Written evidence submitted to the Blacklisting in Employment inquiry by Balfour Beatty

SCOTTISH AFFAIRS SELECT COMMITTEE - BALFOUR BEATTY'S ADDITIONAL INFORMATION

At the recent hearing of the Scottish Affairs Select Committee on 16 July 2014, I explained that there were several points which I would need to check before writing to the Committee with further information. This letter contains that further information.

The Economic League

You asked me to clarify the involvement of Balfour Beatty with the Economic League. As you know, the Economic League ceased to exist over twenty years ago. Given the passage of time, Balfour Beatty has not found any documentary evidence of involvement with the Economic League. However, we have had conversations with some former employees of Balfour Beatty whose recollection is that Balfour Beatty was involved with the Services Group of the Economic League.

Ceasing use of the Consulting Association

You asked me to confirm in writing specifically whether Balfour Beatty had ceased its involvement with the Consulting Association before or after the ICO's raid in February 2009. The position in relation to each Balfour Beatty operating company is as follows:

(a) Haden Young Limited ceased involvement with the Consulting Association in August 2008 (although it continued to pay its membership subscription for the last quarter of 2008) ;

(b) Balfour Beatty Civil Engineering Limited ceased involvement with the Consulting Association in December 2008;

(c) Balfour Beatty Construction Scottish and Southern Limited ceased involvement with the Consulting Association in December 2008;

(d) Balfour Beatty Construction Northern Limited ceased involvement with the Consulting Association in December 2008;

(e) Balfour Kilpatrick Limited ceased involvement with the Consulting Association immediately following the ICO's raid in February 2009;

(f) Balfour Beatty Infrastructure Services Limited ceased involvement with the Consulting Association immediately following the ICO's raid in February 2009.

Internal review

You asked me to review Balfour Beatty's position on whether or not we can provide you with a copy of our internal review of our involvement with the Consulting Association.

Whilst we did review our historic involvement with the Consulting Association following the ICO's raid in February 2009, I am afraid that we are not prepared to make any documents created as a part of that review available to the Committee as I am advised that they address matters currently before the Courts and are legally privileged, and to show them to you would waive that privilege as against anyone else, including the workers who have commenced court proceedings.

I am, however, pleased to confirm that following our internal review in 2009 Balfour Beatty has taken resolute steps to ensure that "blacklisting" is never again endorsed or used as a practice within our organisation and by organisations we employ:

• We have introduced a Group-wide Data Protection Policy and a revised ethical Code of Conduct, both introduced in 2009.

• We appointed data protection officers across our business in 2009. These data protection officers, along with other relevant personnel have received training on data protection best practice which has been recently updated.

• We now have an Ethics and Compliance function, whose role is to help embed a culture of ethics and integrity across the whole of Balfour Beatty.

• We operate a free, secure, confidential ethics helpline to enable individuals to raise concerns about illegal, unethical or other improper conduct (on an anonymous basis if preferred). Allegations or incidents of non-compliance with our Code of Conduct are properly investigated and, where misconduct is established, appropriate sanctions or other remedial actions are implemented.

• We have conducted a data protection audit to identify and rectify areas of weakness in our processing of personal data.

• We have a new centralised system for referencing / vetting permanent employees, carried out by a third party provider. We believe this system represents best practice. No checks I vetting of recruits / employees outside of this system is permitted.

• We are rolling out a new centralised system of recruitment of agency workers.

• We have developed a Suppliers Code of Conduct, reflecting our commitment to working only with business partners whose standards are consistent with our own, and who respect our values. This includes joint venture and alliance partners, customers, sub-contractors, consultants and all suppliers of goods and services.

In the future, we intend to sign up to the voluntary code of conduct that is being developed by the Chartered Institute of Personnel and Development to underpin full transparency in the pre employment vetting processes.

Employee Survey

I undertook to provide you with further details of a survey we are conducting as one of the current measures taken to ensure blacklisting does not take place within our business or on the projects we work on.

That survey is of all employees within our business who have or could have responsibility for bringing in labour. Approximately 1,100 employees have received a questionnaire from me targeted at ensuring blacklisting is not taking place within our business, either directly, or through our use of subcontractors, suppliers or recruiters. In sending out the questionnaire, I have taken the opportunity reiterate the message that blacklisting has no place in our business and have asked all employees who complete the questionnaire to confirm that they have read and understood our Code of Conduct, and in particular the prohibitions on blacklisting. To date we have had responses from over three quarters of the individuals surveyed and no concerns have been raised that blacklisting may be happening within our business. We are following up with the balance to ensure a full response rate, and will work hard to ensure we do not relax this and similar measures that protect our workforce.

A similar questionnaire has been sent to the third party that manages our new centralised system of engagement of agency workers. As this new system is rolled out, every agency we use is asked to complete this questionnaire and sign up to our Supplier Code of Conduct. Agencies which do not satisfactorily complete the Questionnaire or sign up to our new contractual arrangements will not be employed to engage labour on our sites.

I enclose copies of the questionnaires.

Documentation relating to meetings of the Consulting Association

During the committee appearance you also asked me to confirm if Balfour Beatty had any minutes, agendas or other documentation related to meetings of the Consulting Association. We do have some documentation which was found as a result of our internal review. These documents are likely to form part of the ongoing litigation and therefore to be the subject of detailed legal and factual submissions in the litigation. In addition, the documents contain some information about individuals and it may not be in the interests of those individuals for the documents to be published outside of the court process. In those circumstances we would welcome the Committee's guidance on whether the documents could and should be provided to the Committee and, if so, how these difficulties are best overcome.

Reference checks

You asked me to confirm how many individuals were denied employment after having their files checked with the Consulting Association.

We do not have records of how many individuals whose records were checked were not subsequently offered employment by Balfour Beatty companies because of information received from the Consulting Association. We have some data relating to individuals who applied for employment with one operating company (Balfour Kilpatrick Limited) over a 4 year period (November 2004 to August 2008), and who were checked with the Consulting Association.

However, there is no definitive way of knowing from that data how many individuals might have been refused employment as a result of a check made with the Consulting Association.

You also asked me to confirm whether we were checking both potential employees and existing employees. We have not seen any evidence to suggest we were checking existing employees.

You also asked me to confirm whether we were checking workers employed by agencies and

sub-contractors as well as directly employed staff. Our understanding is that the approach taken to checking workers varied between our operating companies but we do not have records of exactly who was checked by each operating company. We do know that Balfour Kilpatrick checked direct employees and agency workers, as well as sub-contractor workers on some of its projects.

Provision of information to the Consulting Association

You asked me to confirm what information Balfour Beatty provided to the Consulting Association. At the hearing, you said that the files the Committee had seen showed that Balfour Beatty supplied information to the Consulting Association on more than 450 occasions, and refused to employ workers on 350 occasions. We do not recognise these figures.

From speaking to former employees, the information we have is that one of Balfour Beatty's operating companies, Balfour Kilpatrick Limited, provided the names of individuals to the Consulting Association on two occasions, in 1999 and 2000, following disputes at Balfour Beatty's Royal Opera House and Pfizer projects. From this, our understanding is that probably some two dozen-odd names were provided in total. I understand that TCA records suggest a higher number of names were provided by Balfour Beatty companies, however I am not able to verify this from our internal records.

Usage clarification

If I may, I would also like to take this opportunity to clarify the numbers referred to by the Committee in relation to Balfour Beatty's usage of the Consulting Association's reference checking service. In the hearing, you explained that the briefing you had was that Balfour Beatty paid

£110,000 for using the Consulting Association service, and that this equated to 75,000 name checks. Practices appeared to vary between operating companies, apparently reflecting local operating company policy on usage of the Consulting Association.

I assume that the number £110,000 was taken from the documentary evidence given to the Committee by Ian Kerr in 2012 (Mr Kerr's exact total for Balfour Beatty's spend was £111,902.29). However, the figures on the table provided by Mr Kerr setting out each company's spend included both membership fees and reference check fees. Our understanding is that the membership fee for Balfour Beatty was approximately £3,500 per year. As Mr Kerr's table covers a thirteen year period, that amounts to approximately £45,500 of the £111,902.29. Accordingly, it is more accurate to say that Balfour Beatty spent approximately £66,400 on reference checks over that period. Our understanding is that the reference checks cost between £1.50 and £3 per check.

Therefore, taking an average of £2 a reference check over the period, Balfour Beatty undertook approximately 33,200 reference checks across the thirteen year period. Whilst equally unacceptable, this appears to be close r to the facts.

Balfour Beatty employees

You asked me to confirm whether Trevor Watcham was an employee of Balfour Beatty, what role he had in the company, and to whom he reported.

I can confirm that Trevor Watcham was an employee of Balfour Beatty between 1981 and 2010. During that period he worked in several different roles in different operating companies, although his primary roles were that of Labour Manager and Industrial Relations Manager. During this period he reported to various operating company HR or Personnel Directors. He did not report to the board.

In addition, you asked me to confirm whether Elaine Gallagher, Paul Raby, Armar Johnston,

Anne Cownie, Vince James and Carolyn Williams were all employees of Balfour Beatty companies and acted as main contacts for the Consulting Association, and also whether Gerry Harvey was the main contact for the Consulting Association at the time of its closure in 2009. I can confirm the following:

(a) Elaine Gallagher was an employee. She reported to various individuals during the course of her employment, including Armar Johnston and Gerry Harvey. She was not the main contact for the Consulting Association. Her role in relation to the Consulting Association was administrative and she did not play any role in decisions taken as to whether an individual should be employed or not.

(b) Paul Raby was, and is, an employee. He was not a main contact of the Consulting Association. Indeed, he never had any contact at any time with Ian Kerr or any other individual at the Consulting Association.

(c) Armar Johnston was an employee. At one stage, he was the main contact for the Consulting Association for Balfour Kilpatrick Limited.

(d) Ann Cownie was, and is, an employee. At certain points she was the main contact for the Consulting Association for Balfour Beatty Civil Engineering Limited.

(e) Vince James was an employee. At certain points he was a contact for the Consulting Association for Balfour Beatty Infrastructure Services Limited, although we cannot be certain if he was ever the main contact for Infrastructure Services.

(f) Carolyn Williams was an employee. At one stage she was the main contact for the Consulting Association for Haden Young Limited.

(g) Gerry Harvey was, and is, an employee. He was the main contact for the Consulting Association for Balfour Kilpatrick Limited at the time the Consulting Association closed in 2009.

I hope that the above is helpful. Please be assured we will continue to work hard to ensure we run a fair business with transparent policies and consistently high standards of professional and

ethical behaviour.

Yours sincerely,

Code of Conduct Communication

Construction Services UK

Code of Conduct • 02 December 2013

Ensuring full understanding of Balfour Beatty's Code of Conduct

December Dear Colleague,

Many of you will be aware of recent political and press interest in the construction industry following it coming to light that, up to 2009, various construction companies, (including certain Balfour Beatty companies) used the services of an organisation called the Consulting Association to carry out pre employment checks on job applicants.

We have acknowledged that Balfour Beatty should not have used the services of the Consulting Association, and have apologised to the workers and families who may have been adversely affected by that use.

Since 2009, our company Code of Conduct has prohibited the checking of references for job applicants without first obtaining their consent as well as the use or support of databases of "blacklisted" people and the supply of information to such databases. For Balfour Beatty this is a historic issue and to be very clear, there is no place for the use of such practices within our organisation. We are an ethical employer, committed to meeting the highest standards of transparency and integrity.

We need your help, support and commitment to ensure this kind of activity will not take place in our business (whether directly or through our use of subcontractors, suppliers or recruitment agencies) and in turn we need to support you by ensuring that you are fully aware of, understand and are adhering to, the principles set out in our Code of Conduct, and in particular the prohibitions on inappropriate reference checks and the use or support of databases of "blacklisted" people.

To ensure your full and complete understanding and to demonstrate full compliance with our Code of Conduct across our business, please take some time to read and complete this linked

questionnaire and return it either by email to codeofconduct@balfourbeatty.com or alternatively, by post to Sonia Lopez, Legal Administrator, 130 Wilton Road, London, SW1V 1LQ no later than Monday 16 December 2013.

In completing the questionnaire, please consider carefully whether you are aware of any activity which might potentially amount to "blacklisting" in its widest sense. In particular, please tell us of any lists which might make reference to an individual's membership of a trade union or other involvement with a trade union (including any role as a trade union representative or health & safety representative), their raising of health & safety concerns, their involvement in industrial action, their membership of a political party, (and in all cases whether such membership/activity was past or present). These would potentially be of concern.

Therefore I encourage you to highlight any activity which might raise such a cause for concern, even if any breach of our Code of Conduct has been inadvertent, or seemingly well-intentioned. Any concerns you raise within this questionnaire will be followed up with you on a confidential basis. You will not be adversely affected because you have done the right thing in declaring concern.

I would also like to take this opportunity to remind you of our confidential ethics helpline and encourage you to use this if you have any concern about something within our business that does not feel right. You can do this by calling 0800 028 0822.

Code of Conduct Questionnaire

Please respond to the below questions as fully as you can and ensure that this is done on a confidential basis. Completed forms must be sent either by email to codeofconduct@balfourbeatty.com or alternatively, by post to Sonia Lopez, Legal Administrator, 130 Wilton Road, London, SWlV LQ.

This should be submitted no later than Monday 16 December 2013.

1. Have you read and understood the Balfour Beatty Group Code of Conduct and do you feel comfortable that you fully understand how to adhere to the principles set out in our Code of Conduct, and in particular the prohibitions on inappropriate reference checks and the use or support of databases of "blacklisted"* people?

2. Are you aware of any recent and/or current checks being carried out on staff (including agency workers) and/or job applicants without their prior knowledge either by Balfour Beatty or any organisation on behalf of Balfour Beatty (including by any recruitment agency)?

3. Are you aware of any recent and/or current subcontractor of Balfour Beatty carrying out checks on staff and/or job applicants for Balfour Beatty projects without their prior knowledge?

4. Are you aware of any recent and/or current use or support of data bases of "blacklisted" * people or the supply of information to such data bases within Balfour Beatty? If the answer is 'yes' or you a re unsure, please provide details.

5. Are you aware of any recent and/or current use or support of data bases of "blacklisted"* people or the supply of information to such data bases by any subcontractor of Balfour Beatty? If the answer is 'yes' or you are unsure, please provide details.

6. Are you aware of any recent and/or current use or support of databases of “blacklisted" * people or the supply of information to such data bases by any recruitment agency used by Balfour Beatty? If the answer is 'yes' or you are unsure, please provide details.

7. Are you aware of an y recent and/or current sharing of names of workers by Balfour Beatty (whether with other employers, subcontractors, recruitment agencies or otherwise) in order to deny those workers access to f utu re employment? If the answer is 'yes' or you are unsure, p l ease provide details.

* For these purposes please consider anything which might potentially amount to a "blacklist" in its widest sense. Consider any lists which might make reference to an individual’s membership of a trade union or other involvement with a trade union (including any role as a trade union representative or health & safety representative), their raising of health & safety concerns, their involvement in industrial action, their membership of a political part y, (and in all cases whether such membership/activity was past or present).

To the best of my knowledge and belief, the above information is true:

Signed : .......................................................... .............................

Name:

Position: .......................................................................................

Date:

Code of Conduct Questionnaire

Please respond to the below questions as fully as you can and ensure that this is done on a confidential basis. Completed forms must be sent by email to balfourbeattycontractresourcecentre@balfourbeatty.com

2. Are you aware of any recent and/or current checks being carried out on your staff (including agency workers and/or job applicants without their prior knowledge either by Balfour Beatty or any organisation on behalf of Balfour Beatty (including your recruitment agency)?

3. Are you aware of any recent and/or current subcontractor of Balfour Beatty carrying out checks on staff and/or job applicants for Balfour Beatty projects without their prior knowledge?

4. Are you aware of any recent and/or current use or support of databases of "blacklisted" * people or the supply of information to such databases within your recruitment company or Balfour Beatty? If the answer is 'yes' or you are unsure, please provide details.

5. Are you aware of any recent and/or current use or support of databases of "blacklisted" * people or the supply of information to such databases by your recruitment company or any subcontractor of Balfour Beatty? If the answer is 'yes' or you are unsure, please provide details.

6. Are you aware of any recent and/or current use or support of databases of "blacklisted"* people or the supply of information to such databases by your recruitment agency used by Balfour Beatty? If the answer is 'yes' or you are unsure, please provide details.

7. Are you aware of any recent and/or current sharing of names of workers by Balfour Beatty (whether with other employers, subcontractors, recruitment agencies or otherwise) in order to deny those workers access to future employment? If the answer is 'yes' or you are unsure, please provide details.

* For these purposes please consider anything which might potentially amount to a "blacklist" in its widest sense. Consider any lists which might make reference to an individual's membership of a trade union or other involvement with a trade union (including any role as a trade union representative or health & safety representative), their raising of health & safety concerns, their involvement in industrial

action, their membership of a political party, (and in all cases whether such membership/activity was past or present).

To the best of my knowledge and belief, the above information is true:

Signed: .......................................................................................

Name:

Position : .......................................................................................

Date:

September 2014