The collapse of Enron Corp. and WorldCom appeared a fitting comeuppance for a country that for years had lectured the rest of the world about the superiority of its corporate ways.
Then Europe discovered its own problems.
Investors in Royal Ahold know all about the pain of scandal. The Dutch food retailer saw its shares crash by 63 percent in one day last year after it announced that it had inflated its accounts by using bogus rebates and improperly consolidating revenues from joint ventures. The company fired its CEO and CFO, both of whom have been charged with fraud in the Netherlands, and it faces investor lawsuits claiming damages worth billions of dollars.
Restoring the company to anything approaching its former glory
won’t be easy, but Ahold’s new chief executive, Anders Moberg,
knows a thing or two about retailing:
He played a key role in the interna-tional expansion of Sweden’s Ikea in the 1980s and ‘90s. As Staff Writer David Lanchner reports in “Shopping for a Turnaround,” beginning on page 64, Mo-berg plans to rebuild profits by selling off weaker store chains and generating greater efficiencies in Ahold’s core businesses in Europe and the U.S. His efforts put the company back into the black in the first half of this year.
Harder, perhaps, for a man who spent most of his career working for a privately held concern, has been placating Ahold’s angry investors. Moberg acknowledges mistakes in clashing with shareholders over lawsuits resulting from the accounting errors and tells Institutional Investor, “I learn every day.”
Many of Europe’s top money managers also know what it’s like to feel the wrath of investors. Our annual survey of the region’s top 100 managers (page 49) finds that big firms increasingly are squeezed between index funds on the one hand and hedge funds or alpha-generating boutiques on the other. The “big is beautiful” mantra, so much in vogue during the bull market, is fading fast, and many large firms have seen assets flow out the door, notes Senior Editor Andrew Capon. To paraphrase the old real estate adage, the secret of success today is performance, performance, performance. As it should be.
