Nigel McArthur FCIOB has won a payout of £137,000 from Balfour Beatty in settlement of a compensation claim for constructive dismissal after he “blew the whistle” over alleged irregularities in a bid process.
McArthur, from Exmouth in Devon, was a regional pre-construction manager at Balfour Beatty. According to his LinkedIn profile, this was after joining the company in 2005 after spells at Rok and Connaught.
Balfour Beatty tendered in 2014 for an £18.5m project at Callaghan Square in Cardiff, funded by the Welsh Government. But McArthur became aware that his employer had not submitted the true prices from subcontractors – and therefore understated its own profit margin.
According to a statement from McArthur’s legal firm, Stephens Scown, Balfour Beatty informed the Welsh Government that its profits would be 3.3% of the total cost of the job.
The statement says: “By not submitting the lowest quotes received from subcontractors… they would be making an extra £768,000. By hiding their true costs, they would in reality be able to make 7.34% in profits, which they did not declare.”
"It is not enough for companies simply to have nice-looking whistleblowing policies in place. They need to ensure that the policies are actually followed and that their employees and management at all levels of the business understand them, why they are necessary and adhere to the spirit of them."
Terry Falcão, employment law partner, Stephens Scown
McArthur apparently established that Capita, appointed by the Welsh authorities as cost consultant for the project, had not questioned the submitted figures.
According to the statement he then “raised concerns internally through the company’s whistleblowing 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”.
McArthur then resigned in February 2015.
Balfour Beatty admitted the claim in November 2015 before the public hearing was due to start at Bristol Employment Tribunal, and the compensation judgement of £137,000 was decided by the court just before Christmas.
Responding, Balfour Beatty said: “We accept that we failed to properly support our employee following concerns he raised, which resulted in him feeling it was necessary to resign.
“We will use the lessons learnt from this experience to provide better support to our employees in the future.”
But the company said it did not “behave illegally or fraudulently” in relation to the project, and that once senior management were aware of the facts, it “provided full disclosure to the Welsh Assembly who were satisfied with our approach”.
Commenting on the case, Terry Falcão, employment law partner at Stephens Scown, 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 his own pocket upfront. I am delighted that he has now received this settlement and been entirely vindicated.
“It is not enough for companies simply to have nice-looking whistleblowing policies in place. They need to ensure that the policies are actually followed and that their employees and management at all levels of the business understand them, why they are necessary and adhere to the spirit of them. Otherwise the policies are not worth the paper they are written on.”
Mr.McArthur will no doubt pay (ultimately) a much higher price than the amount of this settlement for the actions he very properly took.
There has to be considerable doubt that he will find himself ’employable’ again, particularly by any commercial entity, simply because profit (at any ‘cost’?) is a far more powerful driving force than ethics, despite what organisations officially say to deny that fact of life for a public image.
M.Hawkyard
I think you will find more and more relationships these days are built on trust, especially contracts agreed through negotiation.
Companies have a reputation to lose should they be caught out and would appreciate someone like Nigel working for them to ensure that the company is acting with integrity.
This case is a saddening, and disappointing condemnation of an international construction and engineering company. Unfortunately the construction industry in the UK is a dinosaur, and archaic in behaviour as highlighted by this employment case.
I have no doubts that the poor gentleman will be black listed(yes that too is illegal) on some clandestine spreadsheet, that’s made available to those of influence.
It showed considerable fortitude of character to do as this gentleman did, and I’m doubtful whether the majority would have done the same.
The Darwin Theory does not apply here!
What happened to the manager, manager’s manager & commercial director?
And what was the significance of “wrong” prices in the bid? Why was this actually significant, since pre-award prices are somewhat a guess anyway? If the eventual contract is”cost-plus”, then what matters are actual prices paid, and if it is fixed price, what matters is the total bid price, where BB’s price is compared to the competition.
Dishonesty is quite common in the industry. The thing is how much impact the malpractice has on the project, or is it a widespread phenomenon in tendering. This triggers my memory of ring tendering. Third party audit may be a good option to tackle the issue. Independent assessment also protect the interests of the whistleblower. However the audit system in this case need to be reviewed. Thanks to this senior member to demonstrate high level of ethics prompted by our institute, to the whole society beyond construction industry.
I am sure that he will be rewarded in the long run. But not sure if in a contract, the project in charge should have MCIOB or similar with full professional indemnity?