CORPORATE CRIME REPORTER
Ahold
Gets Non Prosecution Agreement
20 Corporate Crime Reporter 39(1), September 28, 2006
Royal Ahold, N.V., a Dutch food conglomerate, entered into a non prosecution
agreement
with the U.S. Attorney in Manhattan.
Ahold was in the government’s crosshairs because of the activities of
its American subsidiary – U.S. Foodservice (USF).
Two USF officers – Mark Kaiser and Michael Resnick – were indicted
in July 2004.
Resnick pled guilty earlier this month and will be sentenced on December 11,
2006.
Kaiser is scheduled to stand trial starting next week.
Both were charged in connection with their efforts to artificially reduce USF’s
costs through the improper recognition of over $800 million in fictitious “promotional
allowances” – supposed rebates received from USF’s own
suppliers, during 2000 to 2003.
The U.S. Attorney, Michael Garcia, said he decided not to criminally prosecute
Ahold based on a number of factors, including – Ahold’s full cooperation
with the investigation; Ahold’s settlement of the SEC’s enforcement
action, which included Ahold’s consent to an injunction against Ahold’s
violating the antifraud and other provisions of the U.S. securities laws; Ahold’s
settlement of a class action brought against it by victims of the accounting
fraud scheme, including Ahold’s agreement to pay a total of $1.1 billion
to class members to compensate them for the damages caused by the fraud at USF;
and the negative effect that charges against Ahold would have on the companies’
innocent employees and legitimate activities.
Garcia said that Ahold self-reported the misconduct and conducted an extensive
internal investigation, including an investigation of misconduct beyond that
at USF.
It
made its personnel available for interviews by federal investigators, including
bringing witnesses to the United States from abroad, and made available to the
government the factual results of its internal investigation.
Ahold also terminated employees responsible for the wrongdoing at USF.
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