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29 August 2013 | Will Green
The Ministry of Justice (MoJ) and Serco have called in the police over alleged wrongdoing on a contract to transport prisoners.
An audit by the government department has uncovered “potentially fraudulent behaviour” by Serco staff in recording prisoners as having been delivered ready for court when in fact they had not.
The MoJ has put the Prisoner Escorting and Custodial Services (PECS) contract under “administrative supervision”, while Serco has been ordered to carry out “corporate renewal”, including overhauling the contract management team, strengthening internal auditing and opening its books to scrutiny.
The government will assess this work after three months and if found unsatisfactory “Serco will face exclusion from all new and future work with government”.
Serco has agreed to return previous profits – estimated to be around £2 million – and to forego future profits on the contract, which was awarded for seven years in 2011 with an annual value of £40.7 million.
The contract covers London and East Anglia and involves a range of services, including the collection of offenders from prison and their delivery to court.
Secretary of state for justice Chris Grayling said: “It’s become very clear there has been a culture within parts of Serco that has been totally unacceptable and actions which need to be investigated by the police.
“We have not seen evidence of systemic malpractice up to board level, but we have been clear with the company - unless it undertakes a rapid process of major change and becomes completely open with government about the work it is doing for us, then it will not win public contracts in future. The taxpayer must know that their money is being properly used.”
Serco said it had found no evidence the “misreporting was undertaken with the knowledge or approval of management outside the contract”.
Chief executive Chris Hyman said: “I am deeply saddened and appalled at the misreporting of data by a small number of employees on the contract. This is a very serious matter for the customer and for us. We will not tolerate any wrongdoing and that is why we have referred this matter to the police. It is also why I have immediately initiated a programme of change and corporate renewal.”
The audit was part of a wider review of all government contracts with Serco and G4S announced after overcharging worth tens of millions of pounds was discovered on prisoner tagging contracts.