BusinessCompany NewsCompass takes a £40m hit in UN row

Compass takes a £40m hit in UN row

Food services company dishes out huge sum to avoid pincer movement from two rival companies

Compass Group has settled legal rows involving UN contracts for just under
£40m.

The problems related to alleged malpractice involving Eurest Support Services
(a subsidiary) in bidding for contracts, a matter that had been investigated by
Ernst & Young and law firm Freshfields.

The group said today it has paid out nearly £40m to avoid a court wrangle
that could have seen the FTSE 100 catering giant liable for £600m of costs.

In March 2006, two competing food companies, ES-KO International Inc and
Supreme Foodservice AG, brought US law suits totalling some £600m against ESS,
Compass and various ESS staff, based on allegations relating to ESS’s United
Nations contracts.

Compass said in a statement: ‘Compass has agreed to a final settlement of all
claims against all Compass-related parties. The terms of the settlement are
confidential but the total legal, professional and related costs associated with
investigation, litigation and settlement are below £40m. No legal liability has
been admitted.’

Compass underwent a three-month review, carried out by Ernst & Young and
law firm Freshfields after the UN suspended it as a contractor as part of a
wider probe into alleged malpractice in bidding for its contracts.

Compass shares dropped by 1.25p to 275.5p, leaving the company’s value at
nearly £5.8bn.

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