Lend Lease subsidiary hit with $54m fine

From The Age April 25, 2012 - 2:22PM

 (Read to the end ... there's a punchline)

A US subsidiary of the Australia's Lend Lease Construction has admitted to a 10-year overbilling scheme on New York area projects and will pay $US56 million ($A54.3 million) in fines and victim restitution, prosecutors said. Bovis Lend Lease, as the subsidiary was previously known, has its largest US office in New York City, where it employs more than 1,000 people and has worked on projects such as the September 11 Memorial in Lower Manhattan and the Citi Field baseball stadium in Queens. Federal prosecutors in Brooklyn said the company pleaded guilty to criminal charges it had a "systematic practice" between 1999 and 2009 of billing clients -- often government agencies -- for hours its workers had never worked. Advertisement: Story continues below "Today's proceedings mark the culmination of a three-year investigation into a systematic pattern of audacious fraud by one of the world's largest construction firms," FBI Assistant Director in Charge Janice Fedarcyk said in a statement. Prosecutors said that the former head of Bovis' New York office, James Abadie, 55, pleaded guilty earlier on Tuesday to charges of conspiracy to commit mail and wire fraud. Abadie faces up to 20 years in prison. An attorney for Abadie, Stephen Kaufman, did not immediately return a call seeking comment. Bovis agreed to pay $US56 million in penalties and victim restitution as part of a deferred prosecution agreement made public on Tuesday. The agreement showed Bovis had accepted responsibility for the fraud and was cooperating with investigators. As part of the agreement, the company would put in place new internal controls to prevent any future misconduct. "Lend Lease takes corporate governance very seriously and is committed to the highest levels of ethical standards," Robert McNamara, the chief executive of Lend Lease in the Americas, said in a statement. "We accept responsibility for what happened in the past and have agreed to continue to make restitution to the affected clients." Bovis agreed to pay $US40.5 million in penalties as well as $US13.6 million and $US2.5 million to victims of different sets of schemes, the deferred prosecution agreement showed. In one scheme, Bovis lied about employing construction companies owned by women and minorities to qualify for public projects in New York and New Jersey, court documents said.  

The Bovis overbilling scheme concerned projects such as the construction of a criminal court in the Bronx, as well as work on the Brooklyn federal courthouse, the very building in which Bovis was charged.

The cases are US v. James Abadie and US v. Lend Lease (US) Construction LMB, US District Court for the Eastern District of New York, No. 12-274 and 12-288. Read more: http://www.theage.com.au/business/lend-lease-subsidiary-hit-with-54m-fine-20120425-1xkw4.html#ixzz1t3ZaNbtm