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
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory