Compass faces more inquiries into wartime contracts

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WASHINGTON A House of Representatives committee plans to open hearings on Wednesday into allegations that foodservice giant Compass Group PLC and other government contractors violated government regulations while providing services to U.S. forces in Iraq.

Allegations have surfaced that Eurest Support Services, a U.S. subsidiary of London-based Compass, illegally used a private security firm to guard dining facilities managed by the contractor in Iraq during 2004. Eurest had been subcontracted by KBR, a division of Halliburton, which is prohibited by a $16 billion contract with the U.S. government from using private forces instead of U.S. troops for security in Iraq.

Compass denies any wrongdoing in the matter.

“ESS constructed and operated more than 25 separate dining facilities in Iraq, which fed thousands of American and British soldiers during a time of war,” Compass spokesman Chris King told Nation’s Restaurant News. “ESS at all times acted responsibly and legally in the performance of those contracts.”

He declined further comment, noting that “the congressional inquiry is ongoing.”

The House Committee on Oversight and Government Reform has said it will probe allegations of “waste, fraud and abuse” as part of its hearings on government contracting in Iraq. U.S. Rep. Henry Waxman, head of the chief investigative committee in the House, will chair the hearings, which are expected to begin Feb. 7.

According to a report in the British newspaper Financial Times, Waxman, a Democrat, received a memo from Compass that admitted it and other subcontractors had used a private firm named Blackwater for security purposes in Iraq. However, the Department of Defense in July said KBR had “no knowledge” of Blackwater being hired by any of its subcontractors.

King said Compass has designated Steve Murray, director of contracting for ESS, “to appear at the hearing as it was ESS that obtained and performed on contracts to provide food services in Iraq.”

The hearings are expected to include testimony from family members of four Blackwater employees who were killed in Falluja in 2004. The families are suing the security firm for wrongful death.

In a letter Waxman sent to former secretary of defense Donald Rumsfeld last December, the congressman said the security subcontract raised “serious questions” about the oversight exercised by Halliburton, the Pentagon and its subcontractors, and whether it was “proper” for Halliburton to bill the government for the services. Halliburton was formerly led by U.S. Vice President Dick Cheney.

In 2005 Compass Group and ESS were accused of employing questionable procurement practices at the United Nations, allegedly using insider information to rig bids and win contracts to feed peacekeeping forces in Liberia, East Timor, Burundi and Ethiopia. The company, which last year was sued by competitors ES-KO International and Supreme Foodservice for its role in the UN scandal, settled the suits for less than $75 million.