Big US pension funds take on Wal-Mart over Mexican bribery allegations

CalSTRS sues while New York funds rally fellow investors

Major US pension funds are tackling the Mexican bribery allegations that have hit US retail giant Wal-Mart in different ways.
The $153bn (€116.5bn) California State Teachers’ Retirement System (CalSTRS) has announced it is suing the company over the scandal. And in the meantime, the five New York City pension funds are calling on fellow investors to vote down directors.
CalSTRS, which owns more than 5.3m Wal-Mart shares, has filed a derivative lawsuit in Delaware on behalf of the company against current and former executives and directors.
“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,” CalSTRS Chief Executive Jack Ehnes said.
“The focus of this action, unprecedented in CalSTRS history, is corporate governance reform to ensure that similar misconduct is not repeated in the future.” CalSTRS has hired law firms Girard Gibbs and Labaton Sucharow for the lawsuit.
“We take our responsibility to our shareholders veryseriously,” a Wal-Mart spokesman told Reuters, adding it is reviewing the lawsuit and looking into the issues raised.

The scandal has broken ahead of Wal-Mart’s annual shareholder meeting, which takes place in Arkansas on June 1. It was already facing three shareholder motions at the meeting, on political contributions, director nominations and incentive compensation.
New York City Comptroller John Liu, the trustee of the New York City funds, this week wrote to Wal-Mart shareholders urging them to vote against five directors, including current CEO Michael Duke, his predecessor Lee Scott and chairman Robson Walton.

“Unprecedented” action by CalSTRS

“If the allegations are true, the company not only violated the Foreign Corrupt Practices Act (FCPA), but may also have broken federal securities and other laws, possibly including criminal statutes,” Liu wrote.
Members of the Interfaith Center on Corporate Responsibility (ICCR), a coalition of faith-based and responsible investors, have previously expressed their “deep concerns” over the issue.