Birmingham prison has been returned to state management © Getty Images

G4S has agreed to pay a £44m fine over its contract for electronic tagging of prisoners as the UK’s Serious Fraud Office said the outsourcer had “repeatedly lied” to the Ministry of Justice.

The SFO on Friday said G4S Care and Justice — a wholly owned subsidiary of G4S that has accepted responsibility for three cases of fraud — had misled the government about the true extent of profits earned between 2011 and 2013 for the prisoner tagging contract. 

The deal draws to a close the bulk of the SFO’s seven-year investigation into G4S and Serco over tagging contracts after Serco agreed to pay a £19.2m fine last year to settle three offences of fraud and two for false accounting between 2010 and 2013. 

G4S has accepted responsibility for three cases of fraud, which benefited the company to the tune of £21.4m in profits, according to the SFO. It will pay the sum, and the agency’s costs, pending approval by a UK judge. 

Ashley Almanza, group chief executive, said G4S had “apologised to the UK government and implemented significant changes to people, policies, practices and controls” within the company. It said the changes were "designed to ensure that our culture is underpinned by high ethical standards" and that they "have made significant progress in embedding these standards throughout the group and are pleased that this has been acknowledged by the SFO and the UK government".

If approved, G4S will not face criminal charges over the conduct, meaning it will remain available for government contracts. The SFO said its investigation into individuals was continuing, however. 

Lisa Osofsky, SFO director, said G4S had “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 provisional deferred prosecution deal with G4S paves the way for it to be awarded a contract to manage either the new Wellingborough or Glen Parva prisons, which will provide an additional 3,360 prison places by 2023. The jails are due to be completed next year and the contracts to run each of them are worth around £300m over 10 years. 

The new prison awards come despite troubles with privatised prisons. The government was forced to take over the management of HMP Birmingham from security contractor G4S in 2018 after an inspector’s report found it “exceptionally violent”. Inmates were described as being high on drugs and wandering around like zombies in a “war zone”. Last year, the government decided to return HMP Birmingham permanently to state management.

 


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