Netherlands-based Royal Ahold ranks among the world's three largest food retailers. In the United States it operates the Stop \& Shop and Giant supermarket chains. Dutch and U.S. regulators and prosecutors have brought criminal and civil charges against the company and its executives for overstating earnings by more than US\$1 billion. The nature of the fraud is described in the following excerpt:

Required:
Using more recent news reports (Wall Street Journal Index, Factiva, and Bloomberg Business News are good sources), answer the following questions.
1. Whom did the courts and regulatory authorities hold responsible for the misstated financial statements?
2. Did the company co-operate with investigations into the fraud? How did this affect the penalties imposed against the company?
3. How might executive compensation plans that tied bonuses to accounting earnings motivate unethical conduct in this case?

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TWO FORMER EXECS OF AHOLD SUBSIDIARY PLEAD NOT GUILTY TO FRALD NEW YORK (AP)-Two former executives pleaded not guilty Wednesday to devising a scheme to inflate the earnings of U.S. Foodservice Inc., a subsidiary of Dutch supermarket giant Puyal Arold NV. Farmer chief financial officer Michael Resnick and former chief marketing officer Mark Kalse entered their pleas in a Manhattan federal court, a day after prosecutors announced aud and conspiracy charges against them. The government contends they worked together to boost the company's earnings by $800 million from 2000 to 2003 by reporting fake rebates from suppliers-and sweetened their own boruses in the process. Two other defendants have already pleaded guilty in the alleged scheme: Timothy Lee a former executive vice-president, and William Carter, a for- mer vice-president. Both are set for sentencing in January. Netherlands-based Ahole's U.S. properties include the Stop & Shop and Glant supermar- ket chains. U.S. Foodservice is one of the largest distributors of fond products in the country. providing to restaurants and cafeterias. Ahold said last year it had overstated its earnings by more than $1 billion, mostly because of the traud al U.S. Foodservice. Its stock lost 60 percent o' its value, and about $6 billion in market value ovaporated. Source: Associated Press Newswires, 28 July 2004.