19th Nov 2013 17:09
LONDON (Alliance News) - The UK government Tuesday rejected an offer by G4S PLC to refund it GBP24.1 million for overcharging on a contract to tag criminals, after the outsourcing company said it own internal review by a law firm had found there was overcharging on the contract but its employees didn't break any laws.
In a statement, G4S said it has issued the Ministry of Justice with credit notes totalling GBP23.3 million for amounts incorrectly billed between 2005 and May 2013, and will also pay back a further GBP0.8 million for billings made from June this year to date.
However, the National Audit Office, which has just produced a report for parliament setting out events around the contract, said the Ministry had not currently agreed to any refund offers.
The government in July placed all the criminal tagging contracts held by G4S and Serco PLC under review after an audit showed 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.
In a statement, G4S said law firm Linklaters had "conducted an extensive search and review of emails and numerous interviews with relevant employees and has not identified any evidence of dishonesty or criminal conduct by any employee of G4S in relation to the billing arrangements under the EM contracts."
However, it said the review had confirmed that sometimes, the G4S unit responsible for the contract had wrongly though it was allowed under the contract to charge for monitoring services when equipment had not been fitted or after it had been removed.
"This billing practice, which the company believes was confined to the EM contract for England and Wales, was not consistent with the contract or G4S' values and the company has apologised to the Ministry of Justice and issued credit notes totalling GBP23.3 million for amounts incorrectly billed between 2005 and May 2013," it said. It said it will also pay back a further GBP0.8 million for billings made from June this year to date.
However, the National Audit Office said 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."
"PwC?s estimate is that the potential overcharge by both providers in total may amount to tens of millions of pounds," it added.
"The NAO?s report includes examples of disputed billing practices which show that, in some instances, both contractors were charging the Department for monitoring fees for months or years after electronic monitoring activity had ceased; over similar timescales where electronic monitoring never occurred; and multiple times for the same individual if that person was subject to more than one electronic monitoring order concurrently," the National Audit Office went on to say.
The payback suggested by G4S, if accepted, would be covered by an impairment the charge the company had already announced, but G4S said it has incurred an additional investigation cost of GBP2 million.
G4S last month replaced its chief executive as part of an attempt to repair its relationship with the UK government following the tagging allegations.
"The way in which this contract was managed was not consistent with our values or our approach to dealing with customers. Simply put, it was unacceptable and we have apologised to the Ministry of Justice. As part of a wider programme of corporate renewal, we have changed the leadership of our UK business and we are putting in place enhanced risk management and contract controls," new Chief Executive Ashley Almanza said in a statement.
The company said it is continuing to cooperate with the Ministry of Justice review of the contracts and the Linklaters internal review is also ongoing.
G4S shares closed up 0.9% at 259.04 pence Tuesday.
By Steve McGrath; [email protected]; @stevemcgrath1
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