Contractor Balfour Beatty (BBY) is to pay $65.4m (£48.8m) to criminal and civil cases brought against its communities arm by the US Department of Justice.
The company pleaded guilty to fraud and was ordered to pay $33.6m of fines and $31.6m in restitution to the US military at a hearing in the District of Columbia on 22 December. It will also be independently monitored for the next three years.
Balfour Beatty Communities (BBC) is a major provider of military housing in the US, for which it is paid a base fee and performance bonuses for housing provided at 55 bases around the country. Between 2013 and 2019, the company falsely reported that it had met certain maintenance and resident satisfaction targets to trigger incentive payments, the DoJ said.
“Instead of promptly repairing housing for US servicemembers as required, BBC lied about the repairs to pocket millions of dollars in performance bonuses,” Deputy Attorney General Lisa Monaco said.
Balfour Beatty’s shares rose 3 per cent, with the company saying that “a series of changes” have been made to prevent repeat offences, including a restructuring of its communities management team and the appointment of a chief compliance officer in the US.
It trades at a fairly unchallenging 10-times forecast earnings for 2022, but its profit margin remains slim, making one-off events such as fines costly affairs. Hold.
Last IC View: Buy, 299p, 18 Aug 2021
