Taxpayers were charged tens of millions of pounds for ‘phantom’ electronic tags on criminals who were either dead, in jail or had left the country.
Two private firms, G4S and Serco, are accused of wrongly billing for tens of thousands of tags which had either been removed or simply never fitted.
Estimates suggest up to one in six of the 18,000 tags the Ministry of Justice was billed for every day were not real.
Taxpayers could have overpaid two private companies for their work tagging criminals
Last night ministers asked fraud investigators to look at G4S, after the company refused to allow forensic auditors access to its books and emails between senior executives.
Justice Secretary Chris Grayling took the dramatic step after pledging to recover ‘every last penny’ owed to the public purse.
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He told MPs 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 current contracts began in 2005.
Mr Grayling condemned the overcharging as ‘wholly indefensible and unacceptable’. In some cases, bills were paid for months or years after tags were taken off, he said.
G4S’S ROLL OF SHAME
Just two weeks before the start of the 2012 Olympic Games, G4S admitted it was unable to supply more than 10,000 security guards it had promised.
Army and police personnel were drafted in to fill the gap (pictured above), with the company eventually picking up the £88million bill.
In 2011, two G4S workers placed an electronic tag on an offender’s false leg, meaning he could simply take it off.
Christopher Lowcock wrapped his prosthetic limb in a bandage to fool staff who set up the device in his home.
Angolan prisoner Jimmy Mubenga died in 2010 after being restrained by G4S guards on his deportation flight. Three G4S staff were arrested on suspicion of manslaughter but charges were not brought because of a lack of evidence.
In 2011, a set of keys went missing at Birmingham Prison, a jail managed by G4S. Inmates were locked in their cells for an entire day, and new locks had to be fitted at a cost of £250,000.
He also launched a disciplinary investigation into former officials in the department after discovering contract managers were aware of billing issues in 2008, but ‘nothing substantive was done’.
Details of a ‘significant anomaly in billing practices’ within the deals emerged during a routine review as ministers prepared to negotiate contracts for satellite tags.
It found ‘charges for people who were back in prison and had their tags removed, people who had left the country and those who had never been tagged in the first place’, Mr Grayling said.
Charges were also made in a ‘small number of cases when the subject was known to have died’.
He added: ‘In some instances, charging continued for a period of many months and indeed years after active monitoring had ceased.’
The bill to taxpayers is put in the ‘low tens of millions’.
Tags are put on criminals after their early release from prison or as part of their community service.
Most involve a 12-hour curfew from 7pm to 7am, allowing the criminal, in theory, to work. A box in the offender’s home sounds an alert if the tag goes out of range or stops working.
Audits have also been launched into all other contracts between the Government and the two firms, both major suppliers to Whitehall. G4S received £1billion in revenue from UK Government contracts last year, while Serco made £2billion.
Serco has withdrawn its bid from the current tendering process for new satellite tags, while G4S is expected to be excluded after refusing to pull out.
Serco agreed to co-operate with a new audit but has said it does not believe ‘anything dishonest has taken place’.
G4S rejected the new audit and last night a spokesman insisted it has ‘always complied totally with the terms of the contract’.
The Serious Fraud Office will consider whether an investigation is appropriate into what happened at G4S, Mr Grayling said.
Indefensible: Justice Secretary Chris Grayling said G4S had rejected a demand for a new forensic audit
The firm’s reputation was shredded last year by its failure to fulfil the security contract for the Olympics. Thousands of armed forces and police personnel were called in to fill the gap and the company was forced to pick up the tab.
In May, G4S chief executive Nick Buckles quit with a £1.2million payoff. Several senior managers were sacked in the wake of the Olympic fiasco.
The price of shares in both firms plunged yesterday following the announcement, wiping £176.4million from G4S’s value and £269.6million from Serco.
G4S group chief executive Ashley Almanza said: ‘We place the highest premium on customer service and integrity and therefore take very seriously the concerns expressed by the Ministry of Justice.’
Serco group chief executive Christopher Hyman said: ‘Serco is a business led by our values and built on the strength of our reputation for integrity. We are deeply concerned if we fall short of the standards expected.’
By Jack Doyle and Peter Campbell
PUBLISHED: 11:52 GMT, 11 July 2013 | UPDATED: 08:19 GMT, 12 July 2013
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