Austin Smith Lord's designs for an International Arts & Culture sector in Abu Dhabi
’The partners looked after themselves and shafted the rest of us’, say former employees
Former staff at Austin-Smith Lord have broken their silence about how they were treated by the practice after it was forced to cut jobs because it is owed millions on a contract in Abu Dhabi.
Axed staff are missing at least £850,000 after the firm was forced to get rid of 70 people last month to prevent it from going bust. According to a creditors’ report, a number of laid-off staff are owed £20,000 or more with most resigned to seeing just a fraction of what they are due.
BD can reveal that outstanding payments include unpaid wages, missing pension contributions, holiday pay and redundancy pay.
Austin-Smith Lord was plunged into crisis after admitting it was owed £11.3 million by its client, the Abu Dhabi Authority for Culture & Heritage (Adach), for work on a job that began in 2008 as a small refurbishment contract for a fort.
The firm has been paid around half of what it says it is owed but in a statement this week Adach, which is part of the oil- and gas-rich emirate’s government, denied it owed Austin-Smith Lord any more: “There was a contractual obligation to Austin-Smith Lord that has been paid in full,” it said.
Staff are angry the practice allowed a single client to run up such a debt. “Living in la-la land is being kind to them,” said one. “Either they knew this was coming or they really thought they were going to be paid, which is incredible.”
One former employee, who is owed at least £10,000, said: “The partners looked after themselves and shafted the rest of us. We didn’t even get a consultation. We were just dumped on the spot.”
Staff were asked to take reduced salary payments in July when partner Neil Musgrove first made them aware of payment problems from Adach by email.
But, in an email in September, staff were told the director general of Adach, Mohammed Khalaf Al-Mazrouei, had given Austin-Smith Lord partners Neil Chapman and Jennifer Dixon “personal assurances… to making payment in full”.
The company was saved from going under when it was put into a company voluntary agreement (CVA) earlier this month.
Chapman said it was “absolutely understandable” that ex-staff were aggrieved but added: “I think the best chance of recovery is the CVA.”
At the start of the year Austin-Smith Lord had around 180 staff but problems in the UK and in Abu Dhabi mean it now employs just 65 people — a drop of two thirds.
The job in Abu Dhabi was suspended in August, and director Neil Chapman said the firm had been working on a plan to reduce its exposure to the contract prior to this.
“We weren’t entirely blind to the risks and we were doing everything we could to reduce them,” he said. The firm would help to re-start the job, he said, but admitted: “I don’t think we’d go back in at the same scale as before.”
He defended the decision to keep on working for Adach despite its mounting debt.
“It doesn’t take long to run up. I do think we’ll get the money back,” he said.
According to a series of internal emails, seen by BD, the crisis for the majority of Austin-Smith Lord’s staff began on July 26.
On that day partner Neil Musgrove emailed staff to let them know that it was “highly likely” they would not receive their full monthly salary in their upcoming pay packets.
“Our client has recently experienced some issues in drawing down funds,” he explained. “This appears to be an across the board review and is not specific to our project.”
But despite this, Musgrove admitted it “had not received significant sums of money that are properly due and payable within the terms of our contract…We will of course pay the balance of salaries as soon as funds are made available from Abu Dhabi.”
Just over a week later partner Jennifer Dixon told staff “we have reached a proposal for payment of salaries” which was detailed in a further email to staff in the middle of August. In it, another partner Ian Brebner spelt out a schedule of weekly payments which would mean employees’ salaries paid out over four weeks rather than in one go. For example, September’s payments were scheduled for 45% on September 2 followed by three further payments of 25%, 10% and a further 10%.
He told staff: “If the cash flow schedule can be followed, it would make all outstanding salary amounts which are due paid out by the end of the first week in October.”
At the end of August, Dixon reassured staff “that everything is going generally as expected with no deviations from the plan”. At the beginning of the following month she told staff it had hired Martin Bandel, an accountant and tax specialist, “to give us temporary support in this area and assist with the new accounting system”.
By the middle of September Brebner raised hopes payment from Adach was on its way saying Austin-Smith Lord had met the director general of Adach who had assured the firm it was committed “to making payment in full”.
But on October 26, Dixon issued formal notification of a redundancy consultation period. Two weeks later she told 47 staff that “because of the continued failure of Adach to meet its obligations” the firm “have no choice but to make you redundant with immediate effect”. She added: “It is with great regret and considerable dismay that we find ourselves in this position.”
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