BENTONVILLE, Ark. — Rocked by reports of a bribery scandal in its Mexican operations, Walmart has created a new corruption watchdog position and strengthened internal controls.

Rocked by reports of a bribery scandal in its Mexican operations, Walmart has created a new corruption watchdog position and strengthened internal controls.

However, the California State Teachers’ Retirement System (CalSTRS), the second-largest public pension fund in the country, has filed suit against the retailer for breaching its fiduciary duty by failing to properly investigate and disclose the matter. The Mexican federal attorney general’s office, meanwhile, has launched an investigation into the allegations after first dismissing them as a local and state problem.

An April 21 article in The New York Times by David Barstow charged that the company had covered up evidence of bribery in its Walmart de México unit and that the cover-up was implemented with the knowledge of Walmart’s most senior management as well as board members.

The article contends that bribes were regularly paid to obtain permits needed for store development all over Mexico, and that senior leadership in Mexico knew about the payments and took measures to conceal them from Walmart headquarters in Bentonville.

The story identifies former vice chairman Eduardo Castro-Wright, who served as president and chief executive officer of Walmart de México from 2002 to 2005, as the main driver behind the use of bribes.

Details of the corrupt practices were provided by a former attorney with Walmart de México who was responsible for organizing the payments. That executive reported the activity to the then general counsel of Walmart International, who urged an independent investigation.

The core allegations assert that, although bribes were occasionally used before Castro-Wright took leadership of Walmart de México, the practice became much more common after his appointment, when the unit undertook an aggressive expansion program that involved opening hundreds of stores. Memos detailing the debriefings of the whistle-blower were sent by the general counsel of Walmart International to several members of senior ­management.

According to the Times, the company then turned to an outside law firm with extensive experience in cases regarding the Federal Corrupt Practices Act (FCPA), Willkie Farr & Gallagher, which recommended a full-scale, independent investigation. Instead, management opted to conduct a far more limited internal investigation over which it would retain control.

However, the article maintains, even that internal inquiry was criticized by senior management as being too aggressive, and it was ultimately handed over to the general counsel of Walmart de México, who himself had been seriously implicated in the original charges.

The Times article states that Walmart notified the Justice Department that it had begun an internal investigation into possible FCPA violations only after the company learned of the newspaper’s investigation.

The company’s responses to the allegations include the appointment of Tom Gean, a former U.S. attorney for the western district of Arkansas who has worked for Walmart since 2004, to the position of global FCPA compliance officer. Gean oversees five FCPA compliance directors based in different international markets, including Mexico.

According to a Reuters report, Gean was appointed to the position before the Times story broke, but after the newspaper had notified Walmart of its findings last December.

Vice president of corporate communications David Tovar noted that Walmart had initiated a global review of its anticorruption program in March 2011, including the development and implementation of recommendations for FCPA training, anticorruption safeguards and internal controls.

"In Mexico we have taken a number of actions to establish stronger FCPA compliance," he said. "We have implemented enhanced FCPA compliance measures, including robust policies and procedures, internal controls, training, enhanced auditing procedures, and issue escalation and remediation protocols."

Tovar added that last fall Walmart initiated an extensive investigation related to FCPA compliance through the audit committee of the company’s board of directors. The investigation is being conducted by outside legal counsel and forensic accountants.