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CORPORATE GOVERNANCE

AT

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Ahold, the Dutch retail giant with several

operating companies in US and Europe.

Ahold announced on February 24,2003 as. It had overstated profits by almost 1 billion

Euros for the period between January 2000 andSeptember 2002.

So it has to faced the US$ 1.1 billionsettlement.

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This settlement has to give to Aholds shareholderswho had purchased its stock between July 30,1999and February 23,2003.

The settlement welcomed by Aholdsmanagement.

It is a substantial compensation for shareholdersof between US$1 and US$ 1.30 per share.

Peter paul Director, VEB said, its a very quicksolution and leaves behind a black chapter atAhold.

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In 1887, Albert Hejin took over his fathers

grocery store in Zaandam, Holland.

It became popular for its high quality,reasonably priced products and service.

He opened 2nd store in Alkmaar, Holland.

By 1897, Hejin increased the store count to 23.

In 1911, Hejin first branded products wasintroduced.

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In 1948, Albert Hejin was listed on the

Amsterdam stock exchange.

In 1955, He opened its first self servicesupermarket chain.

In 1973, the Hejin family established Ahold as

a parent company. And also Ahold entered into specialty

retailing with Alberto and Etos.

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Albert Hejin made its first acquisition in 1951 with

Netherlands-based Van Amerongen store chain.

In 1977, Ahold entered the US market byacquiring the BI-LO supermarket chain.

In 1981, acquisitions with Giant fool stores.

In 1988, acquisitions with Finast.

The 1990s period of rapid expansion.

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In 1999,the company partnered with La

Fragua,a leading retailers in Central America.

In 2000, Ahold entered into a joint venturewith the Scandinavia-based ICA Group.

In march 2000, Ahold acquired US foodservice.

It also acquired around 150 supermarket in

Spain.

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On February 24, 2003,Ahold announced that

its earnings would not be as high as

estimated Wrong financial statements in 2001 and 2002

also.

Aholds auditors Delolite &Touche detected

accounting irregularities

Accounting irregularities amounted to

around US$ 1 bilion

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US Foodservice was headquartered in

Columbia, Maryland

Ahold Group acquired US Foodservice in 2000 Had more than 100 distribution centers in US

The scandal involved US Foodserviceexecutives colluding with employees at Sara

Lee Corporation to mislead auditors

CEO and Founder of US Foodservice ,Jim

Miller resigned from his position

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Problem with joint ventures namely- ICA,

Jeronimo Martins Retail, Bompreco(sold in

March 2004), Disco and Piaz Ahold. Aholds control over the Joint Ventures

Practice of consolidation had been followedfrom late 90s

Deal with Velox of Argentina in 1998

Investigation by SOBI

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Aholds CEO and CFO resigned.

Company downgraded to BB+.

Investors filed securities fraud lawsuits.

Share plummeted to US$6.53.

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Super board tried to secure lifeline credit.

Anders Moberg appointed as new CEO.

Hannu Ryopponen appointed as CFO.

In October 2003, financial results released-huge loss of 1.2 billion pounds.

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Moberg launched- Road to Recovery

program.

Annual general meeting held in November

26,2003.

New position created- Chief CorporateGovernance counsel . Wakki , a famous

Dutch lawyer was appointed.

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Steps to raise money to reduce debt pile.

Raised US$3.5 billion from the equity issue.

Pricewaterhouse Cooppers appointed asforensic audit.

Settled with SEC.

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Court granted inquiry petition made by DutchInvestors Association.

Inquiry focused on- mismanagement at U.S.foodservice and the controls employed over theoperating companies.

On November 28,2005, Ahold agreed to payUS$1.1 billion to shareholders who had boughtAholds share between July 30,1999 andFebruary 23,2003.

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Revision of existing Corp. Governance

Standards.

Tabaksblat committee adopted Dutch corp.Governance code in Dec 2003.

This code came into effect on Jan 1, 2004.

Ahold declared to comply this code on Feb

16, 2004.

All shareholders were accepted new norms.

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Two occasions of deviation were :

Selling of company shares by executive boardmembers.

VC of Aholds Supervisory board holding Six

Supervisory Boards.

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Brian the then operating CFO was appointed

as Business Controlling Officer.

Accounting and Reporting dept. was formed.

Selling of stakes to reduce Debt.

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A corp. governance office was set up in US

to oversee the operations and business

practices.

Structural changes in US food services.

Training program on ethics for 28,000employees.

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Presently has 2909 stores and 206,000 and

sales of 28 Billion.

Commissioned a third party review of thecorporate responsibility report.

Proposed dividend of 0.23

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Lower cost base.

Building strong consumer base.

Driving identical sales growth.

Allocating capital to new growth.

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AMERICA EUROPE

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