Balfour Beatty plc (“Balfour Beatty” or the “Company”) announces that, as of 22 December 2021, its U.S. subsidiary Balfour Beatty Communities, LLC (“Communities”) has reached a resolution with the U.S. Department of Justice (“DOJ”). The resolution resolves the DOJ's criminal and civil investigations into specific performance incentive fees improperly claimed by Communities between 2013 and 2019 related to maintenance work at certain United States military housing installations. 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.
Communities will pay a total resolution amount of U.S. $65.4 million (£49.0 million at the current exchange rate) comprising approximately $33.6 million in penalties and $31.8 million in restitution.
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 Company undertook an in-depth review of operations at Communities and, as a result, a series of changes have been made to prevent this type of 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 U.S. In addition, Communities 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.
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.
The resolution brings the investigation of Communities to a close.
This announcement contains inside information. The person who arranged for the release of this announcement on behalf of the Company is Tracey Wood, Group General Counsel and Company Secretary.
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