismissal denial order Sept. 26 and filed it with the federal court the same day in Fayetteville.
The City of Pontiac Michigan’s Retirement Fund sued Wal-Mart and Mike Duke in May 2012, claiming the retailer is liable for making false statements; or failing to disclose adverse facts known to them about Walmart’s involvement in ethics violations in Mexico under the watch of Mike Duke, CEO of Walmart International at the time. At the same time the plaintiffs argued that Wal-Mart’s failure to disclose their exposure to the bribery investigation allowed their stock price to be inflated as it broke through a decade long lull.
The lawsuit also claims that Duke and other top executives conspired to conceal the extent of their knowledge and involvement, whether purposely or negligently. The shareholders argue that costs have massive.
Wal-Mart was told by the Securities and Exchange Commission in 2012 to do a better job alerting shareholders of the expenses related to the ongoing investigation.
The retailer said it’s spent $439 million since 2012 in connection with investigations into allegations that employees paid bribes in Mexico, China, India and Brazil. That figure includes internal controls which have been set up around the globe to ensure best practices are adhered to with regard to compliance going forward.
“We are disappointed in the court’s ruling,” Wal-Mart spokeswoman Brooke Buchanan told the media on Tuesday (Sept. 30).
The lawsuit was “based solely on unproven allegations.” The fund must now “come forward with actual evidence to prove its case, and we don’t believe it will be able to do so,” she said.