The Ahold Crisis

Authors: Van Eennennaam, Fred; Mens, Maurits
Source: Nyenrode Business University
Year: 2006
Company Name: Royal Ahold
Number of pages: 26

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Abstract:

This is the first of a two-case series (306-072-1 and 306-073-1). Monday 24 February 2003 was a black day in the history of Royal Ahold. On this day the world's third largest food retailer revealed a major accounting fraud at its subsidiary US Foodservice. The event nearly bankrupted the 116 year old company. However, unlike other corporate scandals, Ahold was able to survive and recover from the events. This case is an important event in the area of corporate governance, and provides a unique opportunity to learn from the mistakes that were made. In an engaging way the case describes the context in which Ahold's crisis took place. The case identifies why the fraud remained undetected, and why management and shareholders failed to act adequately. This case is one of opportunistic behaviour, a failed acquisition strategy, a lack of internal controls, and one based on trust rather than checks and balances. This case encourages students to explain what factors contributed to causing the crisis at Ahold, and what could have prevented it. The (B) case maps the progress that Ahold made after the crisis.