G4S boss sorry for overcharging
The head of security giant G4S has apologised to the taxpayer for overcharging by millions of pounds on contracts for tagging criminals.
G4S chief executive Ashley Almanza admitted the company failed to "tell the difference between right and wrong" when dealing with its electronic monitoring contracts.
And Serco chairman Alistair Lyons told MPs on the Public Accounts Committee it was "ethically wrong" that his company also overcharged the Ministry of Justice.
The Serious Fraud Office (SFO) has opened a criminal investigation after it emerged G4S and Serco overcharged the Government for tagging offenders, some of whom were found to be dead, back in prison or overseas.
Mr Almanza said: "It was a judgment that was flawed. It was just a flawed judgment. I don't think we did correctly tell the difference between right and wrong. We got it wrong."
He added: " I apologise to the Secretary of State and I should apologise to this committee and the taxpayer on behalf of our company. We didn't have the systems in place that we needed.
"Too much was left to a small number of individuals and we didn't have appropriate checks and balances in place and that is changing now as we speak."
Mr Lyons said: " Managers within our UK division may have genuinely interpreted the contract that way but that's not the point, as far as we're concerned. It was never right that we should bill where we were not doing work in respect of that billing.
"That was wrong. It was ethically wrong and for us it's one of the signs that say we need to have an attitudinal change within our business.
"As far as the business is concerned, as far as 122,000 people around the world is concerned, they should never feel that because they have commercial objectives to achieve, then they should compromise on what is right or compromise on dealing fairly or transparently with the customer."
Committee chair Margaret Hodge said: "If you had never been caught on some of these people who are out of jail, dead or whatever, you would have carried on charging to the year 3000."
Mr Lyons replied: "It was totally wrong. As far as we're concerned, it may have been what a contractual interpretation, what the lawyers might argue, it still wasn't right."
Yesterday, the Government rejected a £24 million offer from G4S to settle the overcharging scandal with officials vowing to "pursue all possible avenues" to recoup more taxpayers' cash.
Asked if anyone had been sacked, Mr Lyons said: " There have been disciplinary investigations into the electronic monitoring contract as you're aware that's also subject to a Serious Fraud Office investigation.
"The Serious Fraud Office has asked us not to potentially compromise their investigation by our own at the moment."
Mr Lyons and Mr Almanza said no evidence of overcharging on other contracts held by Serco and G4S had been found.
Asked if the staff on the contracts would have received a personal financial reward as a result of declaring "extra business", Mr Almanza said: "Not directly. But indirectly, of course they would have benefited from reporting higher profits in their business unit."
Mr Lyons agreed the same applied at Serco.
He also admitted that since the disclosures about the tagging contracts surfaced in July, Serco has lost a third of its value on the FTSE 100 Index - equal to £1.3 billion.
Mr Almanza was less specific, but added: "It's hard to attribute but there's undoubtedly been a loss of value in the company."
The SFO investigation into tagging contracts began after a forensic audit was ordered by the Government following concerns raised about the system - including by one former G4S employee.
The shock disclosures sparked a Government-wide review of all contracts held by Serco and G4S.
A report issued by the National Audit Office (NAO) yesterday said the audit, carried out by accountancy firm PwC, had cost £2 million so far.
It found Serco received £15,500 for operating a monitoring unit it had not been able to install in the first place for nearly five years and G4S kept taking money for three years in another case, netting £4,700.
In another case, Serco billed the MoJ four separate times for the same tag as the individual was under multiple supervision orders.
G4S said in a statement 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".
Credit notes have been issued for £23.3 million for the period from 2005 to May 2013, with another for £800,000 to follow for recent months.
There was no evidence that it extended to any of its other Government contracts, said the firm, which has faced repeated criticism of its performance, not least over security for the 2012 Olympics.
An MoJ spokesman said it was still working with the firms and the independent auditors to work out "what the final sum will be".
"The Secretary of State has been clear: we are determined to secure a refund for the taxpayer,'' he said. " We have taken appropriate legal advice and will pursue all possible avenues."
Unison chief Dave Prentis said: "Saying sorry hardly compensates for a catalogue of catastrophes and for wasting millions of pounds of taxpayers' money.
"How many more millions will be wasted by failing contractors before the Government starts hearing the alarm bells and calls for a wider review of the use of outsourcing in public services?
"If it is proved that a private company has acted fraudulently, failed to deliver for and cheated taxpayers, they should be barred from bidding for contracts in the future."