(May 24, 2012) — The $228-billion California Public Employees’ Retirement System (CalPERS), the largest public pension fund in the United States, plans to withhold votes for nine Wal-Mart Stores board members following allegations that the retailing giant failed to look into bribery in Mexico.
According to the fund, these board members were in a position of authority, oversight, or management of the company’s operations during the time that the alleged bribery was conducted.
“In our view such an investigation should not be overseen by current members of the board that served in either a board oversight or senior management capacity at the time of the alleged bribery,” the fund stated.
Due to the bribery allegations, CalPERS is withholding its vote from nine directors who were in a position of authority, oversight, or management of Wal-Mart’s business operations during the period in question.
CalPERS is withholding its vote from director nominees James Breyer, Michele Burns, Douglas Daft, Michael Duke, Lee Scott, Jim Walton, Robson Walton, Christopher Williams, and Linda Wolf.
Earlier this month, the $153 billion California State Teachers’ Retirement System (CalSTRS) filed suit against Wal-Mart officials, accusing them of using bribery and corruption to gain approval from the Mexican government to build new stores. Five New York City pension funds also said they would not support some of the Wal-Mart directors.
Meanwhile, Institutional Shareholders Service, an influential advisory firm, has suggested that institutions vote against four members of the Wal-Mart board.
“By utilizing the derivative action, CalSTRS 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 CalSTRS Chief Executive Officer Jack Ehnes. “The focus of this action, unprecedented in CalSTRS history, 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.”
Dana Dillon, chair of CalSTRS’ board, added: “As fiduciaries for California’s teachers, we believe there is a real need for reform. Better corporate governance leads to greater long term value. How we do business is just as important as how well we do business.”
According to the New York Times, the CalSTRS suit was the first by a large institutional investor over the Wal-Mart bribery scandal. The allegations assert that Wal-Mart officials in Mexico paid $24 million in bribes to officials there to accelerate the opening of stores.