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ID NEWS: Sara Lee, ConAgra implicated in USF woes

According to the Wall Street Journal, Sara Lee Corp. and ConAgra Foods, two of the food industry's largest suppliers, may be involved in a "rebate-inflation" scheme with U.S. Foodservice (USF), Columbia, MD, currently under investigation for improper booking of promo monies. Sara Lee is not only a major supplier but was the original parent of JP Foodservice, the company founded by USF ceo Jim Miller, and parent of PYA/Monarch, from which JP was spun off and now also a part of USF.

U.S. federal investigators reportedly received "general information" showing that representatives of these manufacturers "colluded" with executives of USF to inflate supplier rebates. The collusion is said to have involved "false confirms" substantiating amounts of promo allowances listed by USF on its books when, in fact, the supplier reps "knew" a smaller sum would be paid.

Omaha, NE-based ConAgra has declined to comment and Chicago-based Sara Lee says it has not been contacted by any investigative body. Sara Lee's spokesperson told the Journal that the allegations are "untrue" and "unsubstantiated."

The development is "likely to rock" the $500-billion U.S. food industry and has "broad ramifications" for the way manufacturers sell products to distributors, the Journal said.

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