Royal Ahold, the large Dutch food retailer, said yesterday that its U.S. Foodservice unit overstated profits by $880 million over a three-year period, far more than initially anticipated.
The size of the overstatement – some $380 million more than Ahold estimated in February when it revealed accounting irregularities at the unit – raises questions about the future of James Miller, the CEO of U.S. Foodservice.
So far Miller has withstood the scandal, which has prompted investigations by the Securities and Exchange Commission and U.S. Justice Department into the way Ahold booked supplier rebates among other matters.
He has held onto his job, even as two lieutenants, Mark Kaiser and Timothy Lee, were fired. And he has outlasted Ahold’s CEO, Cees van der Hoeven, and CFO, Michiel Meurs, who resigned in February, after the accounting irregularities were made public. Ahold last week named a former Ikea executive, Anders Moberg, as its new CEO.
Miller’s ongoing role at U.S. Foodservice will largely be determined at a meeting scheduled for next week during which Ahold’s supervisory board is expected to discuss what actions to take with respect to the unit’s management, a person close to the company said.
Ahold also said it would have to write down the value of accrued vendor receivables on U.S. Foodservice’s balance sheet by $700 million, and take other write-downs at the unit of $315 million for adjustments in inventory, trade payables and contract revenue liabilities.
The internal inquiry turned up no evidence of fraud at other units, including Dutch supermarket chain Albert Heijn, Stop & Shop in the United States, a Scandinavian joint venture and operations in Chile, Poland and the Czech Republic.