Serco chief to quit amid continuing turmoil

THE chairman of embattled ­outsourcing firm Serco is to step down following a string of ­scandals and profit warnings, saying that it was right he took “ultimate responsibility” for the mistakes made.

Alastair Lyons made the announcement a week after shares plunged by a third. Picture: PA
Alastair Lyons made the announcement a week after shares plunged by a third. Picture: PA

Alastair Lyons, who has for four years chaired a business that has became a lightning rod for political controversy, made the announcement yesterday a week after Serco put out its latest profit warning.

At the time, the group wrote down its value by £1.5 billion and said it would turn to shareholders for more capital to rebuild the firm. The news saw its already battered share price slashed by more than a third.

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That came after Serco had 
to repay the UK government £68.5 million in 2013 for over-charging on criminal tagging contacts, as well as £2m from a past contract for a prisoner escort deal.

Rupert Soames, the former boss of Glasgow-based temporary power equipment maker Aggreko, took over as the company’s chief executive in May and warned last week that it faced two more difficult years as it strives to stabilise its position.

Lyons said in his statement yesterday that continuing moves to review and shake up the group were “necessary steps in putting [it] back on an even keel”.

He added: “The initial findings of the strategy and balance sheet review point to strategic and operational mis-steps at Serco for which, as chairman of the board since 2010, I take ultimate responsibility.

“It is also the right thing for Serco to select a new chairman, to take the helm for the future.

“Whilst colleagues have asked me not to resign, it has been my intention to step down once a new strategy and direction for the business were in place.

“I am therefore taking the necessary steps to ensure an orderly process for my own succession during the first half of 2015.”

He said he had sought to stabilise the business “with strong new management and non-executive directors, a much-improved relationship with the UK government, and clarity as to our strategic direction”.

Soames – who has said that Serco needs to become “smaller and more focused”, and that it has spent too much time on winning new business and diversifying – paid tribute to the outgoing Lyons yesterday.

“Whilst I respect Alastair’s decision, I want to put on record that he has done an outstanding job stewarding the company through the travails of the past 12 months,” Soames said.

“Nobody could have worked harder or done more to get us to the point where we can now concentrate on building a solid future for Serco.”

Shares in the group nudged up 0.6p to 212.6p.