Property and construction giant Lend Lease has been rocked by scandal after the company was forced to launch an investigation into the accounting treatment of projects in Queensland and Victoria operated by one of its subsidiary companies.
In a statement released yesterday, the company says it has launched an internal investigation after senior management and the board identified discrepancies regarding the financial reporting and recognition of profits and losses on two projects within its Abigroup operations in Australia.
The company says that based on the information currently available, it appears that the group’s full share of available profits from the D2G joint venture for an upgrade of the Ipswich Motorway in Queensland may have been understated in last year’s financial result.
Likewise, Lend Lease says that costs on the Peninsula Link Project in Victoria may not have been properly reported and thus the extent of the anticipated loss on that project may not have been adequately recognised.
Though the board stresses these matters are still under review, it says it does not believe the latest saga will have any material impact on the group’s financial position, results for the last financial year or its outlook.
The company says a number of executives responsible for the management and oversight of Abigroup have been stood aside on full pay pending the investigation.
“We take seriously any potential reporting and compliance issues, and are committed to resolving this matter fully and as quickly as possible” Lend Lease Chief Executive Officer and Managing Director Steve McCann says.
Abigroup, which is involved in engineering, infrastructure, construction, building and infrastructure services, was one of several businesses inherited by Lend Lease when it bought construction and engineering firm Valemus off its then German parent Bilfinger Berger in March last year.
Yesterday’s news, which prompted a 6 percent slide in the company’s shares and calls for corporate governance changes within the group, comes on top of Lend Lease’s admission in April that it cheated US clients with regard to overbilling issues over a period spanning more than a decade.