Ahold execs charged with fraud

By Anita Awbi

- Last updated on GMT

Related tags Board of directors Corporate governance Ahold

Three ex-Ahold bosses have received suspended sentences and
€670,000 worth of fines from a Dutch court this week, in Europe's
largest ever executive fraud case.

The Amsterdam court issued former chief executive Cees van der Hoeven and "accomplice" Michiel Meurs, former finance chief, nine mouth suspended prison sentences, after they were found guilty of large-scale accounting fraud from 1998-2003.

They have both been fined €220,000 (£150,220) each.

Jan Andreae, former European executive board member who was also implicated in the scandal, received a four-month suspended sentence and a €120,000 fine. The fourth defendant Roland Fahlin was acquitted.

Speaking at the trial Judge Frans Bauduin said the three prosecuted men "have damaged the good reputation of Dutch companies in general and Ahold in particular"​ and "betrayed the confidence that shareholders...placed in them".

It was reported in the Financial Times that Peter Paul de Vries, director of the VEB Dutch shareholder association, thought the sentences were "unbelievably lenient"​ and "sent a bad signal about the way these cases are tried in the Netherlands".

But the three defendants found guilty are set to appeal the charges, maintaining their innocence in the affair.

In February 2003 Ahold announced it had inflated earnings by at least $500m (€391m) at its wholly-owned US food service subsidiary. The firm also informed investors it improperly consolidated revenues from joint ventures. Together, the fraud represented over €1bn in false profit statements and spanned operations on both sides of the Atlantic.

Deloitte continued to approve Ahold's annual accounts throughout the 1998-2001 period, claiming it had been duped by false paperwork.

Since admitting the true state of its accounts in 2003, Ahold has implemented a "Road to Recovery" programme, spending billions on shareholder remuneration and new corporate governance schemes to restore investor confidence.

Former executives involved in the US scandal face trial on American soil later this year.

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