Whistleblower wins big payout after revealing fraud deal

PUBLISHED: 12:30 21 January 2016

Terry Falcão, employment law partner at Stephens Scown who represented Mr McArthur,

Terry Falcão, employment law partner at Stephens Scown who represented Mr McArthur,

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The UK’s largest construction contractor has paid out a six figure sum to a whistleblower from Exmouth who accused the firm of fraudulently ripping off taxpayers in a multi-million pound deal.

The Welsh Government awarded the £18.5 million contract to Balfour Beatty to build an office building in Cardiff as part of regeneration on a vacant site.

But whistleblower Nigel McArthur said the firm’s true sub-contract costs had been hidden from the Welsh Government.

Balfour Beatty told the Welsh Government its profits would be 3.3 per cent of the total cost of the job. But in fact it had not submitted the lowest quotes received from sub-contractors and would be making an extra £768,000. By hiding their true costs, the company stood to make 7.34 per cent in profits, which it did not declare.

Mr McArthur won an employment tribunal case against Balfour Beatty for unfair dismissal after he said he was hounded out by his bosses, once he made his protected disclosure.

He raised concerns internally through the company’s whistle blowing procedures to his line manager, his line manager’s manager, the company compliance officer and the commercial director who sits on the board – but was met by a mixture of bullying, denial and exclusion.

When it became apparent the company would not be correcting its disclosures about Cardiff Callaghan Square to the Welsh Government, Mr McArthur resigned in February 2015. He began a claim for constructive dismissal through the employment tribunal courts in Bristol.

Balfour Beatty finally admitted Mr McArthur’s claim in November 2015, just days before the public hearing was due to start and the compensation judgement of £137,000 was handed down by the court just before Christmas.

The tribunal heard Mr McArthur, from Exmouth, who was a regional pre-construction manager, ‘was told that he should not have investigated the costs or alternatively that he should not be concerned about it’.

Mr McArthur said he was later bullied in a ‘verbal confrontation’ by his line manager, even after two directors had expressed agreement with his concerns and ‘acknowledged that a fraud had been committed’.

Speaking about the scandal, Mr McArthur, a married dad-of-two, said: “This was the first time in my entire working career - and ten years at Balfour Beatty - that anything like this had ever occurred.

“It was never on my radar screen. That’s why I resigned. I was told by a senior figure that if these matters were ever made public those involved ‘would never work again’.

“I was bullied and harassed after I made this disclosure. It left me feeling anxious and I had sleepless nights.

“I only confided in my wife. But something illegal was going on and I stood my ground as my career went up in smoke.”

The 56-year-old, who has not worked since he quit the firm, said resigning from the company left him feeling ‘a sense of isolation and loneliness’.

Mr McArthur said he believed he had done the ‘right thing’.

He said: “They did not put it right and I was determined to expose it. Two weeks before the public hearing they admitted everything.”

Terry Falcão, employment law partner at Stephens Scown who represented Mr McArthur, said: “Nigel has shown immense integrity throughout this case and has had the courage of his convictions to stand up for the truth.

“He received no severance pay, has not been working for nearly a year now, and has had to meet considerable court and legal fees out of his own pocket upfront. I am delighted that he has now received this settlement and been entirely vindicated.”

A Balfour Beatty spokesman said: “Balfour Beatty admitted liability in this case. We regret that we failed to properly support our employee following concerns they raised, which resulted in them feeling it necessary to resign.

“As soon as senior management were aware of the facts regarding the Callaghan Square project, we provided full disclosure to the Welsh Assembly.

“The Welsh Assembly made a decision not to pursue the project for reasons of their own, completely unrelated to this matter.

“We fully accept and regret our high standards of ethical behaviour unintentionally fell short on this occasion and we have taken the appropriate action to help prevent such issues in the future.”

She said ‘no criminal offence’ had been committed and there had not been a failure ‘to comply with the law’.

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