Update: Yesterday's (10-17-07) Wall Street Journal (subscription) article about this investigation began "Prominent American food companies are under scrutiny in a federal probe of possible fraud and corruption in the military's food-supply operations for the Iraq war", and went on to read "The inquiry is focused on whether the food companies set excessively high prices when they sold their goods to the Army's primary food contractor for the war zone." Today's (8-18-07) WSJ article about the investigation reported a very different slant to the story, suggesting that, rather than pursuing American producers, the government was investigating the wholesaler and companies involved in the Kuwait end. Given this change, I find the story I have written below no longer substantiated, and caution readers to wait along with me for more reliable information.In accordance with our policy of owning up to what we have written, the post will remain.
A number of American food companies including Sara Lee (NYSE:SLE), ConAgra (NYSE: CAG) and Perdue Farms Inc. have come under suspicion of conspiring with Kuwait-based Agility Corp., a logistics supplier for the U.S. troops in Iraq, to inflate food supply costs. In June, Agility received a new, one-year, $2.8 billion contract to provide life support (billeting, motor pool, dining and medical support services) to troops in Iraq. Agility, until recently known as Public Warehousing, has enjoyed a series of support contracts throughout much of the Iraq conflict.
According to Reuters, the Defense and Justice Departments are investigating allegations that Agility may have taken kickbacks from its suppliers, as well as charging the U.S. military unreasonably high prices for provender.
Agility, founded in 1979, was taken public in 1997 and is traded on the Kuwait exchange. It employs over 20,000 people in over 100 countries, with an annual revenue of $4.5 billion. In June, it was also awarded a $43.6 million contract for base operations and maintenance services at U.S. Air Force bases in Spain.
Update: ConAgra has put out a press release claiming that the DOD is looking to them as witnesses, rather than perpetrators.
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Reader Comments (Page 1 of 1)
10-17-2007 @ 4:55PM
lew sare said...
ATTENTION TOM BARLOW
It makes me sick when you report items without investigating and getting the facts. Did you contact Sara Lee before your written remarks? You are 100% wrong, Check with Sara Lee and you will find that they are not being investigated but they may be called as a government witness by the Justice Department. This another case of a reporter making false statements without regard for the damage they can cause a company. You are a jerk.
10-17-2007 @ 7:08PM
Tom Barlow said...
Hope you took the time to flame the Wall Street Journal and Reuters, who reported essentially the same story.
I'm afraid I'm going to have to toss you out of my fan club.
10-19-2007 @ 9:13AM
paul burke said...
agree that the press may have jumped the gun in identifying the food companies involved. conagra also told the press the company wwas only a witness in the investigation. but you were never see the major press issue an apology if that turns out to be the case. the reporters who broke the story never did include the companies' position near the top of the stories. we get a one-sided view. the view that tries to make fact out of pure allegations.
10-29-2007 @ 1:28PM
joseph piccillo said...
if news services were held accountable for any damages to these firms i.e. sara lee, conagra maybe closer attention to what is being reported.
10-31-2007 @ 5:26PM
sally said...
hello- how about gouge them on fresh fruit and veggies-
how about having american schools have good foods, too
not so much bread and fats-
stupid corporations
i think Whole Foods should be taking over about now!