Financial News

  • 20 December 2013, 13:35

Serco Agrees To Repay £68.5m Overcharge

Disgraced firm Serco has agreed to repay the Government £68.5m for overcharging for tagging criminals.

Both Serco and G4S were found to have charged the taxpayer tens of millions of pounds too much for monitoring criminals in a contract dating back to 2005.

The Serious Fraud Office (SFO) opened a criminal investigation after it emerged G4S and Serco overcharged the Government for electronic tagging of offenders, some of whom were found to be dead, back in prison or overseas.

Serco agreed to pay the sum to the Government to reimburse money owed on the contract and for other costs incurred, such as the investigation, at the end of a broader review into Serco and G4S contracts, Justice Secretary Chris Grayling said.

The Government has already rejected a £24m offer from G4S, which came under fire for its poor handling of the Olympics security contract, and officials vowed to "pursue all possible avenues" to recoup more taxpayers' cash.

Discussions on repayment are continuing.

In addition to the investigation it is already facing, G4S has been referred to the Serious Fraud Office a second time after the Ministry of Justice uncovered further problems with two contracts for facilities management in the courts.

Mr Grayling said that while Serco had been willing to allow a further forensic audit to establish what had happened in the overcharging scandal, in July G4S had refused the request.

Francis Maude, minister for the Cabinet Office, which led the review said: "It's good news for taxpayers that Serco has agreed to recompense £68.5m for overcharging.

"We are confident that the company is taking steps to address the issues which our review has identified.

"Since day one this Government has been working to reform contract management and improve commercial expertise in Whitehall."

As revealed by Sky News City Editor Mark Kleinman on Wednesday, both G4S and Serco have withdrawn from bidding for lucrative probation office contracts.

However, the Government has left open the possibility of either firm playing a supporting role, working with smaller businesses or voluntary sector providers.

The remainder of their contract for monitoring criminals has been transferred to rival firm Capita.

Serco non-executive chairman Alistair Lyons said: "The contract issues that were identified should never have happened and we apologise unreservedly for them.

"We are doing everything in our power to make sure that such issues cannot reoccur anywhere in our business around the world."

A statement from G4S said: "G4S places the highest premium on adherence to its company values, including customer service and integrity."

Last month the boss of G4S, Ashley Almanza, admitted to MPs that the company had failed to "tell the difference between right and wrong", while Mr Lyons told the Commons Public Accounts Committee it was "ethically wrong".

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