FTSE 250 builder Balfour Beatty fined £49m for defrauding US military as its subsidiary lied about repairs to pocket millions in bonuses
- Its US subsidiary Balfour Beatty Communities (BBC) pleaded guilty to fraud
- BBC is one of the US military’s largest private landlords
- It falsified documents from 2013 to 2019 in order to receive incentive fees
Infrastructure group Balfour Beatty has been ordered to pay $65million, or £49million, in fines and compensation fees for defrauding the US military.
The FTSE 250 building specialist, which has several Central London property developments, pleaded guilty to a charge of fraud by its US subsidiary Balfour Beatty Communities (BBC), one of the US military’s largest private landlords.
The criminal and civil probe found that BBC falsified documents from around 2013 to 2019 in order to receive incentive fees related to maintenance work at military houses.
Fined: Balfour Beatty’s military landlord ‘lied about the repairs to pocket millions in bonuses’
‘Instead of promptly repairing housing for US service members as required, Balfour Beatty Communities lied about the repairs to pocket millions of dollars in performance bonuses,’ said Deputy Attorney General Lisa Monaco.
‘This pervasive fraud was a consequence of Balfour Beatty Communities’ broken corporate culture’.
BBC charged fees for the management and maintenance of homes of members of the US Air Force, Army and Navy, including a base fee and ‘performance incentive fees’.
To receive these incentive fees, BBC was required to submit to the service branches proof that it had satisfied certain maintenance and customer satisfaction targets.
‘In reality, BBC did not meet those objectives in many of the quarters during that time,’ the US Department of Justice said in a statement.
‘Specifically, BBC employees altered or manipulated data in property management software and destroyed and falsified resident comment cards to falsely inflate these metrics and, ultimately, to fraudulently induce the service branches to pay performance incentive fees which BBC had not earned,’ it added.
Balfour Beatty has agreed to pay $33.6million in penalties and $31.8million in restitution.
Its subsidiary will also need to serve three years of probation, and engage an independent compliance monitor for three years.
The probe was prompted by Reuters reports that discovered some homes built by the business had experienced major problems ranging from asbestos to severe mold, raw sewage backups and burst plastic water lines.
FBI deputy director Paul Abbate said BBC ‘took advantage of their unique position as a military housing provider and put greed and personal profit above our servicemembers’.
Balfour Beatty shares rose 2.7 per cent to 262.52p in morning trading on Thursday.