FBI raids British firm’s offices

David Hencke Westminster
Guardian (U.K.)
June 22, 2000

One of Britain’s biggest civil engineering companies which has billions of pounds of contracts with Railtrack has been raided by the FBI in the US as part of a fraud inquiry into a Dollars 2.3bn (pounds 1.6bn) rail modernisation scheme in Boston.

Balfour Beatty – which also has a contract for the controversial Ilusi dam in Turkey and may face prosecution in Lesotho over alleged corruption payments over a dam project – was raided this month by 40 FBI agents.

The raid was on the orders of the office of the inspector general – the US equivalent of the national audit office. It follows allegations of possible fraud over the doubling of the cost of the project – including an increase in payments to Balfour Beatty from Dollars 321m to Dollars 680m.

The raid on the company’s offices in Old Saybrook in Massachusetts took place at 7am on June 7. Some 40 officers took away computers and three containers of documents.

Some 150 staff had been employed at the offices -most of them British – but many had returned home as the project was nearing completion.

Witnesses said the raid was like a scene from a film set. “Cop cars were on the lawn, computers were coming out of there, FBI and police were looking in dumpsters for stuff,” said Alice Rand, a man ager at a neighbouring firm.

Since then 20 subpeonas have been served on the company and Massachusetts Electric, the firm’s joint venture partner. The investigation was authorised after reviewing the US rail firm Amtrak’s financial records, and a grand jury has been convened to review the case. It was prompted by the huge number of changes and costs added to the rail electrification programme.

The contract, part of a high speed rail electrification plan to link Boston with New York and Washington, was awarded by Amtrak in 1995.

A statement by the two companies said: “The contract value has increased significantly through an increase in scope, the addition of change orders and modifications. As allowed for under the contract, over the past four years, Amtrak, its auditors, external consultants and the office of the inspector general have reviewed a large number of the change orders and increases in the contract value. BBC-MEC has cooperated during this process and provided access to voluminous technical and accounting information.”

A Balfour Beatty spokesman in London said: “We are mystsified and disappointed that the FBI raided the company’s offices in this way without providing an explanation to exactly what they were looking for.”

He also disputed the amount Amtrak had been billed.

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