Morgan Stanley JV Said to Review Contracts in Barratt ProbeBy
A venture between Barratt Developments Plc and a real estate fund managed by Morgan Stanley is reviewing contracts for a 770-home project in east London amid a fraud probe at the homebuilder, according to a person familiar with the matter.
The venture is exploring whether any Barratt employees were paid bribes to award subcontracts to some suppliers, the person said, asking not to be identified because the matter is private. The audit is part of an ongoing investigation by the homebuilder into potential misconduct in the awarding of supply contracts in London, another person said. The wider probe was referred to the police, and led to the arrests of two members of staff in October.
It would be inappropriate to comment while the Metropolitan Police and internal investigations are ongoing, a spokesman for Coalville, England-based Barratt said by email. A spokesman for Morgan Stanley declined to comment.
The venture was formed in 2013 to build a 275 million pound ($337 million) housing project on the River Thames in London’s Greenwich district. Barratt provided construction, development, accounting and sales services to the venture, according to a July 2013 statement.
Barratt suspended Alastair Baird, its regional managing director for London, in October, when he and another former member of staff were arrested. The company subsequently suspended at least three more employees within its London business, Bloomberg News reported in January.
In total four people have been arrested and let out on bail until April as part of an investigation into a public limited company, a police spokesman said by email in January. All four arrests are connected to the Barratt case, a person familiar with the matter said at the time. The police didn’t say whether the detentions involved employees at the homebuilder.
Since the initial findings of Barratt’s internal investigation, the company has introduced new procurement controls, according to a statement in October. The company’s London business has different buying practices from the wider group.
— With assistance by Patrick Gower