Whistleblower says Walmart, eyeing Amazon, cheated on e-commerce

By Jonathan Stempel and Nandita Bose

(Reuters) - Walmart Inc was sued on Thursday by a former executive who accused the world's largest retailer of issuing misleading e-commerce results, amid growing pressure from Amazon.com Inc , and firing him for complaining about it.

Tri Huynh, a former director of business development, accused Walmart of having betrayed the principles of integrity and honesty espoused by founder Sam Walton in its push to show "meteoric growth" in e-commerce.

The complaint alleges various wrongdoing including the mislabeling of products, enabling Walmart to charge excessive sales commissions, and failure to properly process customer returns, enabling it to boost results.

"Wal-Mart cut corners and cheated in a race to expand and gain market-share," having been "desperate to gain the ground it had long lost to Amazon," Huynh said in his complaint filed in the U.S. District Court in San Francisco.

Huynh, who was born in Vietnam and lives in Washington state, said Walmart fired him in January 2017 in retaliation for his repeated complaints about its e-commerce reporting and internal controls.

Walmart did not immediately respond to requests for comment.

The company's shares were down 37 cents at $87.30 in late afternoon trading.

Walmart has spent billions of dollars in recent years to compete with Amazon, including through its 2016 purchase of Jet.com, and last month said quarterly online sales including the December holidays had risen 23 percent.

But Amazon's sales in North America grew 40 percent in the same quarter, and analysts have said its price war has weighed on margins at Bentonville, Arkansas-based Walmart.

Huynh said he was fired not long after raising concerns with U.S. e-commerce chief Marc Lore, and that his dismissal was under the "false pretenses" of alleged performance issues and a broader workforce reduction.

"Wal-Mart sacrificed and betrayed its Founder's key principles of integrity and honesty, pushing those core values aside in its rush to win the E-commerce war at all costs," the complaint said. "In doing this, it realized it must silence any whistleblower who spoke up."

The lawsuit, which accuses Walmart of violating the federal Sarbanes-Oxley whistleblower law and various California state laws, seeks punitive and other damages.

The case is Huynh v Wal-Mart Stores Inc et al, U.S. District Court, Northern District of California, No. 18-01631.

(Reporting by Jonathan Stempel and Nandita Bose in New York; Editing by Cynthia Osterman and Tom Brown)

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