G4S to pay £38.5m to settle MoJ fraud charges

FTSE 100 security outsourcing company G4S is to pay £38.5m to settle charges of fraud in a prisoner tagging contract with the Ministry of Justice (MoJ), in a deal with the Serious Fraud Office (SFO)

Under the terms of the deferred prosecution agreement (DPA), G4S subsidiary Care and Justice Services (UK) Ltd (G4S C&J) will accept responsibility for three offences of fraud arising from a scheme to dishonestly mislead the MoJ as to the true extent of its profits between 2011 and 2013 from its contracts for the provision of electronic monitoring services. 

The scheme was designed to prevent the MoJ from obtaining information to which it was entitled and from using this to decrease G4S C&J’s revenues under those contracts. 

Subject to approval by the court and compliance with the terms of the DPA, the settlement concludes the SFO’s investigation into G4S C&J. Investigations into allegations of improper billing, which were initially the focus of the probe, have now been concluded without any criminal charges being brought.

G4S C&J has already paid compensation to the MoJ as part of a £121.3m civil settlement in 2014. The company will now pay the £5.9m costs of the regulator’s investigation, which began in 2013, plus a £38.5m settlement.

Lisa Osofsky, SFO director, said: ‘G4S Care & Justice repeatedly lied to the Ministry of Justice, profiting to the tune of millions of pounds and failing to provide the openness, transparency, and overall good corporate citizenship that UK taxpayers expect and deserve from companies entering into government contracts.

‘The terms of this DPA will provide substantial oversight and assurance regarding G4S Care & Justice’s commitment to responsible corporate behaviour.’

G4S C&J said the fine reflected a discount of 40% as a result of its substantial cooperation with the SFO’s investigation.

The regulator also took account of the company’s actions to reform its operations since 2013, which have included making substantial changes to its senior management and that of G4S C&J, the adoption and implementation of a corporate renewal programme approved by the UK government, which included enhancing systems of risk management covering bidding, contract on-boarding and management and strengthening assurance activities, operating practices, controls, policies, and procedures throughout its operations, as well as subjecting itself to internal and external analysis, review, and audits.

Ashley Almanza, G4S group chief executive, said: ‘The behaviour which resulted in the offences committed in 2011 and 2012 is completely counter to the group’s values and standards and is not tolerated within G4S. 

‘We have apologised to the UK government and implemented significant changes to people, policies, practices and controls, designed to ensure that our culture is underpinned by high ethical standards and that our business is always conducted in a manner which is consistent with our values.

‘We have made significant progress in embedding these standards throughout the group and we are pleased that this has been acknowledged by the SFO and the UK government. 

‘Resolving this long-standing matter brings certainty to G4S and allows us to focus on delivering innovative and valuable services to our customers in order to grow our business. This represents an important milestone for the group.’

The proposed DPA was the subject of a preliminary court ruling on 10 July, and the SFO and G4S C&J will now seek final judicial approval to the DPA from the court on 17 July.

By Pat Sweet

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