Concrete Supplier to Pay $50M to Settle Boston Tunnel Case

Mon August 06, 2007 - Northeast Edition

By Rodrique Ngowi


BOSTON (AP) A Swiss-owned concrete supplier for Massachusetts’ massive, troubled commuter tunnel system has agreed to pay a $50 million settlement to end investigations into whether it supplied inferior concrete to the project, which was the site of a collapse that killed a woman, authorities announced July 27.

In addition to the fine, Aggregate Industries NE Inc. agreed to plead guilty to a criminal charge of conspiracy to defraud the federal government. Problems with the epoxy securing tons of ceiling panels, not faulty concrete, is believed to be the cause of the collapse.

Six employees of Aggregate, which supplied concrete used in tunnels and roadways in the so-called Big Dig project, were indicted last year on federal charges that they falsified records to hide the substandard quality of 5,000 truckloads of concrete.

The company itself was not charged, but prosecutors at the time said their investigations were continuing.

The indictment charged the men with recycling concrete that was too old or did not meet contract conditions and, in some cases, double-billing for the loads. The company was paid $105 million for 135,000 truckloads of concrete, and more than 5,700 did not meet specifications, according to the indictment.

The settlement announced July 27 will end the case against Aggregate, which has since been bought by Holcim Ltd., a concrete company based in Switzerland. The six employees still await trials on charges of conspiracy to defraud the government, making false statements and mail fraud.

Under the plea agreement, Aggregate will pay $42 million to settle the civil investigation and $8 million in criminal fines.

The company will pay $27 million for a fund that will be used to pay for future maintenance and repair costs on the project. The other $15 million will be divided by the state and federal government.

Under the agreement, Aggregate also will sell its largest asphalt plant in Boston and pay for an independent monitor who will track its compliance with state and federal laws and regulations. The company also agreed to provide up to $75 million in insurance coverage for potential structural maintenance costs and pay $500,000 to federal and state highway officials to conduct regular checks on locations where they suspect substandard concrete was poured.

The $75 million maintenance commitment will expire after 30 years. If inspections unearth new defects beyond that, Aggregate will be responsible for it, said the company’s attorney, Robert Popeo.

The agreement allows Aggregate to avoid debarment by the Federal Highway Administration, which will allow the company to continue to receive federal and state highway contracts.

“Today’s effort is an extremely good result,’’ state Attorney General Martha Coakley said.

The settlement was crafted over two years, and the government agreed to the settlement after the concrete met the specifications for strength, durability and porosity, Popeo said.

“But it wasn’t a walkaway, as you know, it came with a criminal penalty and it came with a substantial civil penalty,’’ Popeo said. “The company is glad to have it behind it.’’

The case was investigated by state and federal officials after a whistleblower who worked on the Big Dig filed a lawsuit in 2005.

Meanwhile, state and federal prosecutors were determining whether to file criminal charges against or settle with various Big Dig contractors in the tunnel ceiling collapse in July 2006 that killed 39-year-old Milena Del Valle.

Popeo said Aggregate did not supply concrete in that area and was not involved in the civil and criminal investigations.

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