The Washington Post reports this morning that federal prosecutors are preparing to file criminal charges against US Foodservice’s former marketing chief, Mark P. Kaiser, alleging that he inflated manufacturer rebates in an effort to bump up the company’s stock price. The company’s former CFO, Michael Resnick, also may be facing indictment.
The Post also reports that one time Kaiser deputy, Timothy Lee, has agreed to plead guilty to similar charges and cooperate with the government investigation.
US Foodservice was a major part of the $1.1 billion accounting scandal that was revealed by its parent company, Ahold, early last year – a scandal that has caused the forced resignation of several senior executives, caused investigations on both sides of the Atlantic, put doubt into the minds of investors, and forced the company to sell off non-core assets, including its Bruno’s and Bi-Lo operations in the US.
In addition to the government probes, Ahold also is facing a number of shareholder lawsuits.
The Post also reports that one time Kaiser deputy, Timothy Lee, has agreed to plead guilty to similar charges and cooperate with the government investigation.
US Foodservice was a major part of the $1.1 billion accounting scandal that was revealed by its parent company, Ahold, early last year – a scandal that has caused the forced resignation of several senior executives, caused investigations on both sides of the Atlantic, put doubt into the minds of investors, and forced the company to sell off non-core assets, including its Bruno’s and Bi-Lo operations in the US.
In addition to the government probes, Ahold also is facing a number of shareholder lawsuits.
- KC's View:
-
It is a positive to see senior executives held accountable for their actions. It’s that simple.
Warren Buffett once said that “you don’t know who’s swimming naked until the tide goes out.” The tide went out on Ahold and US Foodservice, and we found out that an awful lot of folks were skinny-dipping…and it wasn’t a pretty sight.
From Enron to Martha Stewart to Ahold, there have been numerous companies over the past few years that have provided ample ammunition to those who would argue that corporations and the people who run them cannot be trusted, that they look to feather their own nests and line their own pockets at the expense of the public good (and the public often includes investors).
This is not acceptable, this is not appropriate, and this can no longer be tolerated. It’s that simple.
(By the way, we’d love to see “You Don’t Know Who’s Swimming Naked Until The Tide Goes Out” turned into a song by Warren Buffett’s cousin Jimmy…)
