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    U.S. Examines Whether Ahold Deliberately Inflated Rebates

    LONDON - U.S. regulators are examining whether some of the supplier rebates booked by the U.S. Foodservice unit of Dutch retailer Ahold NV were deliberately inflated, people familiar with the situation told The Wall StreetJournal.

    LONDON - U.S. regulators are examining whether some of the supplier rebates booked by the U.S. Foodservice unit of Dutch retailer Ahold NV were deliberately inflated, people familiar with the situation told The Wall Street
    Journal.

    The U.S. attorney's office in Manhattan and the Securities and Exchange Commission, which have started investigating accounting irregularities at Ahold, were tipped off by company investigators about the deliberate inflation of some of the so-called promotional allowances, or bonuses, that food makers pay to distribution companies to promote their products, these people said.

    While details of the way in which the rebates may have been deliberately inflated were unavailable, it appears that U.S. Foodservice in some cases booked larger amounts for promotional allowances than the actual payments made, said one person familiar with the situation. "This, in effect, was not an accounting mistake," this person said. "This is a deliberate inflation of the receivables."

    Ahold said Monday that it had overstated its 2001 and 2002 earnings by at least $500 million, owing to the booking of inflated rebates.

    The scrutiny of the rebates at the U.S. Foodservice unit is part of a broader look the SEC and the U.S. attorney's office are taking at the parent company and its accounting for some of its many acquisitions over the past five years.

    The Washington Post reports this morning that the "criminal and regulatory investigations are likely to go beyond the specific accounting irregularity that led to the restatement -- how U.S. Foodservice booked rebates from suppliers -- to a broader look at the company's finances."

    In other related news, the top management of Ahold's supermarket business in Argentina, Disco, resigned on Thursday, Reuters reports.

    Ahold has said its investigation into irregularities raised questions about the legality of some transactions at Disco.

    Disco said in a statement that the executives resigned to "help the company's operations continue their normal course."

    Ahold entered its Disco joint venture with Argentine group Velox Retail Holdings in 1998. Last year, Ahold was forced to buy out its partner and take on its liabilities after Velox defaulted on its debts.

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