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NYC Pensions Slam Wal-Mart With Another Lawsuit

<em>A group of NYC pension funds has filed a lawsuit against Wal-Mart over allegations of bribery and corruption at Wal-Mart’s Mexican arm.</em>
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(June 12, 2012)—A group of five New York City pension funds, the city’s comptroller, and the New York City Law Department have filed a shareholder derivative action against Wal-Mart alleging improprieties that occurred in Wal-Mex, Wal-Mart’s subsidiary in Mexico.

The suit alleges that Wal-Mart’s board breached its fiduciary duty to its shareholders by tolerating bribery in Mexico and trying to minimize the resulting scandal. “Wal-Mart’s board has repeatedly rebuffed our office and the New York City Pension Funds when we have raised concerns over the company’s failure to comply with legal and ethical standards,” Comptroller John Liu. “Rooting out the directors and executives responsible for the current crisis would be a first step, but Wal-Mart also needs corporate governance reforms and an independent board that will protect outside shareholders and safeguard against another breakdown of internal controls.”

“This suit seeks to recover corporate assets lost as the result of its wrongful acts, tighten legal and regulatory compliance structures, and institute improved governance oversight,” said Inga Van Eysden, Chief of the New York City Law Department’s Pension Division.

The five pension funds lodging the complaint are the New York City Employees’ Retirement System, the Teachers’ Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund, Board of Education Retirement System. Together they own 5.6 million shares in Wal-Mart.

The suit is the latest sign of deep pension unrest over Wal-Mart’s conduct. On June 4, fund giants California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS), both shareholders of Wal-Mart, led a failed push to oust most of the company’s board at the annual shareholder meeting. The five New York City pension funds also pledged not to support many of the Wal-Mart directors. In early May, the $153 billion CalSTRS also filed a similar suit against Wal-Mart officials.