Pension
adviser says Ernst & Young was aware of Wal-Mart Mexico bribery
allegations
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[May 26, 2015]
(Reuters) - A labor-affiliated
pension fund adviser is seeking an inquest into the auditor of Wal Mart
Stores Inc, Ernst & Young LLP, accusing the auditing firm of knowing
about possible bribery in Mexico long before the retailer disclosed it
to U.S. authorities.
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CtW Investment Group, an adviser to union pension funds holding
about 0.15 percent of Wal-Mart's shares, said an internal Wal-Mart
memo released during shareholder litigation showed that Ernst &
Young was informed by Wal-Mart's internal audit services, or IAS,
unit that a whistleblower had provided evidence of the alleged
Mexico bribery scheme to Wal-Mart.
“E&Y was briefed by IAS over the course of the Company’s internal
investigation from late 2005 through early 2006," according to a
letter sent last week by CtW to the Public Company Accounting
Oversight Board, or PCAOB. The board, CtW wrote, should consider
“whether E&Y responded appropriately after obtaining evidence of
illegal acts and serious internal control deficiencies.”
CtW Executive Director Dieter Waizenegger said the group only
realized the significance of the memo in recent months.
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In 2014, the Delaware Supreme Court affirmed a lower court ruling
that ordered Wal-Mart to provide a shareholder with documents
related to the company's internal probe of allegations the retailer
had paid bribes in Mexico.
The alleged bribes and cover-up came to light with a New York Times
story in 2012 that reported the company's Mexican unit had been
making illicit payments since 2005 to obtain permits needed to open
stores.
The story said Wal-Mart's investigators found evidence of widespread
payments and suspected that laws had been broken. The story also
said Wal-Mart leaders rejected an investigator's recommendation to
expand the probe and instead covered it up.
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Wal-Mart is currently under investigation by U.S. authorities who
are trying to determine if crimes were committed.
"The investigation is ongoing and it would be inappropriate to
comment further on specific allegations, or for us or others to come
to specific conclusions until it is finished," Wal-Mart spokesman
Randy Hargrove said in an emailed statement.
A representative for PCAOB declined to comment, and Ernst & Young
was not immediately available for comment.
(Reporting by Ross Kerber in Boston and Shubhankar Chakravorty in
Bengaluru; Editing by Peter Cooney)
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