Dutch charge ex-Ahold CEO, CFO with fraud

October 15, 2004|By BLOOMBERG NEWS

AMSTERDAM, Netherlands - The former chief executive officer and former chief financial officer of Royal Ahold NV, the Dutch food retailer that inflated profit for three years, were charged with fraud yesterday in a court here.

Former CEO Cees van der Hoeven and Michiel Meurs, one-time finance chief, were charged after a judge rejected their objections to the criminal case, said Anthony Jagroop, a spokesman for the prosecutor.

Former board members Jan Andreae and Ronald Fahlin also were charged, Jagroop said.

The former executives are being prosecuted over Ahold's improper use of side letters, supplementary written agreements accompanying some joint-venture contracts. Ahold should not have fully consolidated its ventures with partners in Brazil and Sweden while conflicting side letters existed, according to the prosecutor's office.

Ahold, which last year disclosed inflating profit by 970 million euros ($1.2 billion) over three years, reached a settlement with the Securities and Exchange Commission that was announced Wednesday. The regulator will end its 20-month investigation into an accounting fraud at the company, which will pay no fine because of its "exceptional" cooperation with the SEC.

Shares of Ahold fell 1.5 percent to 5.44 euros in Amsterdam. The company's U.S.-traded shares shed 8 cents, or 1.1 percent, to $6.68.

Ahold owns two major Maryland companies, the Giant Food Inc. supermarket chain and U.S. Foodservice Inc., the No. 2 American food service distributor whose accounting missteps contributed substantially to the Dutch parent's financial woes.

Van der Hoeven, Meurs and Fahlin also settled with the SEC. Van der Hoeven and Meurs are prohibited from serving as executives or directors of public companies in the United States.

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