Catering: American food companies and a dirty war

London / UK. (te) Few companies volunteer to serve food to troops in war zones because it is so dangerous. Thirty of the employees of the Public Warehousing Company (PWC), a Kuwaiti firm that provides food for the American army in the Middle East, have been killed and 200 injured, mainly in attacks on convoys. But lots of companies want to supply PWC: it is not dangerous, it can be very lucrative and American firms consider feeding the boys and girls in the battlefield a badge of patriotic honour – says «The Economist», considering the part some U.S. food companies are playing in Iraq.

The only risk that big American food companies such as Sara Lee, ConAgra Foods, Perdue and other makers of food for the troops in Iraq are taking is to their reputations. So when federal investigators approached them at the beginning of the year because they suspected them of overpricing their food to the army, Sara Lee and the others were alarmed. They worried more in April when Tyson Foods, one of the world´s largest producers of chicken, based in Arkansas, complained to a defence agency that its rivals were receiving preferential treatment.

Tyson Foods claims that the Army Centre of Excellence, Subsistence (ACES), an army agency in Fort Lee, Virginia, tends to award the vast majority of food-supply contracts to companies which have retired military personnel in charge of relations with the American army. It also says that the way in which ACES selects not just foods but particular brands is inappropriate. While soldiers might well prefer Heinz ketchup and Cheerios cereal, they can hardly be fussy about labels when it comes to pieces of raw chicken.

At Sara Lee, for instance, Paul Simmons, an ex-army officer, is in charge of food sales to the armed forces. He negotiates with David Staples, a top procurement official at ACES, who used to work at Sara Lee´s sausage subsidiary. Mr Staples´ predecessor at ACES was Emily Prior, who was subsequently hired by Quantum Foods, a meatpacking firm in Illinois that provides most of the beef for American troops in Iraq and Kuwait. Ms Prior also represents Perdue, a poultry company that supplies much of the chicken for troops in Iraq. «Government officials frequently switch to a job in the private industry and vice versa», says Jon Harris, a spokesman for Sara Lee. So far, there seems to be no damage to the food companies as a result of the investigation. «It´s not something I think about when looking at the stock», says a retailing analyst in New York. That could change as the probe continues.

The real focus of the government´s investigation seems to be PWC, which is suspected of pocketing refunds received from American food suppliers which should have gone to the army. Officials claim that it failed to shop around for the best value. They also say that it favours The Sultan Center, a Kuwaiti retailer which partly owns PWC, over other sources of fresh food in the Middle East.

PWC answers that it receives so-called «prompt payment» discounts if it pays suppliers within a short period of time, which is standard industry practice. It says that the American army asks for specific brands for about half of its orders. «We cannot set the price of producers», says a spokesman. The Sultan Center is the «clear choice» as supplier of perishable food because few companies in the region can provide the range and vast quantity of food required. Whatever the outcome of the investigation, the army will struggle to find another caterer for its troops in Iraq (source: The Economist).

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