Earlier this week, the Guardian reported that a subsidiary of Compass Group, the British catering and services giant, took bribes from counterparts in the Kazakh government for lucrative contacts. The scandal was exposed last year when Karim Pabani, the finance director of Eurest Support Services (ESS) between 2011 and 2013, sued his former employer which had fired him after he repeatedly brought issues of corruption to his superiors.
Last November, Pabani won the right to have his concerns heard by an employment tribunal in the UK. Compass tried to block the case, but the tribunal decided that it did indeed have jurisdiction as, in the words of Judge Fowell “the dismissal took place in the UK, to a UK citizen and resident.” As part of that process, Pabani submitted a witness statement of 166 paragraphs “setting out his full case both on the issues of jurisdiction and time and on the underlying merits of his claims.”
Pabani alleged in his testimony that the subsidiary’s profits were inflated and he had been asked to “falsify accounting records.” Among his claims were that a Kazakh government official and his family were treated to a holiday in Dubai–with a price tag of $19,000 (£12,000)–by Kaz Munay Gaz Services Compass (KMGSC), itself a subsidiary of the Kazakh state gas company and co-owned by Compass. Pabani also claimed that the subsidiary provided luxury vehicles to KMG.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
A new batch of documents, obtained by the Guardian, highlight additional instances of bribery and fraud, and seem to indicate that Compass was aware of such practices. In 2011, before stricter regulations related to a 2010 Bribery Act came into effect, Compass rolled out a new code of conduct and “as part of the roll-out, the Group became aware of small facilitation payments being made through the freight forwarders in Kazakhstan in order to release goods from customs and immediately required the practice to stop. The position was closely followed up in order to ensure that the practice had indeed stopped.”
But according to lawyers, facilitation payments (which “grease” the wheels, so to say) have been illegal in Britain since 1889’s Public Bodies Corrupt Practices Act (which was amended when the 2010 law set a more modern standard).
The most recent batch of documents also that employees noticed and brought up the fact that local food suppliers in Kazakhstan were overcharging by almost “600,000 (£400,000) a year on foodstuffs ranging from chicken fillets and beef shoulder to bananas and dumplings.” Compass itself cried fraud in an internal audit, but has not commented publicly about its own due diligence.
Transparency International, in its 2014 Corruption Perception Index, ranked Kazakhstan at 126 out of 175 countries.
Compass Group engages in a wide variety of foodservice, cleaning, property management and other support services across more than 50 countries. ESS, the subsidiary Pabani worked for, specializes in harsh-environment food service and facilities management and was implicated in 2005 for corrupt practices in obtaining UN contracts to provide food services to peacekeepers in Liberia. In 2006, Compass settled that case without admitting legal liability–paying two competitors, Monaco-based ES-KO International and Switzerland’s Supreme Foodservice, less than $74 million (£40 million).