Balfour Beatty suspends managers in gas contract investigation

LONDON Thu May 8, 2014 8:28am EDT

LONDON May 8 (Reuters) - British infrastructure company Balfour Beatty has suspended three managers as part of an ongoing investigation into alleged "inappropriate activity" on a 480-million-pound contract awarded by National Grid, the companies said.

Balfour Beatty is carrying out gas pipeline replacement work in the West Midlands and the North East on behalf of the British energy network operator.

A Balfour Beatty spokesman said the company had suspended the three managers working on the West Midlands project in relation to an ongoing investigation.

A spokesman for National Grid said it was working with Balfour Beatty on the investigation into "inappropriate activity around our mains replacement work in the West Midlands".

British labour union GMB, which represents workers in the energy industry, said it had received reports of a major investigation into alleged corruption, fraud and bullying.

"We understand that gas mains replacement work, running into tens of millions of pounds in value, may have been tainted by allegations of corrupt practice," said GMB National Secretary Gary Smith.

Balfour Beatty said it was investigating a small group of individuals involved with sub-contracting but could not comment any further while the investigation continues.

National Grid declined to comment further on the investigation.

The allegations are another blow to Balfour Beatty which issued a profit warning on Tuesday and announced the departure of its Chief Executive Andrew McNaughton.

National Grid has previously come under fire for breaching its licence terms when it carried out gas pipeline replacement work between 2005 and 2008.

In 2011, energy regulator Ofgem fined National Grid 8 million pounds for providing inaccurate information on gas mains replacement work.

"National Grid requires the highest standard of ethical conduct from all those working on our behalf," said the spokesman.

A spokeswoman for Ofgem said on Thursday the regulator was not involved in the investigation. (Reporting by Karolin Schaps and Li-mei Hoang; editing by Tom Pfeiffer)