Fraud investigated after builders go bust

Police are investigating allegations of fraud against a cluster of building companies paid millions of dollars by the State Government under the Commonwealth’s Building the Education Revolution program.

More than 50 angry building sub-contractors descended on State Parliament today complaining that program had left them millions of dollars out of pocket.

They argued that the Department of Building Management and Works was dishing out large contracts to WA builders under the Federal Government’s BER program.

Dozens of builders have gone bust without paying at least $45 million owed to their sub-contractors.

Finance Minister Simon O’Brien has acknowledged about $11 million of that money was paid to the builders by BMW.

He announced an inquiry into the shambles yesterday, but sub-contractors say their livelihoods are under threat and believe the Government is liable because they awarded contracts to builders without due diligence.

“BMW knew some of these builders were iffy, but they had to use them because if they didn’t spend the money the Federal Government would take it back,” an electrical sub-contractor, who didn’t want to be named, said.

“It’s now costing people their companies, their livelihoods, their homes.”

Opposition Leader Mark McGowan believes the total amount of money owed to sub-contractors in WA is about $100 million.

He said it has affected up to 1500 sub-contractors who worked on more than 700 school-related projects under the BER program.

“The money was provided by the Commonwealth to the State Government - $1.2 billion of free money – and all the Commonwealth said was get out there and improve schools around WA,” Mr McGowan said.

“The work was then outsourced from BMW to head contractors.”

Mr McGowan said that was enough for sub-contractors to believe there was security in doing the work.

Mr O’Brien conceded that a routine statutory declaration form the lead builders needed to sign to assure the Government it had paid all sub-contractors was flawed and would be changed.

“I am confident from all of my investigations that BMW has done nothing wrong in its management of the BER program of works,” he said.

He said when the first matter was raised two years ago the Government did investigate and take action.

“There were about 2,200 BER projects managed by BMW in WA and unfortunately there has been some difficulties experienced by some of the builders involved in some of those projects,” he said. ‘That is the nature of the environment in which we live.”

He said seven builders involved in the program were currently under investigation by police.

Mr O’Brien said it was the builders that went bust and not the State Government that owe the sub-contractors an apology.