010502 SEC Investigates IBP Subsidiary

Pierre, SD - Securities and Exchange Commission investigators are apparently looking into allegations of fraud at a subsidiary of meatpacking giant IBP Inc.

IBP told the SEC earlier this year that its own investigation had uncovered possible problems at the company's appetizer unit, DFG Foods, based in Chicago.

The SEC's Division of Corporate Finance wrote a letter in March informing IBP that the agency's Division of Enforcement would look into the reports of problems at DFG, IBP spokesman Gary Mickelson said.

“They're apparently following up on the information we provided them,” Mickelson said.

As per its policy, the SEC refused to confirm or deny an investigation was taking place.

IBP, based in Dakota Dunes, bought DFG in 1998. Tyson Foods Co. called off its planned purchase of IBP on March 29, 10 days after IBP reported potential fraud at DFG.

The next day, IBP sued to force Tyson to complete its planned $4.7 billion purchase of the company, which includes taking on $1.5 billion in IBP debt. The lawsuit was filed in Chancery Court in New Castle County, Del.

IBP on March 20 had said it expected Tyson Foods to go ahead with the purchase because accounting issues had been resolved and regulators had completed a review of IBP's financial records. IBP said its investigation into DFG uncovered potential manipulation of financial records and product theft, and mismanagement by former unit managers.

“So this is nothing new,” Mickelson said of the SEC's continued look at DFG.

IBP has said it was candid in dealings with Tyson and the Arkansas company had no justification in withdrawing its offer.

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