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    Food Suppliers Questioned on Rebates Paid to Ahold

    NEW YORK - At least four major foodmakers -- Kraft Foods, Tyson Foods, General Mills and H.J. Heinz -- have acknowledged that they are cooperating with federal investigations into possible accounting fraud at U.S. Foodservice, Ahold's food distribution business.

    NEW YORK - At least four major foodmakers -- Kraft Foods, Tyson Foods, General Mills and H.J. Heinz -- have acknowledged that they are cooperating with federal investigations into possible accounting fraud at U.S. Foodservice, Ahold's food distribution business.

    Sara Lee, Campbell Soup and ConAgra Foods also are expected to come under scrutiny as prosecutors focus on the way the $500 billion food industry uses so-called vendor rebates to U.S. Foodservice and other distributors as incentives for getting their products on grocers' shelves.

    People close to the investigation say the Justice Department suspects executives at some big food manufacturers might have colluded with U.S. Foodservice to inflate supplier rebates and pump up profits. In February, Dutch retailer Ahold admitted it had overstated 2001 and 2002 earnings by at least $500 million.

    As part of the alleged rebate-inflation scheme, representatives of some food giants are suspected of supplying Ahold's auditor, Deloitte & Touche, with "false confirms" that validated the amounts of promotional allowances that U.S. Foodservice listed on its books despite knowing smaller sums would be paid.

    In other Ahold news, the company said Friday that the completion of the audit for its 2002 accounts isn't dependent on the outcome of an investigation by the U.S. Securities and Exchange Commission.

    The Financial Times newspaper reported Friday that Ahold's auditors Deloitte & Touche had made it clear they wouldn't finalize the audit of any Ahold unit until a number of investigations into the global grocery group's financial affairs are completed.

    If Ahold isn't able to produce audited accounts by June 30, it could jeopardize $915 million in financing.

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