Ahold U.S. Unit Inflated Profits by $880 Mln
...of the internal probe, and said the company does not understand what motivated the two executives, since neither appeared to be diverting cash for personal use. On Thursday Ahold said it had found no signs of fraud at other units, which include the U.S. supermarket chains Stop & Shop and Giant. Interim chief financial officer Dudley Eustace, a former top executive at electronics group Philips , expressed amazement at the extent of the irregularities. Eustace in a conference call said it was 'inconceivable' that the problems could remain undetected for so long. The company, which is still being probed by U.S. regulators, said it was confident it could finish auditing its 2002 results by the end of June, meeting a crucial deadline to secure bank financing. 'The news that the forensic accounting into U.S. Foodservice is now substantially complete is in our view important and positive news,' Fortis Bank analyst Jurgen Veenker said. RESULTS OF LEGAL PROBE EXPECTED SOON The company's internal legal probe is continuing to determine if any action should taken at U.S. Foodservice. Its supervisory board is meeting shortly to make those decisions. Results of that meeting are expected next week, possibly as early as Tuesday, a source close to the matter said. U.S. regulators are still investigating U.S. Foodservice, which supplies hospitals and hotels, for irregularities in its use of rebates from its own suppliers to inflate its profits. Manufacturers and grocers or distributors have a long history of complicated contracts offering retailers discounts, money for advertising or payments for prominent shelf space. U.S. Foodservice's balance sheet will be adjusted by about $1 billion, including the writeoff of about $700 million in such promotional allowances from vendors. Eustace, who said Ahold would keep an open mind about whether to sell U.S. Foodservice, said the company's own probe showed only two executives were responsible for the scheme. The unit's chief marketing officer, Mark Kaiser, and purchasing head, Timothy Lee, have been fired. They allegedly worked with employees at such suppliers as Sara Lee (SLE) to inflate sales to obtain vendor discounts that were booked as income at U.S. Foodservice. Lawyers for both men did not return calls seeking comment. F...