Walmart has agreed to a proposed settlement with the City of Pontiac, Mich., General Employees Retirement System that would put an end to fraud allegations in this case brought against the retail giant following the 2011 investigation of violations of the Federal Corruption Practices Act (FCPA) in Mexico, China, India and Brazil.
In a federal filing with the Securities & Exchange Commission late Friday (Oct. 26) Walmart has agreed to pay a settlement of $160 million to the investor class while accepting no liability or claim of guilt or wrongdoing by the company or any of the named defendants in the suit.
“We are pleased both sides could reach a resolution that ends this litigation. Years ago, we began making investments that have established a leading, comprehensive, worldwide ethics and compliance program for our business,” said Karen Roberts, executive vice president and general counsel for Walmart Inc.
The case was originally filed in U.S. District Court in Fayetteville in 2012 by attorneys on behalf of the retirement fund claiming Walmart and its top executives hid a bribery scheme in its Mexican operations and withholding knowledge that should have been made public long before the New York Times reported the investigation in April 2012. Then, in 2016 U.S. District Judge Susan Hickey ruled in favor of the plaintiffs class action suing as investors in Walmart Stores.
Terms of the settlement ,which Hickey has yet to approve, would pay for claims alleging violations of the Securities & Exchange Act of 1934, as well as costs of administering the settlement, legal fees and expenses. The plaintiffs in this class owned Walmart stock between Dec. 8, 2011 and April 20, 2012. This is the time lapse between when Walmart says it first self-reported the alleged violations and the time when the public became aware after the New York Times article.
The plaintiffs had asked the court for $470 million in claims saying the retailer artificially inflated the value of its shares by mishandling the alleged Mexican payoffs.
“The settlement ends a long, hard-fought litigation. It provides significant benefits to the class within months, whereas continuing to litigate would have likely meant years of the class waiting on a very uncertain recovery,” said Jason Forge, of Robbins Geller Rudman & Dowd LLP, which represented the plaintiff class.
Walmart’s FCPA investigation has cost the company $892 million in FCPA and compliance-related costs since 2012. That doesn’t include this proposed settlement of $160 million, or the $283 million the company set aside in November last year toward a possible resolution with the Department of Justice and the SEC. Walmart expects to spend another $40 million this year for FCPA and compliance-related matters. The retailer has not given any guidance beyond that.
The FCPA investigation appears to be winding down according to Mike Koehler. a law professor at Southern Illinois University. He told Talk Business & Politics a year ago the suit was complicated with lots of tentacles given Walmart’s large footprint. More recently he said the suit should be resolved in the coming months and he credits Walmart with transparency over the past several years and investing in safeguards to ensure compliance in the future.