US arm of Balfour Beatty (BBY) settles fraud investigation
10:14, 23 December 2021
Balfour Beatty said its US subsidiary has reached a resolution with the US Department of Justice (DoJ) over its criminal and civil investigations into specific performance incentive fees improperly claimed between 2013 and 2019.
The investigations related to maintenance work by Balfour Beatty Communities at certain United States military housing installations.
In a news release published on Thursday, Balfour Beatty said Communities will pay a total resolution amount of $65.4m (£49m) to settle the dispute – comprising approximately $33.6m in penalties and $31.8m in restitution.
US subsidiary admits guilt
“Under the terms of the resolution, Communities has pleaded guilty to one count of fraud and has agreed to the appointment of an independent compliance monitor for a three-year period. Communities cooperated fully with the DOJ in its investigation,” Balfour Beatty said.
The business also said in the release that it is committed to the highest standards of ethical conduct and the wrongdoing that took place was completely contrary to the way the company expects its people to behave.
It added: “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.”
What is your sentiment on BALF?
Review of operations at Communities
The resolution follows a review the company undertook in 2019 of operations at Communities and, as a result, a series of changes were made to prevent misconduct from occurring in the future, Balfour Beatty said.
It involved the restructuring of the Communities management team including the additional appointment of several key executives and a chief compliance officer for the US. In addition, Communities 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, the company said.
“Communities is committed to delivering a consistently high level of service to the military residents it serves and will continue to work closely and constructively with its military partners to achieve this,” it added.
The resolution brings the investigation of Communities to a close. Stock in the UK infrastructure group Balfour Beatty (BBY) was up 2.27% at 261.40p on Thursday morning on the London Stock Exchange.
Read more: Avacta (AVCT) stock up after EU approves Covid test
Markets in this article