Ahold food operation may owe US government
US Foodservice customer rebates under scrutiny
March 31 2003
Ahold’s US Foodservice subsidiary may have failed to pass million of dollars in rebates on to US government customers, according to a report in the Wall Street Journal.
Government customers, which include the US military, schools, prisons and state agencies, are asking whether supplier rebates should have been passed on to them.
The rebates are already at the centre of the investigation into accounting irregularities at US Foodservice. Last month, Netherlands-based Ahold said the way supplier rebates had been accounted for by US Foodservice had caused it to overstate profits for 2001 and 2002 by as much as $500m.
Government customers holding a particular type of contract, known as ‘cost-plus’, are arguing that the rebates should have been passed on lower food terms.
With many customers now checking their contract terms, the company now potentially faces the prospect of a series of claims for backdated discounts which could run into many millions of dollars.
Meanwhile, two US food companies Sara Lee and ConAgra Foods, have issued separate statements denying any improprieties in their relationship with US Foodservice. A press report had suggested that he scope of the inquiry might be widened to include some suppliers.