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AMSTERDAM - Euronext, a European stock exchange, officially reprimanded Ahold NV today, saying global food retailer broke market rules by delaying the disclosure of accounting problems that had it near bankruptcy last year, according to Associated Press WorldStream.
According to Euronext, Ahold should have warned the market about a month sooner than it did.
The reprimand from Ahold's home exchange, which results in no additional punishment, came over a year after the company admitted it overstated earnings by more than US $1 billion in 2000-2002. As a result of the news, the company's stock lost two-thirds of its value overnight, shocking markets across the globe.
Ahold, the world's third-largest retailer before the accounting scandal broke in February 2003, responded that the scolding was based on "an incomplete and incorrect understanding of the facts."
In a statement Euronext said the Ahold should have disclosed the troubles as soon as it was aware of them, citing a Jan. 13, 2003 internal report that "expressed serious reservations" about Ahold's c.f.o. Michael Meurs, including that he had "withheld information from Ahold's auditor," Deloitte & Touche. Instead, the company didn't disclose the problems until Feb. 24, 2003, the day both Meurs and chief executive Cees van der Hoeven resigned.
According to Euronext, Ahold should have told the market by Feb. 14, 2003 at the latest, when it learned of an "evidently major case of fraud at U.S. Foodservice," the company's U.S. cafeteria food division, where most of the accounting problems were later discovered.
Ahold said it didn't warn the market sooner because it took "significant time for [it] to understand the magnitude of the irregularities." Disclosing the problems earlier could have impaired its ability to get a loan it needed, Ahold's statement said.
Ahold is still being investigated by prosecutors and regulators in the United States and the Netherlands as a result of the 2000-2002 accounting problems.