Balfour Beatty US arm to pay £49m over military housing fraud
Balfour Beatty’s US operation has been ordered to pay out £49m after pleading guilty to major fraud on its military housing maintenance contract.
The Balfour Beatty Communities pay-out is made up of £25m in fines and £24m in damages relating to its military housing contract at 21 Air Force, 18 Navy, and 16 Army bases across the United States, in which tens of thousands of service members and their families lived.
As part of the settlement with the US Department for Justice, BBC pleaded guilty to one count of fraud and has agreed to the appointment of an independent compliance monitor for a three-year period, while it has also been placed on probation for three years.
According to court documents, from around 2013 to around 2019, Balfour Beatty Communities staff falsified performance information for incentive fee requests at various military housing projects.
Specifically, BBC staff altered or manipulated data in property management software and destroyed and falsified resident comment cards to falsely inflate performance to obtain pay performance incentive fees that BBC had not earned.
US Deputy Attorney General Lisa O. Monaco said: “Instead of promptly repairing housing for U.S. service members as required, BBC lied about the repairs to pocket millions of dollars in performance bonuses.”
“This pervasive fraud was a consequence of BBC’s broken corporate culture, which valued profit over the welfare of servicemembers.
“Today’s global resolution sends a clear message to companies that if they do not maintain adequate compliance programs, voluntarily self-disclose misconduct, and fully cooperate with the government, they will pay a price that outweighs the profits they once reaped.”
In a statement today Balfour said: “Balfour Beatty is committed to the highest standards of ethical conduct.
“The wrongdoing that took place is completely contrary to the way the company expects its people to behave.
“The company apologises for the actions of Communities to all its stakeholders. It has been made clear to all employees that breaches of policies, procedures, or law will not be tolerated.
“Communities welcomes the appointment of the independent compliance monitor and looks forward to a constructive engagement.”
In 2019, the Balfour Beatty undertook an in-depth review of operations at Communities and, as a result, introduced a series of changes to prevent misconduct from occurring in the future.
These involved therestructuring of the Communities management team including the additional appointment of several key executives and aChief Compliance Officer for the US.
It said: “Communities also has enhanced its ethics and compliance training for all employees and has made significant improvements to the maintenance work order processing system, underpinned by enhanced controls and protocols that are aimed to prevent misuse and strengthen oversight.”
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M Group buys Babcock power lines arm for £50m
Infrastructure specialist contractor M Group Services has bought Babcock’s Overhead Line Power business for £50m.
Following the acquisition, the business will be rebranded to form part of Morrison Energy Services, sitting alongside and enhancing existing electricity, gas and green energy capabilities.
In latest accounts to March 2021, the power business reported total revenues of £70m and pre-tax profit around £7m before allocated overheads.
The overhead line electric transmission and distribution business counts among its clients including National Grid, Scottish Power Energy Networks and Western Power Distribution.
Jim Arnold, Chief Executive M Group Services, said: “It is important for us to deliver sustainable growth both organically and through acquisitions and we are pleased to strategically enhance our capabilities with this acquisition which provides the means to accelerate our growth by delivering a greater breadth of electricity transmission services to our clients.
“The culture, capabilities and reputation that have become synonymous with this business make it a perfect fit for us. We are delighted to welcome David Maddocks and his team to M Group Services.”
David Maddocks, Director of Babcock Power, added: “I am extremely excited to be joining M Group Services. Our overhead line capability compliments the existing range of services and provides a solid platform to grow in a market that has great opportunity for expansion.”
This acquisition takes the total number of strategic acquisitions made by M Group Services to 15 since December 2016.
