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There continue to be different takes on the accounting scandal at Ahold. As reported earlier this week, the Netherlands-based retailer revealed accounting irregularities that consisted of an overstatement of revenues in the neighborhood of a half-billion dollars. Its CEO and CFO were forced to resign, and the company is dealing with a myriad of legal issues:

  • The Boston Globe reports that the accounting problems “could affect the future of New England's dominant supermarket chain,” though it noted that Faith Weiner, a spokesman for Ahold’s Stop & Shop, said that none of the accounting irregularities that have been exposed to this point have been linked to any of the company’s US chains, which contribute 60 percent of Ahold’s revenues.

    The Globe suggests that, faced with financial difficulties, Stop & Shop could raise prices and cut costs, while slowing its planned expansion in New York and New Jersey. Weiner says, however, that none of these things are in the cards.

    The paper also speculates that a weakened Stop & Shop could embolden Wal-Mart to accelerate its plans for New England.

  • Reuters reports that Ahold has replaced the CEO and CFO, plus the board, of its Argentine Disco chain, saying that it has concluded its probe of possible mismanagement and accounting irregularities there.

    The company said that it hadn’t found anything in its investigation of the Argentine subsidiary that it believed would affect its financial results in any material way.

    However, Ahold reportedly has sent a team from its Netherlands headquarters to oversee operations in Argentina for the immediate future.

  • Dow Jones reports that Ahold now is saying that it believes that its accounting problems are not widespread throughout the company, and just limited to its Argentine grocery chain (where the problems aren’t that bad) and its US Foodservice division.

  • Deloitte & Touche, Ahold’s accounting firm, has been named as a co-defendant in a class action suit filed on behalf of Ahold shareholders.

    The accounting firm has maintained to this point that Ahold didn’t give it complete information.

  • Ahold’s board said that it plans to nominate Jan Hommen, the current CFO and vice chairman of Royal Philips Electronics NV, to be a director of the company. However, Philips went to great pains to say that Hommen would not become Ahold’s new CEO.

    Reuters reports that Ahold will make a decision regarding the payment of 2002 dividends based on the conclusion of the probe into accounting irregularities at the US Foodservice division. The company also said that to could not yet say whether it will be able to present audited figures at its May 13 annual meeting.
KC's View:
Have you ever seen Mel Brook’s ‘The Producers”? Either the original movie or the current Broadway musical? You may remember it is about how a producer and an accountant scheme to raise $2 million to fund what they believe will be the world’s worst play, which will open and close on Broadway almost immediately, leaving them with all the money to play with.

We saw the musical for the second time last week (and it is well worth seeing), but it never occurred to us that some of the financial machinations that go on in the food industry might rival the absurd plot of this hilarious play.

We can see it now: “Slotting Allowances: The Musical.”

There are just too many inconsistencies in all these Ahold developments to be able to say where this is all going to end. But a number of people we’ve spoken to this week believe that all the publicity the case continues to receive will inevitably end in some sort of “60 Minutes” or “Dateline” piece about slotting allowances and promotion fees, which will lead to the government getting involved.

The implications go far beyond Ahold’s specific situation.

However, someone we spoke to yesterday reminded us of an irony. For years, one of the chief criticisms of major food retailing companies has been that they tend to hire financial people, not marketers, to be in charge. The result, it is said, can be companies run by the numbers, and without the merchant’s mentality that can make for a distinctive shopping experience.

Ahold’s problems are financial, not marketing or merchandising.

And the irony? Deposed CEO Cees van der Hoeven apparently is an accountant.

By the way, check out the “Your Views” section below, where members of our MNB community have some passionate and differing opinions about Ahold.