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Nine former and current vendor executives will please guilty to creating false accounting records that enabled Ahold’s US Foodservice unit to artificially inflate its earnings by more than $800 million.

Federal prosecutors say that the guilty parties were either employees or agents of companies that sold products to US Foodservice, and that they also are being charged by the US Securities and Exchange Commission (SEC) with complicity in the accounting scandal.

The nine people include:

    • John Nettle, a former employee of General Mills Inc.
    • Mark Bailin of Rymer International Seafood
    • Timothy Daly of Michael Foods
    • Kenneth Bowman, an independent contractor for Total Food Sales Inc.
    • Michael Hannigan of Sugar Foods Corp.
    • Peter Marion of Maritime Seafood Processors and First Choice Foods; • Gordon Redgate of Commodity Manager Inc. and Private Label Distribution
    • Bruce Robinson of Basic American Foods
    • Michael Rogers, formerly of Tyson Foods Inc.

Bailin and Marion also face charges of insider trading.

Essentially, these vendors are admitting that they cooked the books by indicating that US Foodservice was owed promotional moneys that it actually was not entitled to. US Foodservice has been at the heart of Ahold’s billion-dollar accounting scandal, a problem that has roiled the company’s morale, finances and leadership.

Ironically, this is the second obstacle thrown in front of Ahold in recent days as it tries to put the scandal behind it. Just last week, an Amsterdam court ordered a formal probe into Ahold's management from January 1998 to December 2003.
KC's View:
No matter what Ahold does to try to protect itself from the scandal’s repercussions, the storm keeps raging and its umbrellas keep breaking.

And it sounds like investigators on both sides of the Atlantic have no intention of slowing down their efforts.

But we wonder how many other companies – both retailing and manufacturing – are vulnerable to similar charges and accusations.

Right now, it seems like the dam preventing a flood of such suits and indictments is increasingly fragile. If and when it breaks, the flood could have an enormously negative impact on the food industry.

The best business to be in these days? Lifeboats.