Australian construction giant Lend Lease has announced that its Stateside subsidiary, Bovis Lend Lease, is currently being investigated by the US Federal Attorney and New York District Attorney. It is understood that the investigations relate to alleged over-billing practices by Bovis at various New York construction projects, including the September 11 Memorial and the New York Mets baseball field.
In a statement to the Australian Securities Exchange this morning, Lend Lease noted that “the investigations arise from allegations made by a former employee. These include an allegation relating to billing practices in respect of foremen taken out of the union pool where excess costs incurred by Bovis Lend Lease for payments made to union foremen were billed to clients. The union pool is a source of labour available to contractors in New York which is used by Bovis Lend Lease.”
The New York Times noted that the investigation was spurred after a Bovis official wrote a letter to Lend Lease chairman, David Crawford. It is believed that whistleblower was a former federal agent named Brian Aryai, who had served a senior vice-president at Bovis. The New York Daily News reported that Aryai had previously been a customs agent for the United States Treasury, “working federal, state and foreign investigations into money laundering, fraud and other white-collar crimes.”
The Times noted that Bovis had previously been investigated by Manhattan district attorney, Robert Morgenthau, in relation to the deaths of two firefighters who were killed while fighting a blaze at the Deutsche Bank Building in New York City. Bovis was not prosecuted for the Deutsche Bank incident after agreeing to a non-prosecution agreement with the district attorney in which it “acknowledged failures in connection with the fire and agreed to certain reforms.”
Lend Lease, along with the broader property and construction sector, has struggled in recent times, with its share price slipping to $4.85 in February 2009, after trading as high as $21 in April 2007. Lend Lease scrip has recovered since then, to be trading at around $7.82 per share. Lend Lease shares rose 5 cents this morning despite the announcement, while the broader market was down by 12 points as Crikey ‘s deadline approached.