A federal judge in Arkansas on Tuesday gave her final approval to a $160 million settlement in a securities class action stemming from the alleged bribery scheme involving Walmart’s Mexican subsidiary.
The agreement, approved by U.S. Judge Susan O. Hickey of the Western District of Arkansas, brought an end to long-running litigation from Walmart investors who said they were affected by a sharp drop in the retail giant’s stock after The New York Times reported in 2012 that the company had tried to cover up $24 million in bribes that executives from Walmart de Mexico had paid to high-ranking Mexican officials in order to speed up store openings.
Walmart, which did not admit any wrongdoing, didn’t respond Tuesday to a call seeking comment on the settlement. Under the agreement, Walmart was required to pay the cost of administering the settlement, as well legal fees and expenses.
Robbins Geller Rudman & Dowd, which represented the lead plaintiff in the case, meanwhile touted the ruling as a “extraordinary result” after a series of other suits over the alleged bribery scheme had failed.
Last year, the Delaware Supreme Court upheld the dismissal of lawsuits by a dozen pension funds accusing Walmart’s directors of failing to investigate reports of bribery, after Hickey extinguished similar derivative claims in Arkansas, where Walmart is headquartered. The U.S. Court of Appeals for the Second Circuit also affirmed a New York court’s ruling that investor claims were barred by the five-year statute of limitation under the Sarbanes-Oxley Act.
According to proxy advisory firm Institutional Shareholder Services, the settlement was Walmart’s first ever in a securities class action case and the largest of its kind to be approved in Arkansas federal court, a spokesman for Robbins Geller said Tuesday.
“They took on one of the most powerful companies in the world in its own backyard and obtained a financial recovery that far exceeds any other class action recovery against Walmart,” Robbins Geller said, crediting the leadership of its client, the City of Pontiac General Employees’ Retirement System, and its chairman, Walter Moore.
According to court documents, executives at Walmart de Mexico, or Walmex, began paying bribes to government officials in 2003 through intermediaries to obtain land use permits, reductions in environmental impact fees and other allowances.
Walmart conducted an internal investigation in 2006 and concluded there was no evidence of a bribery scheme.
But six years later, The New York Times published reports detailing the alleged scheme in which government officials received $24 million and an effort by Walmart executives to halt and cover up the internal investigation.
Following publication of the article, Congress announced the launch of a federal probe into the bribery allegations.
In the Arkansas class action, the City of Pontiac General Employees’ Retirement System said that Walmart’s stock plunged nearly 5 percent on news of the Time’s reporting, leading to “billions of dollars” in lost shareholder value. The stock price continued to decline in the following days, amounting to its largest one- and two-day drops since the stock markets had bottomed out over three years earlier, the complaint said.
Walmart said last year, after the settlement was initially announced, that it had years before implemented a global ethics and compliance program.