Financial statements - Notes to the consolidated financial statements
Note 35
Governmental/regulatory investigations
U.S. Department of Justice
The U.S. Department of Justice (the "DOJ"), through the U.S. Attorney's Office for the Southern District of New York (the
"U.S. Attorney") is conducting a criminal investigation into possible criminal wrongdoing by Ahold and certain of its current
and/or former officers, directors and employees in connection with events leading to Ahold's announcement on February 24,
2003 that, among other things, it would be restating its financial position and results for 2001 and 2000 because of certain
accounting irregularities at U.S. Foodservice and because certain subsidiaries had been improperly consolidated (the "February
24 Announcement") and other accounting-related matters. In the course of that investigation, a grand jury subpoena, dated
March 3, 2003, was issued to Ahold by a federal grand jury in the U.S. District Court for the Southern District of New York.
In 2004, 2005 and 2006, the DOJ brought securities fraud and other criminal charges against certain individuals, all of them
either former U.S.Foodservice executives or employees and former employees of vendors that sold food and food-related
products to U.S. Foodservice.
As previously announced the DOJ is also conducting a civil investigation, which the Company believes relates to certain billing
practices of U.S. Foodservice with regard to contracts with federal agency customers. The U.S. Attorney has requested that
the Company provide certain documents generally related to (i) U.S. Foodservice's cost of products purchased from certain
vendors, including the VASPs, and the prices charged for such products when sold to federal agency customers and (ii)
U.S. Foodservice's freight costs and the amounts charged for freight costs for products sold to federal agency customers.
Ahold continues to cooperate fully with the U.S. Attorney's investigations. To date, Ahold has not been charged in the criminal
investigation and no claims have been asserted in the civil investigation. Although Ahold believes it is probable that claims will
be asserted in the civil investigation, Ahold believes it may have meritorious defenses to such claims as may be asserted. Due
to the stage of the civil investigation, Ahold cannot at this time provide a reasonable estimate of any potential liability and, if
so, the amount of such liability.
U.S. Securities and Exchange Commission
As previously disclosed the Securities and Exchange Commission ("SEC") commenced an investigation in 2003 into the events
leading to the February 24 Announcement and other accounting-relating matters. Without admitting or denying the allegations
in the complaint, Ahold settled the SEC's action by consenting to the entry of a judgment permanently enjoining Ahold from
violating the antifraud, reporting, books and records and internal controls provisions of the U.S. federal securities laws. The
SEC stated that it did not seek a penalty or fine from Ahold because of, among other reasons, Ahold's extensive cooperation
with the SEC's investigation. The SEC's investigation is continuing with respect to various individuals and Ahold is continuing
to cooperate fully with the SEC.
U.S. Department of Labor
Following the February 24, 2003 Announcement, through authority delegated to it under Section 504 of the ERISA, the U.S.
Department of Labor ("DOL") opened an investigation into whether any criminal violations of ERISA were committed by Ahold
and certain of its current and/or former officers, directors and employees in connection with the 401(k) plans of Ahold U.S.A.,
U.S. Foodservice and Stop Shop. In the course of the investigation, which is also being coordinated with the U.S. Attorney's
investigation, a grand jury subpoena, dated June 16, 2003, was issued to Ahold U.S.A. by a federal grand jury in the U.S.
District Court for the Southern District of New York requesting documents relating to Ahold U.S.A.'s 401(k) plan. Additionally,
letter requests, dated July 3, 2003 and July 9, 2003, were issued by the DOL seeking documents relating to the 401(k) plans
of U.S. Foodservice and Stop Shop, respectively. In addition, in 2003 the Employee Benefits Security Administration of the
DOL also commenced a civil investigation relating to the U.S. Foodservice, Inc. 401(k) Savings Plan Master Trust to determine
whether any violations under Title I of ERISA have occurred, including breaches of fiduciary duty, which investigation remains
pending. Ahold is fully cooperating with each of the DOL investigations.
Dutch and U.S. proceedings regarding terminations
Ahold's former Chief Executive Officer, Cees van der Hoeven and Chief Financial Officer A. Michiel Meurs, have each agreed
in the context of their separation that the determination of their severance package, if any, must be left to an impartial body,
in this case an arbitration tribunal, which is comprised of persons with experience in this area and not having any relationship
with either Ahold or the former Chief Executive Officer and Chief Financial Officer, to ensure complete objectivity of the
proceedings. In December 2003, the former Chief Executive Officer and Chief Financial Officer initiated an arbitration
170
