Balfour Beatty plc (LSE:BBY) agreed to pay US$65.4mln (£49mln) in fines and restitution after pleading guilty to defrauding the US armed forces.
Balfour Beatty Communities reached the agreement with the US Department of Justice (DOJ) following an investigation into improperly claimed performance incentive fees for maintenance work at military housing installations.
The Communities subsidiary, which provides housing for the US military, pleaded guilty to one count of fraud and also agreed to appoint an independent compliance monitor for three years.
The settlement comprises US$33.6mln in fines and US$31.8mln in restitution, the DoJ said in a statement.
Between 2013 and 2019, Communities’ employees falsified information that helped the company qualify for performance incentive fees, court documents claim.
"In reality, BBC [Balfour Beatty Communities] did not meet those objectives in many of the quarters during that time," the DoJ said.
"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."
“Instead of promptly repairing housing for U.S. servicemembers as required, BBC lied about the repairs to pocket millions of dollars in performance bonuses,” said Deputy Attorney General Lisa O. Monaco.
“This pervasive fraud was a consequence of BBC’s broken corporate culture, which valued profit over the welfare of servicemembers."
“In defrauding our country's military services, BBC took advantage of their unique position as a military housing provider and put greed and personal profit above our servicemembers," FBI Deputy Director Paul M. Abbate said.
In a separate statement, Balfour Beatty said it carried out an in-depth review of operations at Communities in 2019 and has made changes to prevent this type of misconduct from occurring in the future, including the appointment of a chief compliance officer for the US.
"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 statement said.
The resolution brings the investigation of Communities to a close.
It follows guilty pleas by two Communities managers. In April 2021, Stacy Cabrera, a former community manager at the company, pleaded guilty to conspiracy to commit wire fraud, while in June, Rick Cunefare, a former regional manager, pleaded guilty to major fraud against the US.