Court Blames Former Ahold CFO for Scandal

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Court Blames Former Ahold CFO for Scandal:

Posted By: Joshua Boyles

AMSTERDAM, Netherlands - A Dutch enterprise court on Thursday put the burden of blame on the former chief financial officer of Royal Ahold NV for an accounting scandal that nearly drove the global food giant into bankruptcy three years ago.

After a 15-month investigation, the court said former CFO Michiel Meurs bore the largest responsibility in the fraud, but also blamed former Chief Executive Cees van der Hoeven for his role as "sparring partner" for Meurs.

The scandal involved an overstatement of earnings, mostly at its U.S. Foodservices subsidiary. Ahold, one of the world's largest food retailers, also owns Stop & Shop and the Giant-Landover chains in the United States, as well as groceries in the Netherlands, Scandinavia and Latin America.

The final report by the three-member court said Ahold knew about weak internal controls within U.S. Foodservice before it acquired the American company in 2000, and failed to act even after warnings of accounting weaknesses.

Ahold's management was too focused on achieving double-digit growth targets, so it overlooked the internal controls, the panel said.

In 2003, Ahold was forced to restate its earnings by $1 billion for 2000-2002, prompting its share value to plummet some 60 percent and pushing the company close to bankruptcy.

In a class action settlement in December, Ahold agreed to pay $1 billion to shareholders worldwide.

The investigation came at the demand of a shareholder lobby group.

Ahold was forced to sell holdings in the United States, Spain, Brazil, Indonesia, Thailand and Malaysia to balance its books and pay off debt.

Meurs and Van der Hoeven and two other former Ahold executives are facing a separate civil suit in Amsterdam for fraud in connection with false claims that Ahold had a controlling stake in subsidiaries in Sweden and Latin America and incorporated their results into the company's overall results.

Courtesy Of: Yahoo! News

The information reported above is property of Yahoo! inc. and reprinted or modified with legitimate permission. We thank Yahoo! inc. for the kind cooperation with us and other shareholders.

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