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Financial Times: Prosecutors may seek jail for former Ahold chiefs

By Ian Bickerton in Amsterdam
Published: April 3 2006 03:00 | Last updated: April 3 2006 03:00
Dutch prosecutors tomorrow wind up the case against four ex-Ahold directors on trial for their alleged role in an accounting scandal at the supermarkets group three years ago.
They may demand that judges jail Cees van der Hoeven, former chief executive, and Michiel Meurs, ex-chief financial officer, if they are convicted of charges of falsifying documents and misleading Ahold's accountant. Also on trial are Jan Andreae, a former executive board member, and Roland Fahlin, former supervisory board member.
The biggest white-collar criminal trial in Dutch history concerns the consolidation by Ahold of 100 per cent of the sales from four joint-ventures in Scandinavia and Latin America that the company did not fully own.
Documents, called control letters, were signed by the defendants, leading Deloitte, Ahold's accountant, to believe Ahold was permitted to fully consolidate the sales.
Deloitte was not shown separate “side-letters”, which Ahold's joint venture partners insisted upon and which disputed Ahold's interpretation of control. Those letters were signed by the ex-directors, although only Mr Meurs signed all four, and the joint-venture partners.
The defendants deny wrongdoing. Ahold added €34bn ($41.2bn) in sales across several years from full consolidation and be-came the world's third-largest food retailer. The affair came to light in February 2003 when Ahold also disclosed a near $1bn fraud at its US Foodservice distribution unit. Mr van der Hoeven and Mr Meurs resigned.
Mr van der Hoeven said in court that he signed “hundreds of letters every day”, few of which he read. He added he had no detailed knowledge of accountancy. Mr van der Hoeven was Ahold's CFO and spent 14 years before that in accounting and treasury functions at Royal Dutch Shell.
Mr Andreae claimed to have signed the documents at different times and therefore could not have been expected to have realised the connection between them.
Tests by the Netherlands Forensic Institute proved otherwise. His pen had left an imprint on the side-letter which lay beneath the control letter when he signed that document. In other words, it is alleged that he had first signed a letter saying Ahold could not consolidate the sales, then signed another saying it could.
Mr Fahlin also claimed not to be a book-keeping expert, although he was a member of Ahold's audit committee.
However Mr Meurs faces the trickiest task in persuading judges he acted lawfully. He told the court he believed it was not necessary to show Deloitte the side-letters because he felt the documents were not relevant.
His cause will not have been helped by the publication late last week of the report of investigators probing allegations of mismanagement at Ahold. The report, not admissible as evidence in the criminal trial, concluded Mr Meurs was “solely responsible” for keeping the side-letters secret from Deloitte.
A verdict is expected on May 22.

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