A PRIVATE security firm is facing criminal investigations after allegedly overcharging the UK government by tens of millions of pounds for tagging criminals, some of whom had died.
G4S, the company best known for its botched handling of the Olympics security contract, has been reported to the Serious Fraud Office.
In Scotland, ministers have been urged to seek assurances that a £13 million tagging contract has not been open to the same abuse.
The Scottish Government insisted it carries out “monthly audits” of G4S computer systems and that it was confident services paid for were delivered.
UK Justice Secretary Chris Grayling, speaking in the House of Commons yesterday, alleged that, in England and Wales, G4S and another firm, Serco, had charged for tagging offenders who were at the time back in prison; had had their tags removed; had left the country; had never been tagged in the first place; or had died.
The Ministry of Justice discovered issues with the contract as far back as 2008 – but did nothing to tackle the problem, Mr Grayling admitted.
A UK government-wide review of all contracts held by G4S and Serco, which both saw their shares plunge on London’s FTSE 100 index after the announcement, is now to be carried out in light of the shock revelations.
But because Serco agreed to take part in a new “forensic audit” they are not being reported to the SFO at present. The coalition government is planning to privatise up to 70 per cent of the Probation Service in England and Wales, but unions are now calling for both firms to be blocked from the tendering process.
“We’ve long maintained that these companies are unfit for purpose when it comes to holding important public contracts,” said Ian Lawrence, general secretary of the National Association of Probation Officers union.
“The outcome of the initial investigation into G4S and Serco suggests a good deal of malpractice has been discovered.”
An audit by accountancy firm PricewaterhouseCoopers, in May, revealed overcharging began at least as far back as the start of the current contracts in 2005, but could also have affected previous contracts agreed in 1999.
Mr Grayling has told the two firms that an independent forensic audit must now be conducted to look at, among other areas, internal e-mail trails between executives to establish what happened.
Serco has agreed to take part, but G4S has refused.
Mr Grayling said: “The billing practices in question were clearly unacceptable and the government will take all necessary steps to secure a refund for the taxpayer.”
He told MPs: “This is a wholly indefensible and unacceptable state of affairs. The House will share my astonishment that two of the government’s biggest suppliers would seek to charge in this way.
“The House will also be surprised and disappointed to learn that staff in the Ministry of Justice were aware of a potential problem and yet did not take
adequate steps to address it.”
Serco has agreed to withdraw from the current tender process for electronic monitoring, while the Justice Secretary is to instigate moves to exclude G4S, although the company is still attempting to bid.
G4S, which saw its shares fall nearly 4 per cent after the announcement, is no stranger to controversy after its London 2012 Olympics contract fiasco.
The firm was left nursing losses of £88m after it failed to provide all of its 10,400 contracted employees last year, prompting extra military personnel to be drafted in to fill the gap.
Nick Buckles, the former chief executive who stepped down in May, was summoned to appear before MPs to answer questions on the company’s failure.
Ashley Almanza, G4S group chief executive, said: “G4S is committed to having close and open relationships with our customers and we strive to work in partnership for the mutual benefit of our organisations.”
Serco confirmed it will repay any amount agreed to be owed to the government.
Christopher Hyman, chief executive of the Serco group, said: “We are deeply concerned if we fall short of the standards expected of all of us.”
The Scottish Government awarded G4S a five-year £13m contract for electronic tagging of offenders in Scotland last September. It took over from Serco in April.
Opposition politicians demanded guarantees that similar alleged abuses are not taking place. Scottish Labour’s justice spokesman Graeme Pearson said: “After the shambolic handling by G4S of the security at the Olympics, this latest news is very worrying given the scale of the contract they have in Scotland.
“At the very least, I would expect Kenny MacAskill [the Scottish justice secretary] to seek urgent reassurance from them that similar practices have not occurred here.”
Alison McInnes, Scottish Liberal Democrat justice spokeswoman, added: “Taxpayers must be told whether this has also been going on in Scotland.
“When the £13m tagging contract was awarded, the justice secretary told us that G4S were a company with a proven track record. In light of today’s revelations, we need to know whether the Scottish Government will act to protect the taxpayer and conduct a full audit of the company’s tagging operation in Scotland.”
But a Scottish Government spokeswoman said last night that its contract is “entirely” separate to that south of the Border and ministers are “satisfied with the billing processes”.
She added: “We routinely audit the electronic monitoring service provider in Scotland to ensure that the service, as it is set out in the electronic monitoring contract, is the service that is being delivered.
“These audit checks include accessing the service provider’s computer system to count the monitored days that have been billed to ensure that what we pay for, as a service, matches the work actually undertaken.”
Inquiry is the latest blow for security giant
THE criminal investigation facing G4S over tagging criminals is the latest scandal to hit the security giant.
The company faced fierce criticism last year following the botched handling of its Olympics security contract.
Earlier this week, an inquest jury ruled that Jimmy Mubenga, 46, of Angola, who died after being restrained by three G4S guards as he was being deported from the UK, was unlawfully killed. In January, multi-million-pound plans by three police forces to outsource services to G4S collapsed.
However, another force, Lincolnshire, now spends the lowest amount per head of population on policing in England and Wales after it handed over the bulk of its back-office functions to G4S.