AN ARM of the food-services giant Aramark and a local minority-owned business will pay the city a total of $400,000 to settle a suit that accused the companies of fudging their numbers to skirt minority-participation requirements in a Philadelphia prison system contract, the city announced Thursday.

"They really were denying opportunities for legitimate minority companies that wanted to work," said city Inspector General Amy Kurland, whose office oversaw the investigation.

Aramark Correctional Services provides three meals a day to prisoners, but it is required to subcontract out 20 percent to 25 percent of the work to businesses owned by minorities, women or disabled persons. The suit alleged that Aramark and Strother Enterprises, a minority-business group in Philadelphia, employed a circular payment scheme to overstate how much of the business Strother was getting.

Neither company admitted fault in the settlement, which will cost Aramark $352,000 and Strother $48,000. Both will also have to improve their compliance codes.

Aramark described the problem as a "reporting discrepancy.

"We have corrected the issue and implemented a comprehensive compliance program," the company said in a statement.

Strother did not return a request for comment.

Kurland said that schemes like this one are a "huge problem."

"It's very common," she said. "We've approached companies that have done this and [they] said, 'Well, isn't this the way things are done in Philadelphia?' "