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Sep 22, 11:21 AM EDT

Wal-Mart to face class-action over alleged bribery in Mexico


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NEW YORK (AP) -- A federal judge has granted class-action status to Wal-Mart investors suing the world's largest retailer over allegations that it covered up a bribery scheme in Mexico to help its business there.

The allegations included that Wal-Mart's Mexican unit paid millions of dollars in bribes to speed building permits and gain other favors.

In a ruling this week, U.S. District Judge Susan Hickey in Fayetteville, Arkansas, dismissed Wal-Mart's argument that a Michigan retirement fund could not lead a class-action suit because it suffered no related financial losses. Wal-Mart's stance was based on a certain accounting method.

But Hickey ruled that the pension fund, the City of Pontiac General Employees' Retirement System, showed losses using another accounting method and that Wal-Mart failed to adequately explain why its accounting method was preferable.

"Judicial economy and the best interests of the class members favor class certification," Hickey wrote.

Randy Hargrove, a spokesman for Bentonville, Arkansas-based Wal-Mart, said the company is considering its options, including an appeal. "We continue to believe that the claims here are not appropriate for certifying class," he said.

Investors said Wal-Mart knew about the bribery scheme as early as 2005, seven years before allegations were made public by The New York Times. The newspaper reported that top executives had covered up the finding of an internal investigation and didn't alert U.S. or Mexican authorities until after the paper said it was investigating the issue.

In July, a federal appeals court rejected a shareholder lawsuit filed against key directors at Wal-Mart that claimed they allowed and concealed alleged bribery in the company's Mexico division.

Chief Judge William Riley wrote for the 8th U.S. Circuit Court of Appeals that shareholders, including the Louisiana Municipal Police Employees' Retirement System, did "not give rise to a reasonable reference" that the board of directors learned of the suspected bribery while it was being covered up and the internal investigation squashed. That upheld an Arkansas district court's dismissal.

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