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Probe may hit Sara Lee, ConAgra
Expanding investigation of Ahold unit rebates could rock $500 billion food industry, report says.
March 27, 2003: 11:15 PM EST

NEW YORK (CNN/Money) - Sara Lee Corp. and ConAgra Foods Inc. could get hit by the expanding investigation into Ahold's wholesale food distribution business in the United States, a news report said Thursday.

The Wall Street Journal, quoting an unnamed person familiar with the situation, reported on its Web site that U.S. investigators have received data showing that representatives of big food companies colluded with executives of U.S. Foodservice, Ahold's distribution unit, to inflate supplier rebates.

Sara Lee (SLE: Research, Estimates) and ConAgra are two of the vendors whose representatives were involved in "false confirmations" of supplier rebates, according to the person quoted in the report.

As part of the scheme, Sara Lee and ConAgra (CAG: Research, Estimates) supplied U.S. Foodservice's accountants with false records that overstated the promotional allowances that U.S. Foodservice had on its books when the food company representatives knew that lesser sums would be paid, the report said.

A spokesman for ConAgra, of Omaha, Neb., declined to comment while a spokeswoman for Chicago-based Sara Lee said it hasn't been contacted by any investigative body and added that the allegations are "untrue" and "unsubstantiated," according to the report.

The development could rock the $500 billion U.S. food industry and affect how food companies sell their products to distributors, the Wall Street Journal said, noting the disclosure also is likely to throw the spotlight on the business practices of other food-service companies and retailers.

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The Dutch retailer Ahold announced last month that it had overstated its 2001 and 2002 earnings by at least $500 million and its accounting irregularities are now the subject of investigations in the United States, the Netherlands and Uruguay.

Sara Lee stock fell 9 cents to $19.86, a drop of about 0.5 percent, in New York Stock Exchange trading. Conagra edged down 5 cents to $21.48.  Top of page




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