Lend Lease to investigate unit’s ‘discrepancies’

The Australian developer has launched an investigation into reporting discrepancies at Abigroup, a construction firm it inherited when it acquired Valemus from Bilfinger Berger early last year. A number of executives have been asked to step aside during the investigation.

Lend Lease, the Australian developer, has announced that it has identified “certain discrepancies and issues” in relation to the reporting and recognition of profits and losses at two projects within Abigroup’s Australian operations.

Lend Lease inherited Abigroup – an engineering, infrastructure construction and services firm – as part of its A$1.06 billion (€802 million; $1.05 billion) acquisition of Valemus, an Australian construction business, from German developer Bilfinger Berger in December 2010.

Lend Lease said the discrepancies involve “the potential under-reporting of the anticipated profit on one project and the potential under-reporting of the anticipated loss on another project”. The first project referred to is the D2G joint venture for the upgrade of the Ipswich motorway in Queensland and the second is the Peninsula Link public-private partnership (PPP) in Victoria.

The firm said “a number of executives responsible for oversight and management of Abigroup will stand aside during the investigation” and that, until further notice, responsibility for the operational and financial oversight of Abigroup had passed to David Saxelby, Lend Lease’s chief operating officer for Australia, and Andrew Muller, Lend Lease’s group financial controller.

Lend Lease claimed there was “no reason to believe that these matters would have a net material impact on the group’s FY2012 financial position or results, or the group’s outlook”.

The firm’s group chief executive officer and managing director, Steve McCann, said: “We take seriously any potential reporting and compliance issues, and are committed to resolving this matter fully and as quickly as possible.”
Despite the reassuring words, ASX-listed Lend Lease saw its shares fall to A$7.88 at close on Monday, down more than 6.6 percent on the prior trading day.