Balfour Beatty feels the heat

As he prepares the interim results, out next Wednesday, the FD will attempt to focus on the company’s ongoing activities while five of Balfour’s former engineers, and its rail maintenance subsidiary, face charges following the Hatfield crash in October 2000.

Rabin, however, will wrestle with issues currently high on an FDs’ agenda: corporate social responsibility, reputational risk and environmental reporting.

All three will have an added edge given the background of the rail crash and the trial.

On its website, Balfour states: ‘Sound risk management is critical to the delivery of shareholder value. The board takes ultimate responsibility for the group’s system of internal control and, in respect of the key activities of the group and the systems of internal control, reviews its effectiveness at regular intervals.’

Notice of the trial came last week when the company was told that its subsidiary, Balfour Beatty Rail Infrastructure Services, had been charged with gross negligence and involuntary manslaughter.

Two of its engineers at the time of the Hatfield crash, Nicholas Jeffries and Keith Lea, face manslaughter charges. Three others, Kenneth Hedley, Vernon Bullen and Keith Hughes, have been summoned under the Health and Safety at Work Act.

The company responded by saying it saw ‘no justification for manslaughter charges to be brought against our maintenance business or its former employees’.

The problem doesn’t seem like it is going to go away any time soon, as the trial has been set for September 2004.

The trial’s expense is something Rabin is likely to be making provisions for. According to industry sources, Balfour could face ‘unlimited fines’ if it is found guilty. Balfour, however, is understood to be insured for its defence costs.

Rabin, qualified with the ICAEW, and a barrister, will also fight to make sure shareholders’ eyes are focused on the company’s successes and its current business. He will want to demonstrate that recently won contracts will sustain the company.

Those contracts include a £300m schools project, a construction contract for BAA at Heathrow worth £180m and a possible renewal on Network Rail deals valued at about £90m per year.


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