Written 22nd November 2013 by Olliers Solicitors

Private security company G4S has admitted overcharging the Ministry of Justice by more than £24 million for electronic tagging of criminals. The Company has apologised to the Ministry of Justice and issued credit notes for £23.3m relating to work incorrectly billed between 2005 and 2013. A further credit note for £800,000 is to be issued to cover continued overcharging that has happened since June.

Internal Review

G4S indicated that an external review had confirmed it had been wrong to consider it was contractually entitled to bill for monitoring offenders when tags had not been fitted or after they had been removed. However, its’ internal review also concluded it was not the result of “dishonesty or criminal conduct”. An internal review was commenced in May by Price Waterhouse Cooper, however, it is following the outcome of the external review by Linklaters that G4S have offered the refunds.

In July of this year Justice Secretary Chris Grayling said that both G4S and its’ competitor Serco had charged the Government for tagging people who were in prison, had left the country or died, although he said at that stage there was no evidence of dishonesty. He said he had referred G4S to the serious fraud office following ‘clear legal advice’ after the company refused to take part in a forensic audit of the contract. An investigation into the way the Ministry of Justice managed the contracts would also be carried out, Grayling said, as officials had been aware of the potential problem since 2008 and failed to take adequate steps to address it.

The National Audit Office has said that investigations show both firms charged the Ministry over similar timescales when electronic monitoring was never undertaken and charged multiple times for the same individual if that person was subject to more than one electronic monitoring order at the same time. Both G4S and Serco are due to appear before the Commons public accounts committee on Wednesday to give evidence on public sector contracts.

Overcharging Refunded

Serco, the other company implicated, has also said that it will refund any amount that it agrees relating to overcharging. The Ministry of Justice has not confirmed it agrees to the refund amount outlined, however, a Ministry of Justice spokesman commented:

“The secretary of state has been clear, we are determined to secure a refund for the taxpayer – we have taken appropriate legal advice and will pursue all possible avenues.”

Ashley Almanza, the G4S Group Chief Executive, said the company’s announcement was an important step in setting the matter straight and restoring trust.

“The way in which this contract was managed was not consistent with our values or our approach to dealing with customers. Simply put, it was unacceptable and we have apologised to the Ministry of Justice,” Almanza said.

“As part of a wider programme of corporate renewal, we have changed the leadership of our UK business and we are putting in place enhanced risk management and contract controls.

“We remain committed to working with the Ministry and the UK Government to resolve this matter and to provide enhanced oversight of service delivery and contract performance.”

Stacey Mabrouk

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