British catering business Compass suspends a chief executive as it investigates UN contracts

Compass Group PLC, the world's largest catering company, said Friday it has suspended two executives while it investigates a contract between one of its subsidiaries and the United Nations. Compass said it has hired law firm Freshfields Bruckhaus Deringer to investigate the relationship between Compass subsidiary Eurest Support Services, the U.N., and IHC Services Inc., a former contractor to the U.N. contract procurement department.

The company said that Peter Harris, Compass chief executive for U.K. and Ireland, the Middle East and Africa, and Andy Siewert, Eurest's business development executive, were both suspended as of Friday. Neither has commented.

Compass shares were down 5.79 percent to 175 pence (US$3.09; Ђ2.59) at close of business Friday. Barclays analyst Sebastien Petit said the suspensions and investigation were a "significant blow" for the company.

The U.N. said Friday that it has suspended Eurest as a registered U.N. vendor while it investigates allegations that Eurest "improperly" obtained internal U.N. documents that helped it outbid competitors for a US$62 million (Ђ50 million) contract to supply food and water to U.N. peacekeepers in Liberia.

Compass confirmed two weeks ago that Eurest was cooperating with authorities in a wide-ranging investigation into U.N. contracting procedures, but it declined to comment further on the media reports Friday.

The company said earlier that it is a signatory to the U.N. Global Compact and "its business practices are governed by a strict, zero-tolerance based Code of Ethics that applies to all employees without exception." It added that U.N. contracts amounted to less than half of 1 percent of group revenues last year. Compass said that Harris' responsibilities will be taken over by Gary Green, chief executive of the Americas division, AP reported.