The California State Teachers’ Retirement System (CalSTRS) sued Wal-Mart (NYSE: WMT) because the world’s largest retailer may have violated Mexican and US laws. At issue is the bribery, or alleged bribery scandal, at Wal-Mart’s Mexico operations. “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 Officer Jack Ehnes said in the statement.
The trouble with the suit may be that nothing has been proven about Wal-Mart’s conduct in Mexico. The New York Times made a very compelling report about the behavior of senior management in light of events in Mexico. It could be some time before the paper’s story is completely vetted. Nonetheless, the CalSTRS action will open the door to more suits by institutional investors and maybe individual ones.
Wal-Mart’s legal costs will rise even more than they would have just to be involved in internal investigations and those which will be made by the US and Mexican governments.