Troubled discount retailer Kmart is being investigated by the FBI for possible criminal wrongdoing by former executives, it was revealed yesterday.

The probe, which is believed to have been ongoing since early January, hopes to determine whether any of the company's activities warranted criminal charges.

Neither the FBI nor Kmart would comment on the matter, although Kmart did refer to the probe in its annual report released on Wednesday. The company said it was conducting its own investigation into accounting problems and "other matters," which include management's handling of the company. It also said that the Securities and Exchange Commission was conducting an investigation.

Kmart filed for Chapter 11 bankruptcy protection bankruptcy on 22 January. Since then it has put a new management team in place and announced plans to close 283 stores and dismiss 22,000 of its 250,000 workers. Earlier this month, the discount retailer said it was suspending severance payments to some departed executives.

In its annual statement Kmart posted a record loss of $2.4 billion in 2001. This is a tenfold increase over its loss in 2000 of $244 million, or 48 cents a share.