21st Nov 2013 15:42
LONDON (Alliance News) - Serco PLC's Chief Executive Officer for the UK and Europe, Jeremy Stafford, Thursday became the latest casualty in its management team, stepping down as the firm works to win back trust from the the UK government after being put under investigation over allegations of fraudulent charging on two contracts.
In a statement, Serco said that the firm has been, "working hard to refresh its relationship with central government in the UK," for the last four months, resulting in the decision to change the leadership structure at the firm in order to, "accelerate and consolidate that process."
Stafford steps down from the role immediately with Andrew White, Chief Operating Officer of UK & Europe, stepping into the role on an interim basis. The firm said the split of the UK & Europe division into separate business lines is also underway.
Serco was placed under investigation by the UK government in July when all the criminal tagging contracts held by the firm and G4S PLC were placed under review after details from an audit emerged, showing that they had been over-charging, claiming for people who were dead, who had never been to prison, or never tagged in the first place. Earlier this month, the Serious Fraud Office opened a criminal investigation into the contracts.
Additionally, the government in August then called in police to examine claims of fraudulent misreporting of data on Serco's contract to transport prisoners to court in London and East Anglia.
G4S released a statement this week following an internal review by independent law firm, Linklaters, stating that while its employees had not broken any laws, the firm has found evidence of overcharging on the government criminal tagging contract.
The National Audit Office said that following a forensic audit of the contracts by PwC, the Ministry of Justice is in dispute with G4S and Serco over the amount of money by which the Department may have been overcharged for electronic monitoring services under the current contracts.
Stafford's departure follows the departure of group CEO Christopher Hyman in October, who resigned due to the contract issues. G4S also last month replaced its Chief Executive as part of an attempt to repair its relationship with the UK government following the tagging allegations. It is also splitting out its UK public contract operations.
Neither company can sign a contract with the UK government until the current contract issues are resolved.
Serco last week warned that the UK government issues and the impact of October's US downgrade had put the firm under pressure as it dealt with delayed or lost contracts. The company cut its full-year profit expectations and warned that profits in 2014 are set to be even lower.
Shares in the troubled security firm were trading up 2.1% at 439.928 pence per share Thursday afternoon.
By Alice Attwood; [email protected]; @AliceAtAlliance
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