ConAgra to pay $45 million penalty, S.E.C.
July 25, 2007
by FoodBusinessNews.net Staff
WASHINGTON — In response to civil charges filed by the Securities and Exchange Commission (S.E.C.) regarding improper and potentially fraudulent accounting practices, ConAgra Foods, Inc. has agreed to pay a $45 million penalty.
According to the S.E.C., ConAgra engaged in the accounting practices during fiscal years 1999 through 2001. In addition, the S.E.C. charged ConAgra misused corporate reserves to manipulate reported earnings in fiscal year 1999 and participated in a scheme at its United Agri-Products subsidiary in 2000 that involved improper and premature revenue recognition.
The S.E.C. also alleged that during fiscal years 2002 to 2005, ConAgra’s corporate tax department made numerous errors, causing the company to improperly account for tax benefits and understate its income tax expense. As a result, ConAgra has restated its financial statements for the years 1999 through 2005.
The S.E.C. alleged that without engaging in the improper accounting practices, ConAgra would have missed the consensus estimates of earnings per share made by Wall Street analysts for at least six of 11 fiscal quarters in 1999, 2000 and 2001.
While agreeing to the $45 million penalty, ConAgra has not admitted or denied the allegations in the civil complaint. The settlement is subject to court approval.