Cost: Scandal-hit security firm G4S facing claims it charged the Government for tagged people who were either dead or back in prison
Security firms faced a criminal probe today over claims it charged the taxpayer to tag offenders who were dead or back in prison.
Justice Secretary Chris Grayling called in the Serious Fraud Office to consider investigating G4S Care and Justice Services, part of the company disgraced last year for failing to supply enough Olympic security staff.
Another firm, Serco Monitoring, was also believed to have charged wrongly. Mr Grayling told MPs that the sums involved ran to “tens of millions” of pounds.
The bombshell allegations sent the two companies’ shares on the FTSE 100 falling sharply.
In a statement to the Commons, Mr Grayling said officials spotted “what appeared to be a significant anomaly in the billing practices” while preparing new contracts for electronic tagging.
“It appeared that we were being charged in ways not justified by the contracts and for people who were not in fact being monitored,” he said.
To the astonishment and fury of MPs, he added: “It included charges for people who were back in prison and had had their tags removed, people who had left the country, and those who had never been tagged in the first place.
“There are a small number of cases where charging continued for a period when the subject was known to have died.
“In some instances, charging continued for a period of many months and indeed years after active monitoring had ceased.”
Mr Grayling added: “The House will share my astonishment that two of the Government’s biggest suppliers would seek to charge in this way. The House will also be surprised and disappointed to learn that staff in the Ministry of Justice were aware of a potential problem and yet did not take adequate steps to address it.”
Serco had agreed to co-operate fully with a sweeping forensic audit, and said its senior managers were not aware. “They do not believe anything dishonest has taken place,” said Mr Grayling.
However, G4S had refused to take part in an additional forensic audit, leaving him no option but to call in the SFO.
“I should state that I have no information to confirm that dishonesty has taken place on the part of either supplier,” he added.
“But given the nature of the findings of the audit work that has taken place so far, and the very clear legal advice that I have received, I am today asking the Serious Fraud Office to consider whether an investigation is appropriate into what happened in G4S.”
But G4S sources stressed no evidence of dishonesty had been discovered by either the MoJ review or its own inquiry carried out with the assistance of external experts.
They said the firm had co-operated fully with the MoJ and was given the choice of another audit by management consultants or a referral to the SFO.
G4S had preferred calling in the SFO, they added, to investigate any claims of dishonesty.
They insisted that they had found “absolutely no indication” that it had not complied with the terms of its contract.
But shadow justice secretary Sadiq Khan was stunned by the allegations.
“To the public this appears a straightforward fraud – obtaining property by deception,” he said.
Keith Vaz, Labour chairman of the Commons home affairs committee, added: “G4S should never have got another Government contract after the shambles of the Olympics.”
Cabinet Office minister Francis Maude announced a government-wide review of contracts held by G4S and Serco.
Serco Group, which runs the Boris Bike scheme, said it would repay any amount agreed to be due and that given the investigation, it had decided to withdraw from the re-tendering process for the electronic monitoring service.
The company’s chief executive Christopher Hyman said: “We will not tolerate poor practice and behaviour and wherever it is found we will put it right.”
Joe Murphy, Political Editor
Published: 11 July 2013
Updated: 08:03, 12 July 2013
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