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Compass contract leaves question mark over transparency

16 November 2005

Compass Group's contractual arrangements with its suppliers have been called into question after Caterer obtained a letter it sent to a cleaning products manufacturer.

In a memo to Oldham-based supplier Robert Scott & Sons, Compass told the company to charge distributor King UK double the net price (24p) for a cleaning brush and send it the difference.

"This rebate (24p per brush) will be invoiced at the end of each calendar month and paid in full by RS (Robert Scott) within seven working days following receipt of invoice," the letter said.

Diana Spellman, managing director of consultant Partners in Purchasing, said the request was not illegal in itself but raised concerns about the transparency of its deal with the end client.

"If the client does not know about this arrangement, that's when it becomes a problem. If there is a net purchasing arrangement in place this 24p difference has to be returned to the client every month," she said.

The letter also requested a total of £1,038,926 in one-off payments. Compass asked for £400,000 to cover a "previous supplier trading deficit" and legal costs, £244,461 for introducing Robert Scott to a third-party business and £394,465 as an "unconditional and non-refundable third-party payment".

By Tom Bill

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Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

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