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ID NEWS: ConAgra Foods angered by inaccurate confirmation letters sent by USF employees

As more top branded manufacturers say they have been contacted in the federal investigation of U.S. Foodservice (USF), Columbia, MD, for improper booking of more than $500 million in supplier promo monies over a two-year period, one has reported that it was asked to sign off on inaccurate rebate claims by the distributor.

ConAgra Foods, Omaha, NE, says its salespeople received a total of five inaccurate confirmation requests. The confirmation requests should have gone to financial or accounting departments. These claims had inaccuracies and consequently were rejected. One confirmation request overstated a rebate amount by fully $6 million. Two ConAgra Foods sales reps had inadvertently signed off in two situations but also notified ConAgra Foods' accounting department, which subsequently notified USF and rejected the claims. "We made numerous complaints to U.S. Foodservice," says Chris Kircher, ConAgra Foods spokesman, who points out that the branded manufacturer is a "witness, not a target."

A significant amount of this activity took place between February 3 and 10. A revised confirmation was sent to ConAgra Foods by Deloitte & Touche, Ahold's auditor, but it did not fully rectify the error, Kircher adds.

At the end of February, when the investigation of Ahold was announced, ConAgra's "growing suspicions turned to anger," he notes.

Meanwhile, USF reiterates that it is addressing concerns raised by auditors and fully cooperating with investigators, with expectations that the process will be "exhaustive and completed in a timely fashion."

Again, USF points out, "It appears that a small number of trusted employees worked outside our established accounting procedures and betrayed the company. Unfortunately, controls cannot prevent people from breaking the rules; they can only catch the violators."

A source familiar with the situation adds, "It appears that the employees who would have been contacted by these suppliers would be the same individuals who have been implicated in the accounting issues."

This inference apparently points to USF marketing and purchasing execs Mark Kaiser and Tim Lee, who have been suspended, pending the outcome of the investigation.

Other major manufacturers who say they have been contacted by investigators include Sara Lee Corp., Kraft Foods, Inc., H.J. Heinz Co., General Mills, Inc., and Tyson Foods, Inc. All confirmed that they have been approached by either the Securities and Exchange Commission or the Manhattan Attorney's office, or both, as reported by the Washington Post.

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