They face other allegations over other contracts.
The British investigations are unrelated to their outsourcing operations in Australia but a member of the British Public Accounts Committee says people should be concerned.
Stefan Armbruster prepared this report.
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“Well, it’s a judgement that was flawed. It was just a flawed judgement, I don’t think we did correctly tell the difference between right and wrong. We got it wrong.”
That’s Ashley Almanza, the new CEO of one of the world’s largest private sector employers, explaining to a British parliamentary committee what went wrong.
G4S is under a criminal fraud investigation for overcharging the UK government on an offender tagging contract.
Also caught up in the scandal is Serco.
Its new CEO is Alastair Lyons.
“It was never right that we should bill, where we weren’t doing work, in respect to that bill, it was wrong, it was ethically wrong, and for us it is one of the signs that we need to have an attitudinal change within our business.”
Serco is under seven British government investigations, including by the Serious Fraud Office, for its handling of government contracts.
Both the of these huge, multinational, British-based companies are currently barred from bidding for further work there and both have significant interests in Australia, including running mainland and offshore immigration detention centres.
Chair Margaret Hodge of the powerful Public Accounts Committee set the tone.
“Can I just start by saying this is not a session to pass a verdict on whether it is a good or a bad thing for the government to contract public services, what we are about is starting to ensure there’s a proper accountability for the taxpayers pound.”
In a pre-emptive strike, G4S offered the government an apology the day before the hearing and offered to repay the equivalent of AU$41 million of an AU$87 million deal to monitor tagged offenders.
That’s been rejected by the Ministry of Justice, which is waiting on the outcome of the fraud investigation.
In some cases, the government was being charged for monitoring offenders who were dead.
“If you hadn’t of been caught charging for these people who were out of jail, or dead, or whatever, you would have kept on charging until the year 3000. Why on earth, for both of you really, couldn’t this have been detected.”
G4S’s previous CEO resigned in May, due in part to the scandal.
New boss Ashley Almanza admits fault.
“I think the first thing I would say is I apologise to the Secretary of State, and I apologise to the committee and the taxpayers on behalf of our company. We didn’t have the systems in place, too much was left to a small number of individuals and we didn’t have the appropriate checks and balances in place and that is changing now as we speak.”
G4S, Serco and other companies are deeply entwined with the British government’s outsourcing of public services.
The goal: to deliver more efficient services, at a lower cost to the taxpayer, all the while making a profit for shareholders.
Public Accounts Committee member Austin Mitchell spoke to SBS after the hearing.
“I’m not an enthusiastic friend of these big companies having so many government contracts, because what we are doing is replacing a state monopoly for the services, with an oligopoly, they’re to big to displace once they’re incumbent, and they’re too big also to be effectively controlled from the centre.”
Internal control is just one faction in an ongoing debate about how far these companies should penetrate the pubic sector and their duty of care.
G4S employs over 600,000 people in 115 countries.
In South Africa, the government last month found G4S had “lost effective control” of the second largest privatised prison in the world, amid claims inmates were being subdued with involuntarily injections and electric shocks.
G4S denies those claims.
G4S also bungled the London Olympics security contract, forcing the British government to bring in the army.
Opposition Labour MP Austin Mitchell says Australians should be concerned by what has happened in Britain.
“A lot of things that have been made worse under this government were started by the Labour government, that goes for privatisation and outsourcing like this, it goes for reducing the functions of the state. The Labour government did a lot of good but because spending was so high, it tried to economise in this fashion, and therefore it opened the door for the conservative government which believes in reducing the power of the state as an ideology, it opened the door for the conservative government to do it on a much bigger scale.”
The outsourcers say many of the contracts are high risk.
That’s why they come with big rewards, and every now and then things do go wrong.
In Australia, G4S and Serco earn hundreds of millions of dollars from contracts, not just for immigration detention, but the Tax Office, operating trains like the Indian-Pacific and Ghan and much more.
But both companies have been involved in scandals here too.
The hearing in Britain was unrelated to those operations.
SERCO’s Alister Lyons told the committee Britain can now trust his company to do the right thing in future.
“We do an awful lot of other things beside the issues that have arisen this year, which sadden me, which shock me, which I’m very sorry about, but they’ve happened and I need to make sure they don’t happen again and it’s those actions which we are now taking, which is the main reason why I think the taxpayer can have confidence that you can deal with Serco, confident that Serco will deliver value for money, and confident that we will be transparent with our dealings with government.”