The new CEO of scandal-plagued Dutch supermarket group Royal Ahold is challenging shareholder rights group Vereniging van Effectenbezitters to a showdown. On the company’s Web site, Anders Moberg dares VEB to let Ahold stockholders vote on the activist group’s lawsuits against the company at its March 3 annual meeting.
“It is fair to characterize the VEB’s actions as value-destroying overkill,” Moberg tells Institutional Investor. These lawsuits, he adds, “will not create any additional value for shareholders above what has been and will be obtained from the pending investigations.” Moberg, 53, estimates that accommodating VEB could cost the struggling company E75 million ($93 million). The onetime CEO of Swedish home furnisher Ikea was brought in last May to clean up the mess at Ahold.
VEB managing director Peter Paul de Vries, however, is unmoved by Moberg’s tale of corporate hardship. “To really get to the bottom of the failures of corporate governance at Ahold rather than just uncover blatant instances of fraud,” he contends, “these legal actions must continue.” VEB’s suits, which are scheduled to be heard by the court this spring, are intended to force the company to compile new audited accounts going all the way back to 1998 and to probe allegations of gross mismanagement in anticipation of filing for damages.
Besides, de Vries says, Moberg’s vote challenge is bogus. “Most individual investors don’t even show up at general meetings, not to mention those who in this instance already sold Ahold shares at a substantial loss,” he points out.
The world’s third-biggest supermarket chain is accused of overstating sales by roughly E30 billion and inflating earnings by nearly E1 billion, mainly through accounting shenanigans at its U.S. operation. The U.S. Justice Department and Securities and Exchange Commission as well as the Dutch public prosecutor’s office are poring over the company’s books.
