Compass pays £40m to settle lawsuits

Compass has backed down and paid off two rivals who claimed the catering giant cheated them out of £600m of United Nations contracts rather than clear its name in court.

The group reached a settlement with Es-Ko, a Monaco-based rival to its Eurest Support Services (ESS) arm, and Supreme Foodservice, another competitor, seven months after it was handed the writs. Es-Ko alleged ESS had conducted a "criminal scheme", stealing "valuable UN contracts".

Compass said it had not admitted any legal liability, yet admitted that its final bill, including the settlement and lawyers' fees, would cost it almost £40m.

The deal with Es-Ko means that Mike Bailey, Compass's former chief executive who risked being drawn into the scandal on a personal level, has escaped the threat of a lawsuit. The decision to avoid a courtroom showdown illustrates how keen Richard Cousins, who took over from Mr Bailey in June, is to draw a line under the alleged bribery scandal.

Yet the allegations of bid-rigging by ESS to win work to feed UN peacekeepers will drag on for some time yet because Compass is still the subject of three separate inquiries into how it won contracts in East Timor, Liberia, Eritrea, Burundi, Cyprus, Kosovo and Sudan. The US Congress, the Assistant Attorney for the southern district of New York and the UN are all investigating the affair.

When Es-Ko served its writ, Compass vowed to "vigorously" defend itself. But Mr Cousins said: "While any claim would have been defended, we believe it is in the best interests of the business and shareholders, and good management, to avoid the uncertainties and costs associated with prolonged litigation."