Appeals Court rejects suit against Wal-Mart directors in the Mexican bribery allegations
by July 25, 2016 12:19 pm 159 views
The 8th U.S. Circuit Court of Appeals on Friday (June 22) rejected a lawsuit filed against several of Wal-Mart Stores directors including former chairman Rob Walton and former CEO Mike Duke.
U.S. Judge William Riley noted in the ruling that the lawsuit brought by shareholders “did not give rise to a reasonable reference” that the board of directors knew of and concealed alleged bribery claims stemming from the rapid expansion in its Mexican business unit under the leadership of Eduardo Castro Wright, who is no longer with the company.
The 8th U.S. Circuit Court upheld the previous dismissal ruling from the Western District of Arkansas. The retail giant noted that the ruling indicates that the board of directors, not individual shareholders, have authority to manage corporate matters.
While these two dismissals are a victory for the directors, the retail giant has spent more than $738 million since 2013 defending against alleged violations of the Foreign Corrupt Practices Act in Mexico and elsewhere. The company noted in April that it expects to spend $120 million more on FCPA matter this year which will take the five year tally to $848 million.
FCPA expert Mike Koehler told Talk Business & Politics in April that there’s a 50/50 chance the investigations will be wrapped by the end of 2017. He said Wal-Mart has been proactive in dealing with these serious allegations and has done a better job than most offering transparency into the cost and other issues regarding the investigations.
Experts on FCPA issues have said they expect Wal-Mart will settlement these claims and likely pay out a large fine in addition to the millions already spent.