Compass Group

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The British company Compass Group LSE: [CPG] is one of the largest food service businesses in the world. It provides catering services to many types of institutions, for example schools, hospitals, companies and nursing homes. It is listed on the London Stock Exchange and is a member of the FTSE 100 Index. It is headquartered in Chertsey, Surrey to the south west of London.

Contents

1 Highlights
2 Brands
3 Management
4 The United Nations Corruption Scandal + Iraq overcharging scandal
5 Financial Position
6 Corporate Governance Problems
7 References
8 External links
9 Competitors
10 Sources

Highlights

The Compass Group was formed in 1987 when management bought out the catering business of Grand Metropolitan renamed Diageo.
Net revenue for the year ended 30 September 2006 was £10,815 million.
Employs over 400,000 people in more than 90 countries.
Ranks number 12 on the list of the world's largest employers
Ranks at 260 on the Global 500 of Fortune, ahead of McDonald's and Sodexho Alliance (one of its main competitors).
Analysts believe that as much as 15% of current business comes from government sources around the world.
Directly involved in a 2005/2006 scandal for corrupting United Nations officials for winning contracts.
Adopted hardball labour tactics, in 2006 cancelling a service contract at an Ottawa, Ontario, Canada nursing home rather than pay employees the arbitrator-awarded wage after a three year dispute.
The Americas Division is headqaurtered in Charlotte, NC and the company employs about 3000 people in the Charlotte metro region. This division includes all of North and South America.

Brands

The Compass Group owns the following brands and businesses: Bon Appétit, Caffè Ritazza, Chartwells, Create Host Services, Crothall, Eurest, Eurest Support Services (ESS), Everson Hewett, FLIK, Harry Ramsden's, Keith Prowse, Leith’s, Levy Restaurants, Medirest, Milburns, Millie's Cookies, Mitropa, Morrison, Moto Hospitality, Patina Group, Pumpkin, Restaurant Associates, Scolarest, Selecta, Tastte!, Upper Crust, Wolfgang Puck. It operates many franchises of outlets such as Burger King.

Management

Chairman, Sir Roy Gardner
Group Chief Executive, Richard Cousins
Current external members of the board of directors include: Peter Blackburn, Peter Cawdron, Val Gooding, Sven Kado, and Steve Lucas.

The United Nations Corruption Scandal + Iraq overcharging scandal

The Compass Group is involved in a corruption scandal with its subsidiary Eurest Support Services winning contracts to provide food to United Nations peacekeepers in Liberia. The value of Compass’s food contracts with the United Nations is valued at $237 million, with renewals and add-ons that could reach $351 million.

Alexander Yakovlev (UN procurement) the UN Procurement Officer and Vladimir Kuznetsov Head of the UN Committee for Administrative and Budgetary Issues were arrested and indicted after taking nearly $1 million in bribes from Compass.

Competitors Es-Ko and Supreme Foodservice AG have initiated lawsuits claiming violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act, the Sherman Antitrust Act and New York State's Donnelly Act regulating free trade. Federal investigations are underway and the case has been referred to the Serious Fraud Office (UK).

After its own three-month internal investigation, Compass declared it had discovered "serious irregularities" in its UN business, but that these were limited to "only a few individuals" who were dismissed: Peter R. Harris, Andy Seiwert and Doug Kerr. Compass refused to make public its investigation and did not name any other individuals involved beyond those already fired, so the true level of corruption within Compass is unclear. However, Compass’s CEO Michael Bailey has stepped down in June 2006 and has been replaced by an outsider to the catering industry, Richard Cousins.

Furthermore, Compass through its subsidiary Eurest Support Services is involved in the scandal of overcharging its services to the US Government in Iraq[Waxman's statement].

Financial Position

In October 2005, the group’s ESS division was suspended as a registered contractor for the United Nations, following allegations of corruption surrounding the award of contracts. Compass's internal investigation led to the firing of three executives and the admission of “serious irregularities”. [Caterer Search profile]

In 2006, Compass Group's pension fund had a deficit of over £500 million. They have made changes in acounting practices to accurately reflect this[Compass Group press release 1 March 2006] .

By 2006, the Group's stock had fallen to less than half of its 2001 value. They have been divesting some business sectors, to buy down debt and the pension deficit, and to refocus on the core catering business.[International Herald Tribune, 9 April 2006].

Corporate Governance Problems

Sir Francis Mackay Compass's Chairman also chairs the Nomination Committee.
A Code of Ethics (or Ethical code) has been published by Compass only in August 2006.
Compass has no Environment Management System.
Compass published no guidelines for stock ownership by the CEO, Senior Management and non Executive Directors.
Compass facilities are not known to be certified by internationnally known standards. Some of its larger sites have achieved ISO 14001 accreditation, but the level of certification across the Group is not disclosed.

References

External links

Competitors

[Aramark]
[Sodexho Alliance]
Fine Host
Granada Group PLC
HDS Services
Elior SA

Sources

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