Sunday, May 22, 2022

Balfour Beatty to pay $65m over US military fraud


Balfour Beatty is to pay $65.4m (£49m) to the US Government after pleading guilty to major fraud relating to falsified military housing maintenance records.

The contractor’s US subsidiary Balfour Beatty Communities provided maintenance at 55 military bases, earning performance fees for different measures including proof of resident satisfaction with its work.

From 2013-2019, some of its employees submitted false information showing it had hit maintenance and resident satisfaction targets at several military housing projects. The fraud included altering data in property management software and destroying resident comment cards to falsely inflate the proportion of satisfied responses.

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Deputy attorney general Lisa O Monaco said: “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.

“This pervasive fraud was a consequence of [its] broken corporate culture, which valued profit over the welfare of service members.”

Balfour Beatty has apologised and said the actions were contrary to the way it expects employees to behave.

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Just before Christmas, the company pleaded guilty to one count of major fraud against the United States. District Judge Emmet G Sullivan accepted the plea and sentenced it to pay more than $33.6m (£24.9m) in criminal fines and over $31.8m (£23.56m) in restitution to the US military, serve three years of probation, and take part in independent compliance monitoring for three years.

Separately, Balfour entered into a settlement to resolve its civil liability for $35.2m (£26.1m). This will be credited against the amounts it owes under its criminal plea.

As part of its plea agreement, Balfour agreed to continue to implement a compliance and ethics program designed to stop any future violations of US anti-fraud laws throughout its operations.

US attorney for the Southern District of Georgia David H. Estes said: “The men and women who live in our nation’s military housing […] deserve prompt and professional maintenance service from their housing providers. That [Balfour Beatty Communities] would not only fail to deliver this service, but also falsify information to line their own pockets is despicable.”

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FBI deputy director Paul M Abbate called the crime “disgraceful”.

In June last year, it was announced that former Balfour managers Rick Cunefare, 61, of Glendale, Arizona, and Stacy M Cabrera, 47, of Converse, Texas, had pleaded guilty to “major fraud” over the issue. The latest statement from the US Department of Justice said others were also involved in the crime, though it did not state whether any other individuals would face charges.

A statement from Balfour Beatty said it had fully cooperated with the Department of Justice’s investigation into the issue.

It added: “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.”

It added that it carried out an in-depth review of the subsidiary’s operations and made a series of changes in order to prevent such misconduct occurring in the future including restructuring its management team and appointing new executives. It also introduced new oversight controls for its housing maintenance system.


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