TRIAL OF AHOLD EXECUTIVES BEGINS

MARIANA SANTIBANEZ

AMSTERDAM - Criminal trial proceedings began here last week at Amsterdam's District Court for four former Ahold executives and directors in the largest accounting scandal in Dutch history.

All four defendants are charged with falsifying records and accounting fraud, which carry maximum jail terms of seven and three years, respectively.

The defendants - former Chief Executive Cees van der Hoeven, former Finance Director Michiel Meurs, ex-board member Jan Andreae and audit committee Chairman Roland Fahlin - attended the trial with their team of nine lawyers, SN observed. Van der Hoeven and Meurs resigned after the scandal broke in February 2003. The two face 15 charges in total.

According to reports, van der Hoeven told reporters that he was not to blame for the scandal. "It's clear to me that a lot of things went wrong in the last year I was at Ahold, but I always acted honorably."

Ahold itself is not on trial - the company has already settled with Dutch prosecutors. In the U.S., the Securities and Exchange Commission in 2004 barred van der Hoeven and Meurs from ever serving on the board of a public company whose shares trade in the U.S., but did not prosecute them to avoid double jeopardy in the Dutch case.

The charges here were presented to a panel of three judges presiding over the case and were read aloud by Dutch prosecutor Hendrick Jan Biemond. These official charges include falsely drawing up "side letters" that described its control of certain overseas joint ventures, acknowledgement and use of these side letters, publication of a false balance sheet, misleading the public in the occasion of public offering, falsely drawing up "letters of representation" and defrauding accountants.

The charges stemmed from a three-year criminal inquiry investigation led by Dutch authorities. The prosecutors allege that Ahold executives submitted fraudulent side letters to their business partners concerning Ahold's control joint ventures in Bompreco SA Brazil, Disco Ahold International Holdings in Argentina, ICA Frobundet Invest AB in Scandinavia and Paiz Ahold NV of Dutch Antilles.

Ahold claimed control in these joint ventures for reporting purposes in order to recognize their revenues, prosecutors said.

The Ahold defense strategy reportedly is focused on shifting the responsibility onto the Deloitte & Touche accountants who handled auditing for Ahold. Defense attorneys were not immediately available for comment.

The Dutch trial does not involve the profit overstatement at U.S. Foodservice, which is accused of inflating its profits through the improper recognition of vendor rebates.

This week, the court is slated to consider rebuttals against charges of two of the four defendants.

A verdict in the trial is expected on May 22.