G4S admits overcharging MoJ £24m on electronic tagging contract
Private security company G4S has admitted it has overcharged the Ministry of Justice more than £24m on its contract for the electronic monitoring of thousands of offenders in England in a practice that was going on for years.
The admission by one of the government’s largest suppliers comes just 24 hours before G4S and other outsourcing corporate giants, Serco, Atos and Capita are due to be grilled by the powerful Commons public accounts committee on Wednesday over their failings on public sector contracts.
G4S said an external review it had commissioned by the law firm Linklaters 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.
G4S said it had apologised to the MoJ and issued credit notes for £23.3m that had been incorrectly billed between 2005 and May 2013.
A further credit note for £800,000 is to be issued to cover continued overcharging that has happened since June.
The security company said the Linklaters review had not identified “any evidence of dishonesty or criminal conduct by any employee of G4S in relation to the billing arrangements under the electronic monitoring contracts.”
The G4S statement added that it had “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 admission by the company comes after the Serious Fraud Office announced earlier this month that it was launching a criminal investigation into G4S and Serco for overcharging on criminal justice contracts.
The G4S statement was timed to coincide with the publication of a National Audit Office memorandum that shows that, in some instances, both contractors were charging the justice ministry for months or years after electronic monitoring activity had stopped. The charging continued even in cases where offenders had been sent back to prison or even died.
The NAO also says the 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.
Serco has also said it will refund any amount that it agrees represents overcharging.
The justice ministry has not yet agreed to any refund offers made by either firm.
In July, the justice secretary, Chris Grayling, revealed that G4S and Serco had overcharged the government by “tens of millions of pounds” on the tagging contracts. This claim was disputed at the time by G4S. Grayling also announced that accountancy firm PricewaterhouseCoopers was carrying out a forensic audit into the contracts. A G4S whistleblower working in the call centre dealing with tagging was involved in raising initial concerns about billing practices.
The NAO gives examples of the disputed overcharging practices in its memorandum prepared for Wednesday’s showdown between MPs and the outsourced companies. They include:
• The justice ministry was charged £3,000 for 612 days monitoring of an offender who had been sent to prison for two years 20 months earlier. G4S removed the tagging equipment but kept on billing because the court had not provided the relevant paperwork.
• On 28 October 2010, G4S removed tagging equipment from the address of an offender where a number of breaches of curfew had been reported. The court failed to confirm the tag was no longer required even when chased in December 2012 so billing continued until 20 May 2013. The total bill was £4,700 for 935 days without a tag being in place.
• Serco billed £15,000 for almost five years’ monitoring in a case where it was unable to install tagging equipment in July 2008 at an address where the subject was due to be arrested. In October 2010, when Serco visited the property it was told nobody had been living there for 18 months.
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.”
The MoJ said it was not prepared to comment while a criminal investigation was under way.
The Cabinet Office is carrying out a government-wide review of G4S and Serco contracts but G4S said that no evidence had so far come to light that suggested that similar billing practices applied to other government contracts.
Both Serco and G4S withdrew from the tendering process for the next generation of electronic tagging. But both companies have been allowed to bid for £450m-worth of probation contracts but will not be awarded them unless they are given a clean bill of health over the tagging dispute.