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WILLIAMSVILLE, N.Y. -- Royal Ahold NV announced that the chief executive of its Tops Markets grocery chain resigned yesterday and took ultimate responsibility for $29 million in accounting irregularities at Tops.
Frank Curci was slated to become the second-in-command of another Ahold subsidiary, Giant Food Inc. of Landover, Md. this summer as part of a reorganization. But the accounting problems at Tops led to his exit, The Washington Post reported.
"In Curci's role as CEO he held responsibility for oversight and control of the business. As such Curci and [Ahold USA chief executive William] Grize determined it was not appropriate for him to assume his new role" as chief operating officer at Giant, Ahold said in a statement.
Giant has no plans at present to name someone else as chief operating officer, said Ahold USA spokesman Barry Scher. The position has been vacant for some time.
The May discovery of accounting problems at Tops was highly embarrassing for Ahold because it came just weeks after the company said it overstated revenue from promotional rebates by $880 million at its U.S. Foodservice subsidiary. Ahold first disclosed its accounting woes in February and has been conducting a company-wide re-audit. The company said the new audit should be completed by the end of June, and it has promised to give its lenders audited consolidated financial results for 2002 by Aug. 15. Internal investigations are continuing at four of 14 Ahold subsidiaries.
The Securities and Exchange Commission and the office of Manhattan U.S Attorney Jim Comey are investigating the accounting irregularities at Ahold for possible securities-law violations. Though the investigations initially focused on the U.S. Foodservice unit, the government is also looking at other problems at the company, sources said.
Ahold officials would not elaborate on the accounting problems at Tops Markets LLC, which operates more than 360 supermarkets and convenience stores in New York, Pennsylvania and Ohio. Curci had been with Ahold since the Dutch company acquired the Mayfair Supermarkets chain in 1995. He was appointed president of Tops in 2000.
His resignation less than a month after the accounting irregularities at Tops were disclosed stands in contrast to the way Ahold handled the massive financial problems at U.S. Foodservice. The president of that subsidiary, James Miller, hung on to his job for more than three months after the company discovered the profit overstatements there. Ahold has blamed that problem on two of Miller's subordinates who allegedly inflated the amount of rebate money the company was receiving from its suppliers over a three-year period.