Lakeman v. KPN

Pieter Lakeman isn’t about to put KPN on hold. After raising questions about the Dutch telecom giant’s financial disclosures - and sending its share price briefly tumbling in December - the shareholder activist is suing his nemesis.

They meet in court this month.

Working alone from his Amsterdam home, Lakeman, who studied as an econometrist, runs the nonprofit Stichting Onderzoek Bedrijfs Informatie (Foundation for the Investigation of Business Information). Although KPN shares quickly recovered from Lakeman’s earlier attack, which criticized undisclosed covenants in a credit facility, the company now faces a potentially more damaging accusation from the 60-year-old gadfly.

Lakeman claims that KPN - by market cap, the Netherlands’ 11th-largest company - reported E1.87 billion ($1.64 billion) profit in 2000, when it should have announced a loss of E438 million. He maintains that the company improperly booked money from the August 2000 sale of a stake in its KPN Mobile subsidiary to Japan’s NTT DoCoMo as profit.

And that’s not Lakeman’s only jab at KPN. In another court case, likely to begin this spring, he alleges that KPN is inflating the value of its E-Plus mobile phone unit in Germany by at least E9.9 billion in goodwill.

A KPN spokesman says that the company has done nothing wrong in either case. But analysts and fund managers who know Lakeman plan to keep a close eye on the proceedings. “He usually latches on to winnable causes,” says Jankees Ruizeveld, who runs the E100 million Robeco Telecom Services fund in Rotterdam.

Lakeman is reviewing other targets. “When the KPN case is finished, probably this summer, I’ll be looking for another high-profile candidate to take to trial,” he says. Dutch CEOs should consider themselves warned.

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