War of words over Ahold troubles
Supermarket operator rejects claim by US executive
March 13 2003
Netherlands supermarket operator Ahold has moved to block a claim by the chief executive of its troubled US Foodservice business that the US subsidiary is not responsible for Ahold’s wider difficulties.
James L. Miller, chief executive of US Foodservice, wrote to customers and employees last week saying there was no link between the $500m alleged accounting errors at US Foodservice and the departure of top executives at the parent company.
However, official Ahold spokespeople have told US and European newspapers that the parent company does not did not “stand by” Miller’s letter and rejects the claim.
Ahold’s chief executive officer and chief financial officer resigned after the announcement of accounting irregularities at US Foodservice. These were the of accounting for volume discounts offered by suppliers as income that never materialised.
Miller’s letter said: “The press have linked their departures to the situation at USF. In reality, their resignations had nothing to do with our company. Their resignations are the result of events that occurred outside the United States.”
It has also emerged that Ahold revealed a sharp fall in cash due to the timing of supplier payments in the filing with US Securities and Exchange Commission as long ago as last November. The filing said a drop of almost 50 per cent in third quarter earnings was mainly due to “timing differences related to the collection of vendor allowances.” Ahold did not specify then which division was responsible for the cash flow problems.
An Ahold spokeswoman told news agency Reuters the issue “had not rung any alarm bells at the time,” with either the company or with analysts. “Ahold believed it had no reason to be concerned because it had every reason to believe that these vendor allowances would be made in the fourth quarter.”
The accounting problems at US Foodservice are being investigated by the Justice Department, the Securities and Exchange Commission and Dutch regulators. They are also the subject of several class action lawsuits filed on behalf of Ahold shareholders.
