Kraft, Frito-Lay Buyers Agree to Bribery Pleas

By: Don Thompson AP
By: Don Thompson AP

SACRAMENTO (AP) - Buyers for Kraft Foods Inc. and Frito-Lay Inc.
are pleading guilty to accepting hundreds of thousands of dollars in bribes as part of a scheme that helped drive up food prices nationwide, federal prosecutors said Tuesday.

Robert Watson of White Plains, N.Y., entered his plea in a Sacramento federal court Tuesday to accepting $158,000 from a California-based tomato processor. Watson, 59, was a Kraft senior purchasing manager.

The U.S. Attorney's office said James Wahl Jr., 58, a former Frito-Lay purchaser from Dallas, also has agreed to plead guilty to accepting about $160,000.

The charges say they each helped Randall Lee Rahal, a sales broker and director at SK Foods of Lemoore, charge their companies inflated prices. SK Foods grows and processes products like tomato paste and diced tomatoes, 95 percent of which are processed in California.

Attorneys for both Watson and Wahl did not immediately return telephone messages Tuesday.

Kraft spokeswoman Renee Zahery said prosecutors have told the company Watson is the only Kraft employee suspected in the ongoing
price-fixing investigation. Kraft is not a target of the investigation and is cooperating, she said.

Prosecutors said Watson made sure Kraft bought about 230 million pounds of processed tomato products from SK Foods at higher prices
between 2004 and 2008. He pleaded guilty to two counts of honest services mail fraud, each of which carries a maximum 20 year prison
term. Sentencing is set for May 5.

"We have been victimized by one former employee," Zahery said. She would not say when or why Watson left the Illinois-based company and could not speculate how exactly his actions affected Kraft's food prices.

Wahl is to plead guilty "in the near future," prosecutors said. The former senior group manager for ingredients at Frito-Lay was charged Monday with two counts of honest services mail fraud. The charges say he accepted the bribes between 1998 and 2008 in exchange for giving SK Foods information that let it charge Frito-Lay inflated prices.

Frito-Lay spokesman Charles Nicolas said Wahl left the company last fall but could not say why Wahl left, citing privacy concerns. Frito-Lay also has been told it is not a target of the investigation, he said.

Rahal, 61, of Ramsey, N.J., the SK sales broker, pleaded guilty Dec. 16 to racketeering, price fixing, bid rigging and contract conspiracies. SK Foods has denied wrongdoing.

Prosecutors say he negotiated contracts between SK Foods and food product manufacturers, distributors and retail stores throughout the United States.

In previously filed court documents, FBI agents said they found buyers accepting payments at six food companies including Agusa Inc., Safeway Inc., B&G Foods Inc., and ConAgra Foods Inc., in addition to Kraft and Frito-Lay, which is a division of Pepsico Inc.

Acting U.S. Attorney Lawrence Brown said the investigation is continuing.

Also Tuesday, another SK Foods employee, Anthony Manuel, 57, pleaded guilty to two counts of wire fraud and filing a false tax return. He admitted embezzling about $975,000 from his former employer, Morning Star Packing Company, which had tomato processing facilities in Los Banos and Williams.

Manuel was fired Monday from SK Foods, where he had worked since
2005.

He is set for sentencing May 5. Wire fraud carries a maximum 20-year sentence; the filing a false tax return could bring a three-year sentence.

No attorney was listed for Manuel.

(Copyright 2009 by The Associated Press. All Rights Reserved.)


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