G4S agrees to pay back £109m over electronic tagging scandal

Government upholds ban on G4S winning new contracts despite tagging deal

Deputy political editor

G4S has agreed to pay nearly £110m back to the taxpayer following a scandal in which it charged for the monitoring of non-existent electronic tags, including some which had been assigned to dead offenders.

The private security giant, which reported a pre-tax loss of £170m in 2013, had had an earlier offer of £24.1m plus VAT rejected by the Ministry of Justice (MoJ).

Chris Grayling, the Justice Secretary, announced the department and the company had agreed a settlement of £108.9m plus VAT to cover overpayments for tagging and prisoner escort services.

It includes £4.5m which relates to G4S contracts to operate court buildings. Both this and the tagging contracts have been referred to the Serious Fraud Office.

Mr Grayling said the payment represented a “good deal” for the taxpayer as it recovered all the money owed to the MoJ.

The repayment will comprise £75.9m in cash and credits of £33m. An exact figure after VAT has been added has not been disclosed.

The world’s biggest security company will hope the payment draws a line under the episode, in which it charged the state over many years for tagging offenders who were actually dead, back in prison or did not even exist.

However, Mr Grayling said the department would consider whether it was owed further cash if police decided to bring criminal charges against G4S.

The other firm caught up in the tagging scandal, Serco, has agreed to pay back £70.5m plus VAT.

The Cabinet Office is reviewing 28 contracts worth around £9bn held by G4S and Serco, including work operating private prisons and running welfare-to-work schemes. The episode raised questions over the Coalition’s drive to outsource work to private contractors.

A ban on G4S bidding for new Whitehall contracts will not be lifted by ministers until they see evidence of “corporate renewal”.

The cost of overhauling the business since the tagging scam was exposed contributed to G4S reporting an £170m annual loss, compared with a £158m pre-tax profit in 2012.

Its chief executive, Ashley Almanza, who last year replaced Nick Buckles as chief executive officer, admitted that the company had achieved “barely any growth” in Britain during 2013. He added: “The reasons for this are well-known.”

G4S also suffered severe damage to its reputation after its failure to fulfil its contract to provide enough security staff for the 2012 London Olympics, forcing the Government to draft in members of the armed forces at short notice.

Mr Almanza said: “We have repaid all amounts overbilled and have implemented significant changes to strengthen contract management and controls and to ensure our business is always conducted in a manner which is consistent with our group values.

“We believe the conclusion of this matter, together with the actions we are developing on corporate renewal, will enable us to maintain our position as a strategic supplier to Government.”

Sadiq Khan, the shadow Justice Secretary, said: “This large sum of money G4S are repaying taxpayers shows the true scale of the wrongdoing that went on. This, in addition to its poor performance on a number of other contracts, has led to huge damage to the public’s confidence in our criminal justice system.”

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links