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ID NEWS: Ahold says USF promo allowances overstated; investigation launched; Ahold ceo, cfo resign

Royal Ahold, Zaandam, The Netherlands, has announced it has discovered overstatements of income related to promotional allowance programs at U.S. Foodservice, Columbia, MD, the international company's $17.5-billion American broadliner unit.

Because of this and other problems, Cees van der Hoeven, Ahold ceo, and Michael Meurs, Ahold cfo, are resigning, and an intermim management board will be run by the head of Ahold's supervisory board, Henny de Ruiter.

Ahold said that its fiscal year-end audit for USF indicated that "significant accounting irregularities were discovered in the recognition of income, including prepayment amounts related to U.S. Foodservice's promotional allowance programs." Preliminary information suggests that operating earnings for 2001 and expected operating earnings for fiscal year 2002 were overstated by an amount that Ahold believes may exceed US $500 million--the majority in the expected earnings for fiscal 2002.

A complete investigation is continuing by outside legal counsel and independent forensic accountants. Pending conclusion of the investigation, "certain senior executives" of the USF purchasing and marketing management team have been suspended.

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