The Spanish conglomerate that wants to lead DIA’s $1.8 billion terminal project faces flak over refugee camps and bribery case
Ferrovial isn’t a household name in Colorado, but the company could play a big role at Denver International Airport if the City Council approves a $1.8 billion terminal partnership contract Monday night.
The Madrid-based conglomerate, whose airport operator is leading a team of equity and construction partners in a proposed 34-year arrangement at DIA, has wide-ranging businesses and projects in 15 countries that, to some, make it a compelling partner. But it also has attracted controversy for two bankrupt toll road partnerships in the United States, accusations of bribery lodged against employees in Spain and its acquisition last year of an Australian company accused of violating the human rights of refugees in off-shore government detention centers.
Some of those issues briefly sparked questions among Denver’s council members a year ago, when DIA named the Ferrovial team the project’s preferred bidder.
But since the release of the partnership’s proposed contract this summer, the council has focused more on the details of the deal — which calls for a $650 million to $770 million renovation of the terminal, including the relocation and upgrading of security screening on the upper level. Ferrovial then would spend three decades managing expanded concession areas on the main floor, keeping 20 percent of the income generated by the new retail and food outlets.
But what is Ferrovial? Here is a look at company:
A global player in construction, toll roads
Ferrovial — taken from the Spanish word for “railroad” — began as a railroad company more than 60 years ago, but the company says it now has 96,000 employees worldwide. Ferrovial S.A. and its subsidiaries develop and operate toll roads; own and operate four U.K. airports — including London’s Heathrow — as the lead investor; provide a variety of infrastructure, waste and urban services; and design and build large public projects.
In May, Forbes ranked Ferrovial as the 769th largest public company in the world, with nearly $15 billion in market capitalization.
“The airports and the toll roads are the key generators of cash flow,” said Sonia Baldeira, a London-based global analyst for Bloomberg Intelligence who tracks Ferrovial. In an investor presentation last year, Ferrovial said dividends from its 25 percent stake in Heathrow and its first North American toll road, the now-67-mile suburban 407 route through the Toronto suburbs, together generated more than $350 million of its $1.3 billion in cash flow in 2015.
“They have great experience developing, executing construction and maintaining airports,” Baldeira said, crediting the company with keeping a tightly controlled balance sheet after some missteps on projects in the past.
Ferrovial’s Cintra has 27 road partnerships in 10 countries. In Colorado, Ferrovial and Cintra are seeking financing, construction and operating roles in the upcoming $1.2 billion expansion of Interstate 70 through northeast Denver and Aurora, as part of one of four bid teams.
Unwanted attention over controversies
Ferrovial has faced unwanted attention in the last year over three issues, from both council members and critics of the airport deal that include the Unite Here union. It represents some airport concession employees who are seeking job and wage protections in the terminal.
Toll road bankruptcies: Two long-term toll road partnerships involving Ferrovial’s Cintra — State Highway 130 in Texas and the Indiana Toll Road in northern Indiana — declared bankruptcy. In both cases, the partner teams said, the Great Recession nearly a decade ago led to drops in trucking and other traffic, causing road-usage and financial projections to miss the mark. In both cases, new investors took over.
Asked about the Texas road project’s bankruptcy in August 2016, Chris Butler, Ferrovial’s project director, assured council members that the government was protected: “The state of Texas received what’s, by now, $142 million worth of revenue from that. It was Cintra as an organization that was out-of-pocket as a consequence of that, not the state.”
Bribery case: In Spain’s Catalonia region, a long trial is wrapping up in a corruption case that involved multiple defendants, including two former Ferrovial executives. The allegations included that Ferrovial donated money to a music hall that was funneled to a political party in exchange for contracts, which the company has denied. A panel of judges is expected to announce the verdicts in coming weeks.
“Just to repeat: We are very, very clear about our zero tolerance for bribery and corruption,” Butler told Denver’s council last summer. “It’s a large organization, and we take our reputation extremely seriously.”
Refugee camps: Ferrovial has tried to distance itself from Australian offshore detention camps operated by Broadspectrum, which Ferrovial bought last year. It said it would not renew Broadspectrum’s contracts to run the centers because it was more interested in other aspects of the company’s business, but the Australian government later forced contract extensions through October 2017. Since then, Amnesty International has been among groups targeting Ferrovial, alleging in a report last month that it “continues to build a fortune on refugees’ despair.”
Ferrovial has pushed back, including by saying that such reports hold Broadspectrum “responsible for a range of matters well outside its scope.”
Denver deal would be Ferrovial’s first U.S. airport project
A Ferrovial executive says the company’s experience in running airports would make it a reliable partner for DIA. Though Ferrovial’s other units have done projects in the United States, the company has a lot riding on the deal, since it would mark its first major U.S. airport project.
“Ferrovial has been working in the airport industry for the last 20 years, improving passenger experience and supporting the economic development of cities and communities,” Jorge Gil, the CEO of Ferrovial Airports, said in a statement provided by a project spokeswoman. “We are confident that this experience would help us to successfully deliver this strategic project together with the DEN team.”
DIA chose the Ferrovial-led team over two others — both of which also included foreign-based companies as partners.
The other main players on the Great Hall Partners team are Centennial-based Saunders Construction, which would oversee the renovation work, and equity partner JLC Infrastructure, an investment fund started by former NBA star Magic Johnson and Loop Capital. Saunders also was part of the construction team that built DIA’s hotel and transit center.
Public hearing before Monday’s vote
The City Council has set a one-hour public hearing at its 5:30 p.m. meeting before it is set to debate and vote on the contract. The council meets on the fourth floor of the Denver City and County Building.