Compass Group - the world's largest catering firm - yesterday vowed to "vigorously defend" itself against complaints from competitors relating to an ongoing United Nations contracts scandal.
In March, Compass confirmed rival ES-KO had filed a complaint making allegations in connection with UN contracting. Reports suggested ES-KO alleged it would have won $574 million worth of contracts from the UN but for the "illegal conduct" of Compass.
That followed a claim for $125 million from another competitor, Supreme Foodservice, alleging that fraud and bribery were used to win contracts to feed UN peacekeepers in countries such as Liberia and Eritrea.
The claims were made in the wake of an ongoing Federal Criminal investigation into alleged mispractices involving its Eurest Support Services (ESS) unit and the UN in securing contracts.
Compass finance director Andrew Martin spelled out the company's determination to fight the claims following the group's interim results announcement,
"In terms of the US authorities, we'll give evidence as appropriate. I don't know when they'll bring their investigation to a conclusion. In terms of the claim by the competitors, we will vigorously defend those claims and that is something we're getting into now," he said.
In November, Compass sacked Peter Harris, chief executive of its UK & Ireland, Middle East and Africa division, and ESS chief executive Andrew Seiwert in connection with the probe.
Mr Martin said the company's strategy of keeping clients appraised of developments had enabled sales growth to remain robust despite the adverse publicity. "A lot of people had concerns six to nine months ago over whether we'd continue to win new business against this background," he said.
"We've said all along that it's important we're not complacent because there's no doubt it's not a helpful thing to have happened but we've worked very hard to ensure that, against that background, we've kept clients appraised of what's going on."
Compass still managed to achieve eight per cent like-for-like growth overall, including 13 per cent in the US.
However, the investigation comes at a transitional period for the company, with Richard Cousins, former head of building materials group BPB, taking up the role of chief executive next month.
He replaces Michael Bailey who has been widely criticised for presiding over a sharp decline in profitability and the company's share price. It is still in the process of completing the £1.8 billion disposal of its travel concession catering business, SSP.
"The company now faces a difficult period in which it will demerge its travel concessions businesses, change its chief executive and still faces legal challenges in the US over recent cash for contracts allegations," said Seymour Pierce analyst Kevin Lapwood.
Compass reported a decline in first-half earnings, in line with market fore-casts, and said it remains on track to meet its expectations for the full year.
Pretax profit from continuing operations fell by 9.4 per cent to £184 million from £203 million the previous year, while underlying sales rose by 12.4 per cent to £5.66 billion from £5.04 billion the year before.
Credit Suisse said in a note to clients: "Although there was no resolution to some outstanding problems (UN investigation etc) the more important issue, in our view, was that there were no major new problems appearing in these results and some stability appears to have returned to the operation."