9 Suppliers Face Charges in U.S. Foodservice Plot

NEW YORK -- Criminal charges have been filed against nine suppliers accused of participating in a plot to inflate earnings of U.S. Foodservice, Inc., Columbus, MD, by more than $800 million, federal prosecutors said today, according to media reports.

The vendors, whose names were not immediately released, allegedly conspired with executives of the U.S.-based Ahold NV subsidiary to create false accounting records, Manhattan U.S. Attorney David Kelley said in a press statement.

The nine are accused of taking part in the alleged scheme by signing a false audit letter that overstated money owed to U.S. Foodservice, the country's second largest foodservice distributor.

In July 2004, four executives of U.S. Foodservice were accused of conspiring to inflate the earnings by reporting $800 million in fake rebates from suppliers.

Ahold, Zaandam, The Netherlands, which also controls supermarket chain Giant Food LLC, said in early 2003 that it had overstated its earnings by more than $1 billion, mostly because of the alleged fraud at U.S. Foodservice, and its stock lost 60% of its value. About $6 billion in market value evaporated.

Meanwhile, Ahold today that its fourth-quarter sales declined 3% to 12.3 billion euros (US$16.3 billion), blaming the weak dollar and the sale of some operations. The company, the world's fourth-largest retailer by sales, released the unaudited figures ahead of its full earnings report scheduled for March 29.

Full-year sales fell 7% to 52.0 billion euros (US$69 billion), Ahold reported. The company said it would have had 3.1% growth over the full year without the effects of currency fluctuations and its divestments.


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