QBCC suspends licence of billion-dollar builder Laing O’Rourke for failing financial requirements

A TOP-tier construction giant with more than a billion dollars turnover on major projects across Australia has been suspended from working in Queensland after it failed to meet the state’s financial requirements.

NSW Minister for Transport and Infrastructure Andrew Constance, Sydney Trains Acting Program Director Tom Gellibrand and Laing O'Rourke Managing Director Cathal O'Rourke tour the Sydney Yard Access Bridge after the company was awarded a $955 million contract to transform Central Station.

A TOP-tier construction giant with more than a billion dollars turnover on major projects across Australia has been suspended from working in Queensland after it failed to meet the state’s financial requirements.

Laing O’Rourke holds the state’s highest possible class of licence, allowing it to work on projects worth more than $240 million, but it was suspended after an 11-month investigation by the Queensland Building and Construction Commission.

The company said it planned an urgent appeal of the decision.

The QBCC confirmed last month it was investigating the financial position of the company, whose projects have included the $130 million Griffith University Health Centre, Brisbane Airport expansion, Brisbane Convention and Exhibition Centre and the $955 million redevelopment of Sydney’s Central Station.

QBCC Commissioner Brett Bassett said the company’s Queensland licence was suspended after it provided written representation to a show cause notice issued by the QBCC on January 30.

“The company was given a show cause notice and provided updated information, however it failed to show how the company was operating within the law, and with allowable asset levels,” he said.

“Essentially, this means the company is operating outside its allowable annual revenue limit and this presents a serious risk of financial harm to the sector.

“The QBCC has issued a licence suspension, the next step in the regulatory process, effective

immediately, which means that work on the company’s Queensland sites must stop.”

Laing O'Rourke offices in Sydney.

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Laing O’Rourke Australia managing director Cathal O’Rourke said the company strongly disputed the decision.

“We are appealing this decision and seeking an urgent reassessment to have this matter resolved,” he said in a statement.

“The business maintains a strong financial position with independently audited accounts, which have been signed off in accordance with Australian accounting standards.

“Whilst a loss was published in June 2018 for the 2017/18 financial year, this related to an increased investment in tendering and a small number of legacy projects.

“The business has no outstanding creditors, a strong cash position and continues to operate profitably, holding building licences in all other jurisdictions across the country.”

Mr Bassett said the suspension came after an 11 month investigation.

“In April last year we began investigating the company. Prior to this investigation the last time the company was required to provide financial information to the QBCC was in March 2014.”

He said that this important decision serves as a reminder to every construction company working in Queensland.

“If you hold a QBCC licence and work in Queensland, you need to adhere to local laws, it’s that simple,” Mr Bassett said.

“While it has taken almost a year for this investigation to reach this point, I want to remind licensees that new laws which restore annual reporting requirements have now started.”

In January Laing O’Rourke was ordered to shell out hundreds of thousands of dollars in back pay to about 40 workers after the Fair Work Commission ruled they had been underpaid.

The UK-based company’s Australian arm booked a net loss of $26.6 million towards the group’s global net loss of £46.5 million ($84.6 million) last financial year.

In its last annual report it said it had reduced its workforce in Australia from 3262 in 2017 to 1997 people in 2018.

It said its FY18 results had been hit by reduced revenue and increased tender costs along with legal and other costs over a terminated contract to construct cryogenic tanks at the Icthys LNG site near Darwin. Its losses on that contract as at June 30 were $73.3 million.