WILMINGTON, Del (Reuters) - A Delaware judge refused to choose which of two large pension funds would lead a lawsuit against the board of Wal-Mart Stores Inc (WMT.N) for allegedly allowing bribery to flourish in Mexico.
The chief judge of Delaware’s Court of Chancery, Leo Strine, encouraged the public pension funds from California and New York to investigate the allegations more thoroughly and find a way to work together.
“More energy was spent by dueling plaintiffs over who gets to be lead counsel and lead plaintiff than was spent writing the complaints,” Strine told a hearing on Monday.
The California State Teachers’ Retirement System, or CALSTRS, and New York City’s public pension funds both sued Wal-Mart’s officers and board of directors for breaching their fiduciary duty to both the company and shareholders.
Their lawsuits said the directors and officers failed to properly handle claims of alleged bribery and apparently attempted to cover up details of the issue. Both sought to be named lead plaintiff, which would allow its lawyers to direct the litigation on behalf of other plaintiffs.
The lawsuits seek damages for the harm caused to the company. The lawsuits are derivative cases, meaning the plaintiff is essentially stepping into the shoes of the company and any recovery will be paid to Wal-Mart, rather than directly to shareholders.
At least nine lawsuits have been filed related to the bribery accusations, which first came to light in an April 21 New York Times report which said that management at Wal-Mart de Mexico WALMEXV.MX, or Walmex, allegedly orchestrated payments of $24 million to help it grow quickly in the last decade. The report also said that Wal-Mart’s top brass tried to cover it up.
Wal-Mart has said it is thoroughly investigating the matter. The world’s largest retailer also initiated a global review of its anti-corruption compliance program in March 2011.
Strine criticized both funds for basing their lawsuits on a newspaper report rather than conducting their own investigation. He encouraged them both to come back to court after an investigation was completed by union pension fund, the Indiana Electrical Workers Pension Trust Fund IBEW, which has sued Wal-Mart in the same Delaware court for access to its books and records.
Shares of Wal-Mart fell 20 cents on the New York Stock Exchange on Monday to $72.98. Shares have risen about 16 percent since the bribery allegations were published. (Reporting by Tom Hals; Editing by Kenneth Barry)