The United Nations has suspended a subsidiary of British catering giant Compass as a supplier for the world body amid an investigation into a food-for-peacekeepers contract scandal.
The suspension is the latest blow to UN procurement, which in recent months has seen the arrest of two Russians by the FBI for alleged money laundering.
UN spokesman Stephane Dujarric said Eurest Support Services (ESS) had been barred from seeking new UN contracts pending an investigation into allegations that it “improperly obtained” internal UN information about proposals for a contract to supply food to UN peacekeepers in Liberia.
It was reported today that that ESS obtained confidential documents that helped it outbid competitors for the £34m (€50.3m) contract to supply food and water to the Liberia peacekeepers.
ESS is a subsidiary of Compass Group, the world’s largest catering company, which confirmed two weeks ago that ESS was co-operating with authorities in a wide-ranging investigation into UN contract procedures.
Compass said yesterday it had suspended two executives while it investigated the contract between ESS and the United Nations. The company said it had hired London law firm Freshfields Bruckhaus Deringer to investigate the relationship between ESS, the UN, and IHC Services, a former UN contractor.
ESS currently has seven contracts to provide food to about 30,000 troops in UN peacekeeping missions in Lebanon, the Israeli-Syrian border, Cyprus, Liberia, Ethiopia-Eritrea, Burundi and Sudan.
Dujarric said ESS would be allowed to continue to carry out these contracts subject to the results of the investigation. But he said the United Nations intended to issue new tenders as soon as possible to provide food for various peacekeeping operations.
On a related case involving allegations against IHC, Dujarric said the company would remain suspended pending the completion of investigations.
“The UN reiterates that it will strictly enforce a zero tolerance policy concerning unethical, unprofessional or fraudulent behaviour for UN contractors,” Dujarric said.
Compass said earlier that “its business practices are governed by a strict, zero-tolerance based code of ethics that applies to all employees without exception”. It added that UN contracts amounted to less than 0.5% of group revenues last year.
The UN’s internal watchdog is continuing to investigate UN procurement activities.
Vladimir Kuznetsov, a Russian diplomat who chairs the powerful UN budget oversight committee, was indicted in early September for conspiring with a UN procurement officer to launder hundreds of thousands of dollars from foreign companies seeking contracts with the world body. He pleaded not guilty.
Alexander Yakovlev, a Russian who worked in the UN procurement office, pleaded guilty on August 8 to soliciting a bribe from a company seeking a contract under the UN oil-for-food programme.
He also admitted his guilt on wire fraud and money laundering charges for accepting nearly one million dollars in bribes from UN contractors unrelated to the oil-for-food programme.
The oil-for-food programme is the target of numerous corruption investigations. Those investigations have highlighted serious mismanagement of the £65bn (€96.2) programme and management failures in the United Nations – issues highlighted by the arrests of senior UN procurement and budget officials.