SACRAMENTO --The country’s second-largest public pension fund, the California State Teachers’ Retirement System, is suing current and former board members and executives of Wal-Mart Stores Inc., accusing them of using bribery and corruption to gain authorization from Mexican government officials to build new stores.
Late Thursday, CalSTRS governing board filed a so-called derivative lawsuit in a Delaware state court seeking changes in the corporate governance of the world’s biggest retailer to assure that such alleged bribery does not occur in the future.
“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,” CalSTRS Chief Executive Jack Ehnes said. “The focus of this action, unprecedented in CalSTRS history, is corporate governance reform.... We need truly independent directors who will set the right tone from the top.”
CalSTRS owns about $313 million in Wal-Mart stock as of May 1.
Accusations that widespread bribery was used to grease the way for Wal-Mart expansion in Mexico were first reported by the New York Times.
State Treasurer Bill Lockyer, a member of the CalSTRS board, backed the pension fund’s decision.
“This is a classic case of corruption and cover-up,” he said. “The victims include Wal-Mart, and this lawsuit aims to make sure the company gets compensated for the damage caused by this outrageous conduct.”
The CalSTRS complaint accuses Wal-Mart officials of failure to act despite evidence that corporate malfeasance and bribery was occurring in Wal-Mart’s Mexican operations. The suit also alleges that some senior Wal-Mart executives sold shares of company stock before the New York Times story was published April 21.
The bribery allegations are being investigated by Mexican government agencies and the U.S. Securities and Exchange Commission. A U.S. law, the Foreign Corrupt Practices Act, makes it illegal for American companies to bribe officials of other governments.
[For the record, 8:49 p.m. May 3: An earlier version of this post’s headline said the pension fund sued Wal-Mart. In fact, it sued Wal-Mart officials.]