ID NEWS: Ahold probe of USF continues; Smithfield discovers 'false confirms'

New issues crop up as U.S. Foodservice (USF) struggles to overcome an accounting scandal in which promo monies were overstated by some $880 million for a three-year period (ID Management Report, 5/15/03).

Royal Ahold, Zaandam, The Netherlands, indicates that its investigation into the profit overstatements continues and that is "unclear" whether more dismissals will follow at the $17.5-billion braodliner, based in Columbia, MD, according to a spokeswoman cited by Reuters. As a result of the accounting improprieties, USF CEO Jim Miller, CFO Michael Resnick and Executive Vice President and General Counsel David Abramson have resigned (ID Web news 5/14/03), and Mark Kaiser, head of marketing, and Tim Lee, in charge of purchasing, were fired.

Meanwhile, another supplier-Smithfield Foods, Smithfield, VA, a pork processor--has become entangled in the issues. An internal review has revealed that an independent broker who once worked for the company and now handles its business with USF confirmed rebates due from Smithfield without the company's knowledge, says the Wall Street Journal. The broker, who wasn't named in Smithfield's filing, recorded balances and related information that were "inconsistent" with Smithfield's books and records and were "significantly higher" than the amounts owed, according to a filing cited by the Journal: "From our review, it appears that, also without authority, he responded incorrectly on at least one occasion to confirmation requests from U.S. Foodservice while he was our employee."

The processor, which joins Sara Lee and ConAgra in discoveries of inaccurate confirmations, is turning its findings over to the Securities and Exchange Commission (SEC), in conjunction with the SEC investigation. (In ConAgra's case, the inaccurate confirmations were caught before approval and rejected-ID Web news 4/4/03)


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