CASE 2-4 MULTIPLE COUNTRY ENFORCEMENT*
SEC Charges Royal Ahold and Three Former Top Executives with Fraud; Former Audit
Committee
Member Charged with Causing Violations of the Securities Laws for Immediate Release
2004-144
Washington, D.C., Oct. 13, 2004—The Securities and Exchange Commission today
announced the filing of enforcement actions alleging fraud and other violations against
Royal Ahold (Koninklijke Ahold N.V.) (Ahold) and three former top executives: Cees van
der Hoeven, former CEO and chairman of executive board; A. Michiel Meurs, former CFO
and executive board member; and Jan Andreae, former executive vice president and
executive
board member. The Commission also charged Roland Fahlin, former member of
Ahold’s supervisory board and audit committee, with causing violations of the reporting,
books and records, and internal controls provisions of the securities laws.
The SEC’s complaints, filed in the United States District Court for the District of Columbia,
allege that, as a result of the fraudulent inflation of promotional allowances at U.S.
Foodservice, Ahold’s wholly-owned subsidiary, the improper consolidation of joint ventures
through fraudulent side letters, and other accounting errors and irregularities, Ahold’s
original
SEC filings for at least fiscal years 2000 through 2002 were materially false and misleading.
For fiscal years 2000 through 2002, Ahold overstated net sales by approximately EUR
33 billion ($30 billion). For fiscal years 2000 and 2001 and the first three quarters of 2002,
Ahold overstated operating income by approximately EUR 3.6 billion ($3.3 billion) and net
income by approximately EUR 900 million ($829 million).
The Commission has not sought penalties in the enforcement actions against the individuals
because the Dutch Public Prosecutor’s Office, which is conducting a parallel criminal
*Dr. Thomas Klein, Emeritus, the University of Toledo, assisted with this case.
Source: U.S. Securities and Exchange investigation in The Netherlands, has requested that the Commission not seek penalties
against the individuals because of potential double jeopardy issues under Dutch law.
Because
of the importance of this case in The Netherlands and the need for continued cooperation
between the SEC and regulatory authorities in other countries, the Commission has agreed
to the Dutch prosecutor’s request.
Required
a. Why can the SEC charge a company in The Netherlands with U.S. security violations?
b. Why is The Netherlands conducting a parallel criminal investigation?
c. Speculate on how many countries may be running a parallel criminal investigation
relating to securities sold.

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