Friday, July 30, 2004

Ahold U.S. executives charged with F.

Prosecutors charged three former executives of Royal Ahold NV's U.S. unit with inflating earnings by more than $800 million at the world's third-largest retailer. Michael Resnick, 42, the former chief financial officer of the unit; Mark Kaiser, 47, its ex-marketing manager; and William Carter, 43, a former vice president, were charged with a F. conspiracy, Interim U.S. Attorney David Kelley said at a press conference in Manhattan. Resnick and Kaiser, members of the unit's executive committee, will appear in federal court tomorrow to enter a plea to charges including securities F. , conspiracy to commit securities F. and filing false statements to the U.S. Securities and Exchange Commission. The three-count indictment alleges that U.S. Foodservice overstated earnings by recording as income promotional allowances that hadn't yet been earned. By doing so, Kaiser and Resnick each earned bonuses doubling their salary, Kelley said. Their alleged F. occurred between 2000 and February 2003, Kelley said. Prosecutors said Kaiser and Resnick were able to dupe auditors by inducing vendors to issue letters attesting to the legitimacy of some promotional allowances. They then issued secret side letters excusing the original letters. "They manipulated income, they accelerated income, and in some instances they just made it up,'' said Linda Thomsen, deputy enforcement director of the Securities and Exchange Commission. Article

Saturday, July 10, 2004

Former Enron Chief Pleads Not Guilty

Former Enron Corporation Chief Executive Kenneth Lay has pleaded not guilty to charges connected to the financial collapse of the energy trading company he headed. Mr. Lay appeared in a Houston federal court Thursday and was released on payment of a $500,000 bond. The case is part of an effort by U.S. authorities to restore confidence in the stock market and U.S. business in general.
The indictment unsealed in federal court charges Kenneth Lay with 11 counts including conspiracy, wire F., securities F. and bank F. In an appearance before reporters in downtown Houston only a couple of hours after his court appearance, Mr. Lay denied any wrongdoing.
"As CEO of the company I accept responsibility for Enron's collapse, however that does not mean I knew everything that happened at Enron and I firmly reject any notion that I engaged in wrongful or criminal activity," he said.
Overall attack against corruption

Monday, July 05, 2004

Independent directors decrease F. risk

A recent study provides ammunition for current demands for more independence on the part of C. boards, showing a correlation between a higher proportion of independent, outside directors and a lower likelihood of CF.
The study compared 133 companies that were accused of F. between 1978 and 2001, and 133 companies of similar size and from the same industries that were not, searching for significant differences in director independence, board size and other variables. The result showed that the boards of the companies that were accused of F. had fewer non-executive directors and fewer independent directors, and lower levels of independence on their audit, compensation and nominating committees.
The researchers found that, compared to the non-F. companies, companies accused of committing F.:
- had a lower percentage of outside (non-executive) directors
- had a lower percentage of independent directors (directors with no business or personal ties to the company).
- were less likely to have an audit committee of the board
- were more likely to have a compensation committee of the board
- had a lower level of independence on its audit, compensation and nominating committees (measured by the percentage of directors on these committees with no business or personal ties to the company).
The study was published in the June issue of Financial Analysts Journal, a research publication for investment practitioners worldwide published by CFA Institute.