The trial of four former executives at Dutch-based retailer Royal Ahold NV, accused of fraud, began in Amsterdam today.
Included in the group of four are former CEO Cees van der Hoeven and former chief financial officer Michiel Meurs. All four have denied fraud.
The trial comes three years after Ahold was taken to the brink of bankruptcy.
The principal part of the case relates to the exaggeration of sales at Ahold’s US Foodservice subsidiary. The accused reached a settlement with the US Securities and Exchange Commission (SEC) but this did not involve an admission of guilt. They were, however, banned from holding office in public companies.
The Amsterdam trial will see the four accused of improperly booking sales from four subsidiaries in Scandinavia and Brazil, with the trial centering on several letters in which the executives discussed control of the companies with the other owners of the subsidiaries.
This trial involves only the executives rather than Ahold as a company. In the US, Ahold avoided US prosecution by cooperating with the SEC. In the Netherlands, the retailer received a formal reprimand from the Dutch financial regulator, AFM, and paid a settlement of US$8m to Dutch prosecutors. Late last year, the group also settled shareholder suits, agreeing to pay $1.1bn in compensation.
Now under new management, the company has recovered well from the scandal which is a significant achievement. In February 2003, when van der Hoeven and Meurs resigned and the alleged fraud was made public, Ahold shares fell by two-thirds and the company only avoided insolvency by selling assets and establishing an emergency line of credit.