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G4S probe after tag firms' multi-million overcharging confirmed G4S probe after tag firms' multi-million overcharging confirmed
(35 minutes later)
The justice secretary has asked the Serious Fraud Office to consider investigating G4S over overcharging for tagging criminals in England and Wales.The justice secretary has asked the Serious Fraud Office to consider investigating G4S over overcharging for tagging criminals in England and Wales.
Chris Grayling told MPs overcharging by G4S and rival Serco amounted to tens of millions of pounds.Chris Grayling told MPs overcharging by G4S and rival Serco amounted to tens of millions of pounds.
He said some charges were for tagging people who were in jail or abroad, and a few who had died.He said some charges were for tagging people who were in jail or abroad, and a few who had died.
Serco agreed to a "forensic audit" by accountants PwC of what happened but G4S declined to take part, he added. Serco agreed to a new "forensic audit" by accountants PriceWaterhouseCoopers but G4S declined, he added.
The firms have said they will repay any amount which is found to be due.The firms have said they will repay any amount which is found to be due.
G4S has said it has "co-operated fully with the PwC audit" and is conducting its own inquiry but is not aware of any indications of dishonesty or misconduct. G4S said it had "co-operated fully" with a previous audit which PwC began earlier this year and was conducting its own inquiry but was not aware of any indications of dishonesty or misconduct.
Shares in the companies fell as Mr Grayling said there would also be a wider review of all contracts held by the two companies across government.Shares in the companies fell as Mr Grayling said there would also be a wider review of all contracts held by the two companies across government.
Last month, figures showed government spending on contracts with G4S had risen by more than £65m in 2012 to £394m.Last month, figures showed government spending on contracts with G4S had risen by more than £65m in 2012 to £394m.
In a Commons statement, Mr Grayling said he had also launched a disciplinary investigation into the way the contracts had been managed inside the Ministry of Justice after uncovering evidence that officials knew in 2008 there were problems with how both companies were billing for tagging.In a Commons statement, Mr Grayling said he had also launched a disciplinary investigation into the way the contracts had been managed inside the Ministry of Justice after uncovering evidence that officials knew in 2008 there were problems with how both companies were billing for tagging.
"The House will share my astonishment that two of the government's biggest suppliers would seek to charge in this way," said Mr Grayling.
2004 contracts2004 contracts
Electronic tagging of criminals is a key part of the government's strategy to monitor offenders in the community. The contracts are awarded to private companies who then place the electronic ankle bracelet on the offender or suspect and ensure that their movements comply with their bail or licence conditions.Electronic tagging of criminals is a key part of the government's strategy to monitor offenders in the community. The contracts are awarded to private companies who then place the electronic ankle bracelet on the offender or suspect and ensure that their movements comply with their bail or licence conditions.
Mr Grayling said that current contracts had been awarded in November 2004 and were due to expire shortly.Mr Grayling said that current contracts had been awarded in November 2004 and were due to expire shortly.
He said that an audit had revealed a "significant anomaly in the billing practices" of both companies.He said that an audit had revealed a "significant anomaly in the billing practices" of both companies.
Mr Grayling said: "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 but who had instead been returned to court.Mr Grayling said: "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 but who had instead been returned to court.
"There are a small number of cases where charging continued for a period when the subject was known to have died."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.""In some instances, charging continued for a period of many months and indeed years after active monitoring had ceased."
'Open and transparent''Open and transparent'
Mr Grayling said officials estimated that the total over-billing was in the "low tens of millions" but it was not clear whether the problems dated back to an earlier 1999 contract. Mr Grayling said officials estimated that the total over-billing was in the "low tens of millions".
He said that Serco had agreed to open its books to auditors PriceWaterhouseCoopers who would conduct a forensic audit of what happened, including looking at executives' emails. He said that Serco had agreed to the forensic audit of what happened, which included looking at executives' emails.
Mr Grayling said: "We put the same proposal for a further detailed forensic audit to take place to G4S. They have rejected that proposal.Mr Grayling said: "We put the same proposal for a further detailed forensic audit to take place to G4S. They have rejected that proposal.
"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, and to confirm to me whether any of the actions of anyone in that company represent more than a contractual breach." "I should state that I have no information to confirm that dishonesty has taken place on the part of either supplier.
"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, and to confirm to me whether any of the actions of anyone in that company represent more than a contractual breach."
Shadow justice secretary Sadiq Khan said the government should ask the police and the Serious Fraud Office to investigate both G4S and Serco.Shadow justice secretary Sadiq Khan said the government should ask the police and the Serious Fraud Office to investigate both G4S and Serco.
"Both these companies are recipients of hundreds of millions of pounds of contracts from across government and local authorities and it is important that an immediate and independent audit takes place to make sure there are no wider irregularities involving taxpayers' money by them or the other big players," he said. "Both these companies are recipients of hundreds of millions of pounds of contracts from across government and local authorities," he said.
He also said plans to privatise probation contracts now needed to be evaluated through pilot schemes.He also said plans to privatise probation contracts now needed to be evaluated through pilot schemes.
The BBC understands that G4S rejected the proposal of a forensic audit because it maintained that its own internal review had found no dishonesty. The BBC understands that G4S rejected the proposed forensic audit because it maintained that its own internal review had found no dishonesty. It also wanted to see the results of the first audit, which it had co-operated with.
In a statement, the company said: "We can confirm that we are working with the Ministry of Justice on their review of the electronic monitoring contracts. The Ministry of Justice has confirmed that G4S co-operated with the first audit, but has not confirmed whether any results have been shared with the company. The ministry has also not commented on suggestions that G4S warned the MOJ in 2009 about anomalies in the charging arrangements.
In a statement, the company said it believed that "any evidence or indication of dishonesty should be referred to the relevant authorities including, if appropriate, the SFO".
G4S added: "We can confirm that we are working with the Ministry of Justice on their review of the electronic monitoring contracts.
"We believe that we are delivering our electronic monitoring service in a completely open and transparent way.""We believe that we are delivering our electronic monitoring service in a completely open and transparent way."
It added: "G4S believes that any evidence or indication of dishonesty should be referred to the relevant authorities including, if appropriate, the SFO."
G4S chief executive Ashley Almanz said: "We take very seriously the concerns expressed by the Ministry of Justice. We are determined to deal with these issues in a prompt and appropriate manner."G4S chief executive Ashley Almanz said: "We take very seriously the concerns expressed by the Ministry of Justice. We are determined to deal with these issues in a prompt and appropriate manner."
Serco's chief executive Christopher Hyman said: "We are deeply concerned if we fall short of the standards expected of all of us.Serco's chief executive Christopher Hyman said: "We are deeply concerned if we fall short of the standards expected of all of us.
"We are therefore taking this extremely seriously and will continue to work closely with our customer to resolve their concerns in this matter. We will not tolerate poor practice and behaviour and wherever it is found we will put it right.""We are therefore taking this extremely seriously and will continue to work closely with our customer to resolve their concerns in this matter. We will not tolerate poor practice and behaviour and wherever it is found we will put it right."
Serco has withdrawn from the tendering process for the next generation of tags.
G4S faced controversy last year after it failed to provide all of its 10,400 contracted employees to the London Olympics.G4S faced controversy last year after it failed to provide all of its 10,400 contracted employees to the London Olympics.
Ian Lawrence, general secretary of the National Association of Probation Officers, said Serco and G4S should not be allowed to bid for any of the contracts under proposals to privatise the probation serviceIan Lawrence, general secretary of the National Association of Probation Officers, said Serco and G4S should not be allowed to bid for any of the contracts under proposals to privatise the probation service
Andrew Neilson, director of campaigns at the Howard League for Penal Reform, said Mr Grayling "should rethink his plans to introduce yet more private sector involvement in the criminal justice system".Andrew Neilson, director of campaigns at the Howard League for Penal Reform, said Mr Grayling "should rethink his plans to introduce yet more private sector involvement in the criminal justice system".