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How firms like Serco and G4S pad their invoices for tens of millions – and get away with it

21st Century Wire says…

Government outsourcing giants SERCO and G4S have managed to win contracts worth billions in tax payer money, while largely managed to avoid any scrutiny from mainstream media, and government accounts from what it seems. There’s a reason for that…

Now Justice Secretary Chris Grayling has made big news this week accusing multinational outsourcing firms G4S and SERCO of charging for electronically tagging convicts who were either back in prison – or who had already died. Yes, you heard that one right.

As a result, millions of dollars have been wiped off the stock market value of both G4S and SERCO. So it looks like the taxpayers have been propping up the share prices of SERCO and G4S all these years – giving them that extra profit, generated by institutional fraud and theft.

The solution is equally as shady – to have multinational accountancy firm Price Waterhouse Coopers (PwC) do the auditing on behalf on the government. This could be a bit of a problem too…

For starters, where was auditor PwC when its client Barclays was gaming Libor? What was PwC doing when its client AIG was processing billions in fraudulent transations which ended in a multi-billion dollar bailout to the firm? What was PwC thinking when it allowed  Tyco International Ltd. to continue engaging in multibillion-dollar accounting fraud over a period of years? And the list goes on, and on. From one corporate bemoth to another. Sure, PwC will do a ‘proper audit’ of SERCO and G4S. Outsourcing the audit to yet another large conglomerate like Price Waterhouse Coopers is no solution either, as it’s the equivalent of allowing one branch of a mafia family to investigate the another. Too late though, because the government has already given up on auditing anything these days.

Herein lies the problem with outsourcing most of our public services and operations to large conglomerates – it’s easy to fiddle the invoices, whereby, over a long period of time, a little can add up to tens of millions, with the taxpayers picking up the bill of course.

Politicians never want to talk about this reality, because they need companies like SERCO to make their own books appear somewhat balanced, by pushing their payments forward like kicking the can down the road – which all makes PPI’s and PPP look as if they’re “more cost effective”.

Once in while, the media may catch wind of a scandal, and even then, political hacks will avoid the issue as much as possible for fear of losing out on the all the perks that large multinationals can offer our struggling career politicians. 

It’s interesting to note that BBC mentioned G4S in its headlines, but not SERCO. Why is that?

This could be because the BBC is currently outsourcing parts of their operation to SERCO (the firm was also a ‘preferred bidder’ to operate license fee collections). Embarrassing, isn’t it. 


This is why nothing will happen to SERCO and G4S, and why they will not lose any contracts – because they have penetrated the state so deeply in a way that cannot be reversed – or so it seems.

Nonetheless, it’s still somewhat encouraging to see the BBC covering a meaningful news story here, and we hope to see them engage in more journalism in future. Here is what the BBC had to say about Serco and G4S…

G4S probe after tag firms’ multi-million overcharging confirmed

BBC News

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.

He said some charges were for tagging people who were in jail or abroad, and a few who had died.

Serco agreed to a new “forensic audit” by accountants Price Waterhouse Coopers but G4S declined, he added.

The firms have said they will repay any amount which is found to be due.

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.

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 billing

“In some instances, charging continued for a period of many months and indeed years after active monitoring had ceased” –

Electronic tagging of criminals is a key part of the government’s strategy to monitor offenders in the community. Contracts are awarded to private companies who 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.

He said that auditors had revealed a “significant anomaly in the billing practices” of both companies.

G4S in 2012

  • £7.3bn turnover
  • Pre-tax profit: £516m
  • Quarter of turnover relates to government contracts
  • Half of business in Europe
  • Value of government contracts: £394m

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.

“In some instances, charging continued for a period of many months and indeed years after active monitoring had ceased.”

‘Open and transparent’

Mr Grayling said officials estimated that the total over-billing was in the “low tens of millions”.

He said that Serco had agreed to the forensic audit [that is, a search for possible illegality] of what happened, which included looking at executives’ emails…

Read more at BBC

READ MORE ON SERCO AT: 21st Century Wire Serco Files



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