Serco to pay back £68m over tagging contracts

Private security firm Serco has agreed to repay the Government £68.5m for over-charging on criminal tagging contracts, the Ministry of Justice has said.

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

Serco has agreed to pay the sum to the Government to reimburse money owed on the contract and for other costs incurred such as the investigation.

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In addition, G4S has been referred to the SFO again after the Ministry of Justice uncovered further problems with two contracts for facilities management in the courts.

An audit by big four accountancy firm PricewaterhouseCoopers, launched in May, alleged that overcharging began at least as far back as the start of the current contracts in 2005.

Justice Secretary Chris Grayling told the two firms that an independent forensic audit was required to look at, among other areas, internal email trails between executives to establish what happened.

In July, the Government reported G4S – well-known for its botched handling of its Olympics security contract – to the SFO when it refused to take part in an additional investigation to rule out any dishonesty.

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Serco allowed a further forensic audit to take place, during the course of which the Ministry of Justice passed material to the SFO.

The shock disclosures sparked a Government-wide review of all contracts held by Serco and G4S, worth £5.9bn in total. The review, newly released, found no further evidence of wrongdoing or malpractice, but did highlight areas of focus for different departments.

Francis Maude, Minister for the Cabinet Office, which led the broader review of Serco and G4S contracts, said the repayment was good news for taxpayers. “We are confident that the company is taking steps to address the issues which our review has identified,” he said.

Unlike Serco, G4S has not yet agreed a position on repayment, although discussions are continuing.