Balfour Beatty

One of the UK's most infamous construction compaines due to its wilful involvement with projects such as the Ilisu dam in Turkey,^[1] it is also the UK's second largest and most profitable with a turnover in excess of £2.6 billion. In 2000, the company made £94m profit, £477, 233 of which went to its chief executive, Michael Welton.^[2] Balfour Beatty is the world's fifteenth largest construction company and has 28,500 employees in 24 countries.^[3] In 2002, it had 5,449 new global contracts.^[4]

Balfour Beatty manages many hundreds of projects a year, and has relationships with approximately 10,000 suppliers, and sub-contractors.^[5] Thanks to PFI, Balfour Beatty announced a rise in sales to £3.44bn during 2002 and PFI now forms 20% of its £5.1bn forward order book.^[6] It is the UK's leading PPP/PFI concessionaire/contractor.

In addition to its extensive involvement in rail projects following the privatisation of Britain’s railways in the early 1990s, Balfour Beatty received, along with Tarmac (another major donor to the then-ruling Conservative Party), 49% of all road construction contracts.^[7]

Under its finance director at the time, Ron Henderson (now group finance director at Network Rail but previously with Halliburton, Brown and Root and Arthur Andersen), Balfour Beatty was found responsible for the Heathrow tunnel collapse of 1994. It was fined £1.2 million – at the time the largest ever imposed by the Health and Safety Executive (HSE) fine, after failing to ensure the safety of both its employees and members of the public.

Henderson was also in post when Balfour Beatty caused the Rivenhall rail disaster. The firm was fined £500,000. The judge believed that ‘it was only by the grace of god’ that no passenger train was involved in the crash and deaths were avoided. Henderson had left the firm by the time of the Hatfield disaster where four people died, but he was still on the board. The ultimate cause of all three incidents was cost-cutting - something which Henderson, as finance director, must have been aware of.^[8]

In 1996, Balfour Beatty was banned from bidding for contracts in Singapore following allegations of corruption. It was also involved in the Pergau dam in Malaysia where British aid lubricated arms deals with Malaysia.^[9]

Jeremy Carver, a barrister for Transparency International, said of his dealing with Balfour Beatty:

'I went to a DTI reception. I was introduced to someone who identified himself as the chairman of a company and we were talking about corruption. He announced with great pride that he personally handed over the cheque to the government minister for the Pergau dam “bribe” in Malaysia.' Identifying the interlocutor as 'the chairman of Balfour Beatty', he continues: 'The corporate honcho was not confessing, but boasting about the payment which he may have considered not a bribe but just the cost of doing business Malaysian-style.'^[10]

Balfour Beatty was also part of the Lesotho Highland Project Contractors consortium (see AMEC). In March 1991, according to Swiss bank records which form the basis of the prosecution's case, the consortium allegedly paid £585,000 via an intermediary into a Swiss bank account controlled by a Lesothan official. Only one month earlier a building contract was signed, worth £135.66

In March 1994 the consortium allegedly paid another £200,000 to the official's account. Two weeks later, they signed the contract to build another dam, worth £41m.^[11]

In 1999, four year-old Bobby Wood was electrocuted after gaining access to live rail in Strood, Kent. The HSE alleged that Balfour Beatty and Network Rail had failed to ensure that a gate giving access to the line was secure. After pleading guilty, they were fined a total of £300,000.^[12]

M25 Widening

The M25, is perhaps the paradigm example of traffic induction. Balfour Beatty has been happy to take on the widening between junctions 8 and 10 near Reigate, due to be completed September 1997.

Group profiles

Most of Balfour Beatty's controversial projects (including the Cardiff Bay Barrage and all road schemes) are carried out by Balfour Beatty Civil Engineering Ltd., which is a subsidiary of Balfour Beatty Ltd., which in turn is owned by BICC Group plc.

BICC Group plc.

Devonshire House, Mayfair Place, London W1X 5PH

Tel. 0171 629 6622 / Fax 0171 409

Turnover: £4.4bn. (1995)

Operating profit/loss: £178m (1994), £150m (1995), £82m (first half 1996). After exceptional items, interest & taxation: £116m (1995), £29m (first half 1996)

Business: engineering, construction, property development, power & communications cables, pipes & tubes, electronic building automation systems, energy (25% share in Barking Power Ltd.)

Directors

Viscount Weir (Chairman)*, A Jones (Chief Executive), Sir Robin Biggam*, Sir Peter Bonfield*, E Clark, M Downie, Sir Robert Davidson*, R Henderson (Finance Director), Lord Howe of Aberavon QC., C Painter, C Reeves*, U Stark*, M Welton, P Zinkin.

[* = non-executive]

Political Links

Lord Howe was a Conservative MP 1964-92, Chancellor of the Exchequer 1979-83, Foreign Secretary 1983-89, Leader of the House of Commons & Deputy Prime Minister 1989-90. BICC has supported Aims of Industry, the Economic League and British United Industrialists.

Investors with over 3% of shares (27/2/96): Franklin Resources Inc. 6%, Capital Group Companies 10.26%

Environmental policy

"Balfour Beatty continues to develop its systems for environmental monitoring... Training on environmental is seen as important in supporting the implementation of these systems. Technology programmes to examine produ0070. Stewardship and life cycle issues are in progress. Environmental principles are incorporated into the Group's purchasing policies...

The Board is satisfied that safety and environmental matters are given appropriate attention by the Group's businesses.

Balfour Beatty Ltd.

One Angel Square, Torrens Street, London ECIV ISX

Tel. 0171 216 6800 / Fax 0171 216 6950.

Turnover: £1.7bn (1995)

Operating profit: £43m (1994), £18m (1995), £1m (first half 1996) [before exceptional items i.e. losses for which the company feels it can't be blamed - poor dears! For 1995 it includes losses from the collapse of the Heathrow Express tunnel in late 1994 (BB Civil Eng.), with the BB Ltd. (Plant Division) - Derby. and from the sell-off of Clarke Homes Ltd.]

Directors:

MW Welton (Chief Executive), track renewal units. BB Building - Knotingley (W. Yorks.), HM Bedelian, PJ Mason. Aberdeen, Shons (Strathclyde).

Employees: 16,115. encouraging. The group will seek further Balfour Kilpatrick Ltd. (cables) - Erith (1<

Notes

BB Construction Ltd. has been a member of the British Roads Federation (BRF) since at least 1989. Warwick Evans, a director of BB Civil Engineering Ltd., was a member of the BRF Board of Directors 1992-3. [Source: BRF Annual Report 1993]. Colin Shepherd MP (Conservative, Hereford) is registered as a parliamentary advisor to BB Ltd. [Source: A Bit On The Side, 1994 (not sure if still the case)]. BB is suffering from the reduced UK power and civil engineering markets. Building and building services have had a bad year, but are expected to recover slowly. Maintenance and facilities management have been successful. Railway engineering is picking up, with the acquisition from BR of 3 maintenance and track renewal units.

"The UK market outlook for 1996 is not - expansion overseas was" - Michael Welton BB currently has 50% of sales outside the UK (it was 25% at start of 1995). This includes Indonesia, Malaysia (incl. the Pergau Dam), Watch) Dubai, Lesotho (£260m HEP dam), Singapore, Hong Kong and USA (incl. several road schemes). BB Construction Intemational is based at Sidcup, Kent.

===Offices=== BB Construction Ltd. - Walton-on-Thames (Surrey), Lichfield (Staffs.), Wythenshawe (nr. Manchester), Newcastle-upon-Tyne, Edinburgh. BB Projects & Engineering Ltd. - Sidcup (Kent), Exeter, Bristol. Wallington (Surrey), Birmingham, Renfr'ber (Strathclyde). See Who Owns Whom for other subsidiary acquisition from BR of 3 maintenance and BB Power Construction Ltd. - Kirby. - Look in the phone book! (or call Corpor

Balfour Beatty Civil Engineering Ltd.

7 Mayday Road, Thomton Heath, Surrey

Tel. 0181 684 6922 / Fax 0181 710 5151

Other addresses: 14 Ack Lane East, Bramhall, CR7 7XA. Cheshire SK7 2BY

Tel. 0161 440 0700 / Fax 0161 439 7511

===Directors=== HM Bedelian (Managing Director). Randolph House, 4648 Wellesley Road,

WE Clifford, WA Evans, DG Fison. Croydon, Surrey CR9 3QD

AW Merricks, AE Rose, PJ Steckelmacher. Tel. 0181 686 8700 / Fax 0181 686 3854

MW Welton

Balfour Beatty was ranked the UK's largest trunk roads contractor in financial year 1992-3, 2nd largest in 1993-4. It won the biggest single road scheme each year: the £65m Second Sevem Crossing and the £71m A13 Thames Avenue/Wenninton respectively.

Notes

1. ^ Balfour Beatty Key Facts. See: www.balfourbeatty.com/bbeatty/aboutus/keyfacts/. Viewed: 10.03.04
2. ^'Top Global Contractors,' ENR, 2002. See: http://enr.construction.com/people/toplists/topGlobalcont/topglobalCont_1-50.asp. Viewed: 11.03.04
3. ^ See: www.buildonline.com/oursolutions/casestudies.asp Viewed: 22.01.04
4. ^'Unison Companies Update,' Unison, 09.04.03. See: www.unison.org.uk/acrobat/B798.pdf. Viewed: 26.01.04
5. ^'Company Profile – Balfour Beatty,' Ilisu Dam Campaign. See: www.ilisu.org.uk/balfour.html. Viewed: 27.01.04
6. ^'Off the rails,' Solomon Hughes, Red Pepper, 01.11.02. See: www.redpepper.org.uk/KYE/x-kye-Nov2002.html. Viewed: 28.01.04
7. ^'Balfour Beatty – Proud to be British?' Kate Geary, Issue 10, Spring 2000, Corporate Watch. See: www.corporatewatch.org.uk/magazine/issue10/cw10f4.html. Viewed: 27.01.04
8. ^'Corruption in Southern Africa - Sources and Solutions,' Lori Pottinger, 10.07.00. See: www.irn.org/programs/lesotho/index.asp?id=/programs/lesotho/chatham.01.html. Viewed: 26.01.04
9. ^'Corruption in Southern Africa - Sources and Solutions,' Lori Pottinger, 10.07.00. See: www.irn.org/programs/lesotho/index.asp?id=/programs/lesotho/chatham.01.html. Viewed: 26.01.04
10. ^'Corruption in Southern Africa - Sources and Solutions,' Lori Pottinger, 10.07.00. See: www.irn.org/programs/lesotho/index.asp?id=/programs/lesotho/chatham.01.html. Viewed: 26.01.04
11. ^'Balfour Beatty Rail fined £150,000 after boy electrocuted,' Contract Journal, 11.02.04. See: www.contractjournal.com/home/Default.asp?type=2&liArticleID=40599&liSectionID=2&liDF=1. Viewed: 23.02.04