One of the UK’s largest residential property development companies has found itself dragged further into a murky corruption scandal this week.
Barratt Developments suspended three members of staff as part of an ongoing investigation into alleged bribery and misconduct, with some executives reportedly adopting a bias when awarding contracts for new housing developments. A spokeswoman for London’s Metropolitan Police confirmed they were “launching an investigation regarding a number of allegations of corruption concerning a public limited company.”
The three staff members are understood to work in the housebuilder’s London operations division and follow hot on the heels of the high profile suspension of Regional Manging Director Alastair Baird, who was arrested with another former Barratt employee by the Metropolitan Police in October last year.
The two have since been released on bail.
The scandal was prompted by a Barratt internal audit last year which focused on “possible misconduct in the process for awarding and managing certain material and sub-contract supply contracts in London”. Following the audit, the firm hired an accounting firm to take a closer look at their tendering and procurement process for all London developments.
CEO David Thomas said, “We are committed to meeting the highest ethical standards in all aspects of our business…we will take whatever action is required to ensure our values and standards are upheld.”
It’s been a difficult few months for the developer; last week the firm’s Chief Financial Officer Neil Cooper announced he would be leaving the business by mutual consent one week after the housebuilder reported a nosedive in the number of London homes it had built.
CEO Thomas will stand in for Cooper until a full-time successor is found, however Cooper will enjoy his £450,000 salary in full for the next 12 months, unless he finds a position at another firm in the meantime.
Sources close to the situation said there had been a “lack of chemistry” between former CFO Cooper and other senior members of the team, with Barratt insisting his departure was not related to the company’s recent poor performance.
DMZ were shocked to see Barratt’s alleged bribery case unfold.
Employing 5,000 people and with a yearly revenue that goes into billions of pounds, Barratt Developments are a major player in the UK’s property market. What DealMakerz finds most surprising is that in the midst of a bribery scandal, senior level departures and disappointing building numbers, the giant developers share price has remained largely intact. After a three pronged shock most share prices would be in freefall, but Barratt has only taken a small hit from the news and the share price is still within a respectable long-term average range.
As an industry it is key for real estate in the UK to remain transparent and accessible. Not only is this necessary ethically, but also as a means of gaining sales – will customers of a new build home think they are paying over the odd’s due to a behind the scenes agreement that they weren’t party to?
As most DMZ’ers (agents, developers and investors) know, trust is an essential part of any deal. A breach of trust within a company or an industry is detrimental for everyone involved. The case continues…