G4S set to face new Serious Fraud Office investigation

 

G4S is facing fresh controversy after the Government announced it plans to refer the private security giant to the Serious Fraud Office for a second time.

The Ministry of Justice said that after auditing 15 big outsourced contracts worth almost £4 billion, it had discovered “serious issues” on G4S’s running of facilities management for the British courts. The problems covered “invoicing, delivery and performance reporting”, the Government said.

“While at this stage, the department does not have evidence to confirm that dishonesty has taken place, they have today, following legal advice, referred both matters to the Serious Fraud Office in order to establish whether this is the case.”

That sent shares in the world’s biggest security group falling 5.7p, or 2 per cent, to 248p against 312p in April, before the latest scandal emerged.

G4S said it “places the highest premium on adherence to its company values, including customer service and integrity.”

G4S is already under investigation, together with rival Serco, for overcharging on electronic tagging contracts, including for offenders who were imprisoned or dead.

Serco settled with the Ministry of Justice over that scandal, saying it would repay £68.5 million to the Government. G4S is still in discussions over a settlement payment. Also today, Serco admitted its own costs for investigating and taking advice on the scandal had spiralled to £36 million, up from an initial sum of £27 million.

Alastair Lyons, Serco’s chairman, said: “We apologise unreservedly. We are doing everything in our power to make sure that such issues cannot re-occur anywhere in our business around the world.”

The latest blow for G4S comes after the security behemoth’s name was besmirched by its London Olympic fiasco last year, where the security giant paid out £88 million over its failure to supply enough guards for the Games — forcing the Army to be drafted in instead.

Both it and Serco have been barred from winning new Government work since the summer, when news of the electronic tagging scandal emerged. The Cabinet Office said it would decide whether to allow Serco to sign new deals next month.

“Over the past few months, Serco has engaged constructively with government, setting out a corporate renewal plan that is now well advanced,” the Cabinet Office said. But in the case of G4S, it demanded the firm take action to demonstrate its “corporate renewal”.

The Government also conceded that its own outsourcing procedures required honing. Bill Crothers, chief procurement officer for the Government, said: “We know these skills are not yet strong enough.

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