Nine charged in Ahold fraud case
aiding and abetting the massive financial fraud at US Foodservice,
a division of Dutch retail group Ahold. The nine all worked for
food companies supplying food to the company, and are alleged to
have colluded with US Foodservice officials to falsify accounting
records to the tune of $800 million.
The charges follow similar indictments against the four US Foodservice employees thought to be at the centre of the fraud.
The nine employees are Mark Bailin, Kenneth Bowman, Timothy Daly, Michael Hannigan, Peter Marion, John Nettle, Gordon Redgate, Bruce Robinson and Michael Rogers.
The US authorities did not specify which companies they worked for, although the Securities and Exchange Commission examined the accounts of a number of firms as part of its investigation, including Kraft Foods, HJ Heinz, General Mills, Sara Lee, ConAgra and Tyson Foods.
The SEC's case focuses on 'promotional allowances', sums paid by food makers to retailers and distributors in return for meeting sales targets. Staff at US Foodservice are said to have asked their food industry contacts to send false statements to the company's auditors which overstated the size of these promotional allowances.
The amounts overstated in the confirmations were often inflated by millions of dollars and by more than 100 per cent.
According to the SEC, Bailin, Hannigan, Nettle, Redgate and Rogers have each agreed to settle out of court with a payment of $25,000.
"Financial frauds often depend on the assistance of outsiders to succeed and remain undetected. The individuals and salespersons charged today, while not employed by Ahold, helped the company commit a fraud and helped hide that fraud from Ahold's auditors. By verifying as true information they knew to be false, the defendants corrupted the audit process and helped US Foodservice commit and hide a fraud," said Linda Chatman Thomsen, deputy director of the SEC's Division of Enforcement.
Ahold will not be penalised by the SEC because of its co-operation during the investigation into the fraud which led to the indictment of the four former executives.
