Security firm G4S to pay £44m+ after overcharging government

Security firm G4S to pay £44m+ after overcharging government
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Security giant G4S has been ordered to pay £44.4 million to avoid prosecution after ‘very substantially’ overcharging the Government for tagged criminals – including some who had died.

The Serious Fraud Office (SFO) and G4S agreed a fine of more than £38.5 million and costs of £5.9 million after a near-decade-long probe found three counts of fraud.

The firm ‘dishonestly misled’ the Government in an effort to boost its profits, according to the SFO.

It comes after G4S was dramatically dumped from tagging criminals as punishment for overcharging the taxpayer in 2013. 

G4S said a subsidiarity, G4S Care & Justice, had taken responsibility for the offences between August 2011 and May 2012. 

The Serious Fraud Office (SFO) and G4S (file image) agreed a fine of more than £38.5 million and costs of £5.9 million after a probe found three counts of fraud

The Deferred Protection Agreement (DPA) is a court-approved deal which allows prosecution to be suspended as long as the organisation meets certain conditions. 

The company was given a 40 per cent discount on its fine after co-operating with the SFO. 

G4S Care & Justice provided electronic monitoring services to the government from 2005 to 2013, and the fraud involved a ‘very substantial loss to the public purse’, according to the judgement in the case. 

G4S overcharged for tens of thousands of criminals, including those who had left the country, been returned to prison or even died.

The company previously admitted overcharging taxpayers by more than £24million for ‘phantom’ electronic tags that had been removed – or were never fitted in the first place.

G4S’ history of blunders 

The UK-based security firm traces its roots back to a guarding company founded in Denmark in 1901.

G4S was formed when Group 4 merged with Securicor in 2004. The company has a long record of blunders including:

  • In 1993 Group 4 became the first private company to run prisoner escort services, and lost seven inmates in three weeks
  • A year later a hunger striker escaped from Campsfield House detention centre, guarded by Group 4
  • In 1997 it emerged the firm had transferred a prisoner between two vans on a petrol station forecourt
  • Three prisoners escaped from Peterborough Crown Court in 2001
  • In 2011, G4S staff lost a set of cell keys just days after taking over Birmingham Prison 
  • Workers put an electronic tag on criminal Christopher Lowcock’s artificial limb
  • In 2012 the firm failed to train enough guards for the London Games which meant 3,500 soldiers had to be recalled from leave
  • In March 2013 a G4S guard at Heathrow ordered Royal Navy engineer Nicky Howse to change out of her uniform before flying to the US because it was ‘offensive’

Today’s DPA was approved by Mr Justice William Davis at the Royal Courts of Justice and means G4S Care & Justice will not be prosecuted.

The G4S subsidiary has already paid out £121.3 million to the MoJ following a civil settlement in 2014.

In January 2014, G4S Care & Justice reported it had discovered material which indicated the company failed to provide accurate financial reports to the MoJ.

The SFO found there had been fraudulent conduct in contracts for electronic monitoring services, including tagged criminals.

Addressing the court on Friday, the judge said: ‘I do declare that this DPA is in the interests of justice and that its terms are fair, just and proportionate.’

In his judgement, he wrote: ‘The intensity of the external scrutiny as set out in the DPA is greater than in any previous DPA.

‘This is necessary and appropriate given the exposure of both G4S C&J and the parent company to government contracts.’

He added that it was important to provide reassurance that proper controls are in place to stop the issue happening again.

‘The DPA will last for three years during which period the compliance measures will continue and will be reviewed. This will provide further reassurance as to the conduct of G4S and G4S C&J,’ he said.

Director of the Serious Fraud Office Lisa Osofsky slammed the company’s ‘methodical fraud against the Ministry of Justice’,

She added: ‘This DPA ensures G4S C&J is held accountable. It also guarantees that G4S C&J and its parent company, G4S plc – a significant government supplier – will be subjected to unprecedented, multi-year scrutiny and assurance.’

Clare Montgomery QC, representing G4S, repeated an apology on behalf of the firm and said it ‘condemns absolutely this type of behaviour’.

She added: ‘With the apology, it is also important to note that it is particularly heartfelt because integrity is at the heat of G4S’s business.’ 

The scandal could date back as far as 1999, when tagging of criminals began in England and Wales.

Since then the taxpayer has spent £1billion on tagging and monitoring offenders. The 2013 contracts began in 2005.

The SFO found there had been fraudulent conduct in the contracts for electronic monitoring services (file image)

In some cases private contractors charged the Government for years after tagging had stopped and cases included being charged for tags for dead people.

G4S previously apologised and offered to repay £24.1 million.

A spokesman said it accepted it ‘wrongly considered itself to be contractually entitled to bill for monitoring services when equipment had not been fitted or after it had been removed’.

The company insisted an independent review it commissioned ‘has not identified any evidence of dishonesty or criminal conduct by any employee’.

But the Ministry of Justice made clear that the government would not accept the voluntary offer.

A National Audit Office report into the electronic monitoring contracts found evidence the firm was charging for multiple tags on individual criminals.