CtW Investments Group (“CtW”), which represents a group of minority shareholders in Wal-Mart, has accused the firm’s external auditor Ernst & Young (“E&Y) of having had early knowledge of Wal-Mart’s violation of the Foreign Corrupt Practices Act related to bribery allegations in Mexico. In a letter to the Public Accounting Oversight Board, CtW reports that Wal-Mart employees informed E&Y in 2006 of an internal investigation into the bribery claims. However, the Securities and Exchange Commission (“SEC”) and other U.S. regulators and investigative agencies were not informed until 2011 when Wal-Mart made disclosures about the internal bribery investigation in its SEC filings.
CtW claims that E&Y’s failure to make an early reporting of the alleged bribery could have misled investors by presenting potentially tainted financial statements.
