Serco Gets Tagged With £19.2 Million Fine

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03 July 2019 | Updated 04 July 2019

The Serious Fraud Office will make Serco, the outsourcing giant, stump up £19.2 million - plus costs - for claiming they had tagged offenders when they hadn't. The affair already cost the company nearly £74 million in compensation payments and legal costs back in 2013.

Just as things seemed to be looking up for Serco (last week, ending June 28, the group said that 2019 will be the third year in a row that incoming orders will outpace income) the company has been hit with a Deferred Prosecution Agreement (DPA) which Serco Geografix Limited (SGL), a wholly-owned subsidiary of Serco Group, has accepted. It was due to be rubber-stamped by Mr Justice William Davis. On Thursday 4 July 2019.

Presuming approval, the DPA will result in a payment by SGL of the £19.2 million and the Serious Fraud Office's (SFO) costs.

2013 saw the Ministry of Justice compensated by Serco to the tune of £70 million, with the company also shelling out £3.7 million in legal costs.

Fraud

In entering the DPA, SGL has taken responsibility for three offences of fraud and two of false accounting arising from a scheme to dishonestly mislead the MoJ as to the true extent of the profits being made between 2010 and 2013 by SGL’s parent company, Serco Limited (SL), from its contract 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 SL’s revenues under that contract.

Fessed up

Serco Group, Serco Limited and Serco Geografix all took action when the serious fraud was spotted and the level of this current 'fine'  has been kept as low as it is because of the co-operation of Serco.

Serco actually reported itself to the SFO in late November 2013. This followed the launch in October 2013 of an investigation into Serco and its employees in respect of the electronic monitoring contract, which initially focused on the question of whether Serco Limited had improperly invoiced and been paid by the MoJ for electronically monitoring subjects where no actual monitoring of those subjects had taken place. (These matters are not the subject of the Agreement and having been fully investigated, no criminal charges are to be brought against Serco based upon them.)

Lies

However, the Director of the Serious Fraud Office, Lisa Osofsky didn't pull any punches when she said: “SGL engaged in a concerted effort to lie to the Ministry of Justice in order to profit unlawfully at the expense of UK taxpayers.

"The SFO will pursue those who engage in this sort of criminal conduct so that they are held to account. This resolution not only ensures such accountability but also recognises Serco Group's voluntary self-reporting of the misconduct and substantial co-operation with our investigation.

"Serco Group’s extensive corporate reform and other remediation along with substantial assurances regarding the future corporate integrity of Serco Group was also a factor.

"The measures now in place are designed to achieve the goal of fair and transparent dealing with the Government and other market participants of one of the UK’s largest government contractors."

The full reasons for and the terms of the agreement will be given in open court on Thursday July 4 at the public hearing subject to any reporting restrictions The hearing will take place at the Southwark Crown Court at 10:00am.

Picture: Southwark Crown Court.

Article written by Brian Shillibeer | Published 03 July 2019

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