Compass is embroiled in probe into illegal procurement practices at UN

By Stephen Fidler and Salamander Davoudi
October 1, 2005
Financial Times
http://news.ft.com/cms/s/1af20050-3217-11da-9c7f-00000e2511c8.html 
Compass, the contract caterer that this week announced its third profits warning in 12 months, has become embroiled in high profile investigations into corrupt buying practices at the United Nations.
A spokeswoman from the US embassy in London said a US federal investigation into Compass was still ongoing.
The company admitted yesterday that US federal and UN investigators had questioned it in connection with separate probes into illegal procurement practices at the UN.
Compass claimed a large number of companies were under investigation and denied any wrongdoing.
The investigations have also led to the conviction of a former UN procurement officer, Alexander Yakovlev, with whom ESS Support Services, a Compass subsidiary, had repeated contacts.
Mr Yakovlev has already pleaded guilty to charges arising from his receipt of at least several hundred thousand dollars from non-US companies in connection with his UN duties. Mr Yakovlev is understood to be co-operating with investigators.
ESS has in recent years won multiple contracts with the UN to supply food to UN troops in trouble spots around the world including Kosovo, Cyprus, East Timor, the Golan Heights and Lebanon.
Compass said in its 2004 annual report that it supplied 30,000 UN blue helmet peacekeepers, and during that year won UN supply contracts in Liberia, Eritrea and Burundi.
Paul Kelly, spokesman for Compass, said: There is no suggestion of any wrongdoing. Where they [investigators] have asked questions, we have responded.
The scope of both investigations remains unclear. The US Attorney's office in Manhattan, which secured Mr Yakovlev's guilty plea in August on wire fraud and money laundering offences, declined to comment, as did the Federal Bureau of Investigation.
The investigations arise out of a probe led by Paul Volcker, the former US Federal Reserve chairman, into the UN oil-for-food programme, which supplied food and medicines to Saddam Hussein's Iraq.
A report from the Volcker inquiry said a bank account in Antigua controlled by Mr Yakovlev received more than $950,000 (£539,000) from companies or people associated with companies that won more than $79m in UN contracts and purchase orders. The names of the companies involved were not mentioned.
Mr Kelly said Compass had paid no money into Mr Yakovlev's bank accounts. While company employees had met Mr Yakovlev on multiple occasions, the contracts were awarded under closed tender and not by Mr Yakovlev.
Mr Yakovlev resigned from the UN after disclosures by Fox News in the US that he had helped secure employment for his son, Dmitry, at a regular UN supplier, IHC Services, which has offices in New York and Milan.