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Walmart and a foreign subsidiary can be let off the hook from a lawsuit claiming shareholders lost money following the revelation that the rapid growth in Mexico may have been driven by a bribery scheme targeting government officials.

The decision by the U.S. Court of Appeals for the Second Circuit preserves a ruling handed down last year by U.S. District Judge Katherine Polk Failla of the Southern District of New York, who found that many of plaintiff Michael Fogel's claims regarding the subsidiary's conduct in 2005 were barred by the five-year statute of limitation under the Sarbanes-Oxley Act.

According to the Second Circuit's ruling, 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 an expose 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 his proposed class action suit, filed in 2013, Fogel alleges that, because of the bribery scheme and Walmart's misrepresentations in financial reports and Walmex's website, annual depository receipts in Walmex were overvalued from February 2012 to April 2012, when the Times published the article. For instance, Walmex's website stated that the subsidiary does “not tolerate, permit, or engage in bribery, corruption or unethical practices of any kind.”

Affirming Failla's ruling to dismiss the suit, a Second Circuit panel consisting of Judges Reena Raggi, Gerard Lynch and Christopher Droney said Fogel failed to show under what circumstances the company's statements about “honesty, integrity and ethical behavior” would rise “above the level of mere puffery.”

The judges also said they did not agree with Fogel's allegation that the “multi-year criminal enterprise” to bribe elected officials and bureaucrats to open new stores was a “classic example of a scheme,” finding it was mere speculation on Fogel's part that the Times article led to a reduction in new store openings in Mexico because executives could no longer pay bribes.

A team from Latham & Watkins consisting of Peter Wald, Melissa Arbus Sherry, Sarah Tomkowiak and Matthew Peters represented the defendants.

“We appreciate the court's careful consideration of the issues and are pleased that it has affirmed dismissal of these claims,” a Walmart spokesman said in a written statement.

Thomas McKenna and Gregory Egleston of Gainey McKenna & Egleston represent Fogel. Neither responded to a request for comment.

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