Major league book-keeper brought in to sort out Ahold's scandals

A couple of years ago, when Dudley Eustace retired from Philips, the Dutch electronics company, he announced he had bought a …

A couple of years ago, when Dudley Eustace retired from Philips, the Dutch electronics company, he announced he had bought a small hill in the south of England upon which he intended to build a house and grow roses.

Today Mr Eustace is digging up dirt as interim chief financial officer at Ahold, the Dutch grocery group, where a forensic trawl has unearthed widespread illegal, intentional or questionable accounting practices.

The growing scandal - Mr Eustace concedes he does not know where it will end - has analysts talking of a failure of corporate governance, and has heightened concerns over liquidity as the company battles to meet loan deadlines.

Mr Anders Moberg, the former Ikea boss who is Ahold's new chief executive, remains out of the public gaze as he begins the task of mapping a comeback strategy. But Mr Eustace is the public face of a company in crisis.

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He is working 12 to 15 hours a day, seven days a week, skipping holidays to face down a hostile press and jetting to the US to get to the bottom of a global scandal.

One person who knows him well called him "a major league book-keeper", adding: "He may be the only one who can control things, because he's seen all the tricks before."

Last week's announcement that Ahold's pre-tax earnings would be cut by $29 million (€24.8 million) following the discovery of what "tends towards fraud" in its US retail operations, was the latest accounting irregularity uncovered since February.

It followed the disclosure of an $880 million earnings overstatement at US Foodservice, Ahold's food distribution unit, and evidence of "questionable transactions" at Disco, its Argentinian supermarket chain.

There is also the matter of potential criminal charges arising from the way in which certain of Ahold's European joint ventures were consolidated.

Meanwhile, a €€2.65 billion credit facility rests on the delivery of audited group accounts to its banks by August 15th. And, while Ahold says it intends meeting that deadline, it has not considered a contingency plan should it fail.

The 66-year-old Englishman, who speaks no Dutch but claims to understand it, must deliver credibility and clarity, quickly.

Initial impressions are positive. "He is laudably straight," said Mr Andrew Fowler at Merrill Lynch. "Clearly there is a thirst for information because what the markets want is to be told what happened, have it cleaned up and get the debt down, but I am prepared to give him time." Mr Eustace is well-connected. A survey at the weekend ranked him one of the Netherlands' five most influential non-executive directors. "When he talks to the banks he knows the people across the table," said one colleague. "And he is charming."

A decade ago that charm was critical in rebuilding credibility with investors when Philips stood at the brink of bankruptcy.

Two years ago Mr Eustace repeated the trick at KPN, helping steer the company through a crisis of mounting debt, failed merger attempts and management upheaval.

KPN survived without selling core assets, thanks to an equity issue. That option is not available to Ahold, which instead relies on capital expenditure reduction, control of working capital and asset disposals.

Insiders note a directness in Mr Eustace that suggests he will not flinch from tough decisions, whether the disposal of assets or personnel. More executive departures are on the cards, while a wider review of governance is under way. Further adjustments to the balance sheet will be required regardless of what comes out of ongoing probes.

"He has a wonderfully British ability to say awful things in the nicest way," said one who knows Mr Eustace well. He will need it, if Ahold is to come up smelling of roses.