Balfour Beatty US arm to pay £49m over military housing fraud

Aaron Morby 3 years ago
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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 the restructuring of the Communities management team including the additional appointment of several key executives and a Chief 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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