Police drops investigation into Serco's prisoner transport contract

"No evidence of corporate-wide conspiracy" to falsify information to meet contract's terms

The City of London Police has dropped a year-long investigation into Serco's £285 million prisoner transport contract, saying it found "no evidence of corporate-wide conspiracy".

The move will come as a welcome relief for its chief Rupert Soames, the grandson of Sir Winston Churchill, who joined from Aggreko in May as he looks to revive the ailing firm after a tumultuous 18 months.

Serco’s problems stem from its admission in July 2013 that it had charged the Government for tagging thousands of criminals who were actually dead, imprisoned or non-existent, and misled the Ministry of Justice by recording prisoners as ready for court, one of the measures by which the outsourcer was paid, when they were not.

Last summer ministers called the police to investigate claims of fraud at Serco, and whether there was criminal intent in the contract to transport prisoners in between 24 crown courts, 43 magistrates courts, 24 prisons and 131 police stations.

“The issue,” said analysts at Liberum, “was that there may have been ‘controlling minds’, ie corporate involvement in encouraging people to act fraudulently.”

At the time, Justice Secretary Chris Grayling said it had “become very clear there has been a culture within parts of Serco that has been totally unacceptable, and actions which need to be investigated by the police.”

Now, however, City of London Police said it has had found “no evidence to support bringing charges against staff” on the prisoner-escort contract, and the Crown Prosecution Service will not bring charges against Serco or its staff on this issue.

Serco said police concluded “there was no evidence of any corporate-wide conspiracy or an intention to falsify figures to meet the [prisoner transport] contract requirement by senior Serco management or at board level.”

That means Serco can continue running the contract until it ends in 2018, although it has already agreed to give up future profits on the contract, as well as repaying profits on the contract for transfers in London and East Anglia since 2011 — about £2 million.

However, while Serco repaid almost £70 million last year for ripping off the taxpayer on the electronic-tagging contract, that matter was referred to the Serious Fraud Office, which is ongoing. Last month, it issued its fourth profit warning in 12 months and suspended its dividend.