Ahold operates in 27 countries on four continents

The firm said its chief executive and chief financial officer would be leaving, and that investigations into its US food distribution division were under way.

It also admitted that it had been looking into the legality of certain transactions at Disco, its Argentine subsidiary.

The news meant that Ahold would have to rework its 2002 results, which were due to be published in full on 5 March.

Shocked by the sudden wave of bad news from one of the world's most respected companies, investors hurried to dump Ahold shares, sending them down 63% on the Amsterdam stock exchange.

The company also has a listing in New York and shares there lost more than half their value.

Down, but not out

The group's problems are being compared with the scandals that crippled Enron and WorldCom.

"Ahold's accounting irregularities revive unpleasant memories. This is the main driver of the share price today as an investor just cannot trust the company's figures," said John Hatherly, head of global analysis at M&G Asset Management.

But the company stressed that its financial situation remained stable.

A syndicate of banks has provided it with 3.1bn euros (�2bn; $3.3bn) in emergency financing.

The trouble is centered on US Foodservice, Ahold's distribution business.

Although Ahold gave few details, it seems US Foodservice accounted incorrectly for its income, in particularly prepayments relating to its promotional programmes.

The total overstatement - the bulk of which should fall in the 2002 fiscal year - may exceed $500m, Ahold admitted.

As for Disco, Ahold insisted it could give no details of an ongoing probe, which it is pursuing with the help of forensic accountants.

Low ebb

The news comes at a difficult time for Ahold.

For years it outperformed its peers, expanding aggressively into overseas markets, especially in the Americas and Eastern Europe.

But the global economic slowdown has hit it hard, and in the second quarter of last year it reported its first loss in three decades.

Its rash of acquisitions has left it with one of the largest corporate debt burdens in the sector - some 12bn euros.

It has also struggled to overcome differences in accounting practice between its international divisions, and its image has suffered from investor gripes over the quality of its information disclosure.