The Office of the New York City Comptroller and the New York City Law Department announced today that the New York City Pension Funds filed a shareholder derivative action against Wal-Mart Stores Inc. The lawsuit concerns the recent revelations contained in a New York Times article regarding the bribery and corruption scandal at Wal-Mex, the Mexican subsidiary of Wal-Mart.
The
City Funds’ Complaint, filed in the Delaware Chancery Court, alleges
that Wal-Mart’s officers and directors breached their fiduciary duty
to the company and its shareholders by failing to properly handle
credible claims of the bribery allegations and attempting to cover up
details of the 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 said. “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,” noted Inga
Van Eysden, Chief of the New York City Law Department’s Pension
Division.
In
2005, Wal-Mart executives were notified of a scheme involving the
bribing of Mexican officials to expedite the building of
Wal-Mart stores in that country. Several internal investigations
resulted. The Pension Funds allege that the company took no significant
action to change the situation. On April 21, 2012, The
New York Times published an article concerning the Mexican
bribery scandal. Wal-Mart’s stock quickly declined approximately 8
percent in the days that followed.
Based on these developments, the Funds decided to commence their derivative action against Wal-Mart directors and executives.
Separate derivative cases against Wal-Mart are also pending in Delaware Chancery Court and the U.S. District Court in Arkansas.
New
York City’s legal team includes Valerie Budzik and Richard Simon of the
Comptroller’s General Counsel’s Office, and Inga Van Eysden and
Keith Snow of the New York City Law Department’s Pensions Division.
The
New York City Law Department is one of the oldest, largest and most
dynamic law offices in the world, ranking among the top three largest
law offices in New York City and one of the largest public law offices
in the country. Tracing its roots back to the 1600’s, the Department has
an active caseload of 90,000 matters and transactions in 17 legal
divisions. The Corporation Counsel heads the Law
Department and acts as legal counsel for the Mayor, elected officials,
the City and all its agencies. The Department’s approximately 650
attorneys represent the City on a vast array of civil litigation,
legislative and legal issues and in the criminal prosecution
of juveniles. For more information, please visit nyc.gov/law.
New
York City Comptroller John C. Liu serves as the investment advisor to,
custodian and trustee of the New York City Pension
Funds. The New York City Pension Funds, consisting of the New York City
Employees’ Retirement System, New York City Teachers’ Retirement
System, New York City Police Pension Fund, New York City Fire Department
Pension Fund, and New York City Board of Education
Retirement System, serve more than 600,000 active and retired New York
City employees, and combined constitute one of the largest public
pension funds in the United States.
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