Serco dives on new row

Shares in Serco, the FTSE 100 giant that runs everything from London’s Boris bikes to the Atomic Weapons Establishment, tanked today after referring some of its employees to the police.

Serco confirmed that it was handing back £2 million in profit to the Ministry of Justice, after it discovered irregularities in records kept for its £285 million prisoner-escorting contract.

The group will also forgo any future profit from the seven-year contract, but insisted there was “no evidence that this misreporting was undertaken with the knowledge or approval of management outside the contract”.

This comes on top of the electronic-tagging scandal in July, which has resulted in Serco and rival G4S being investigated for allegedly overcharging the taxpayer to monitor non-existent prisoners’ tags, including for dead people and those in custody.

Chief executive Christopher Hyman vowed there would be “corporate renewal” to reassure the government that the group was properly managed.

There is also a government-wide review into the group and Justice secretary Chris Grayling warned yesterday that Serco would not win future public contracts “unless it undertakes a rapid process of major change”.

Investors fled Serco on all this news, resulting in a 10.1% slump to 545p.

A 2.6% fall in half-year pre-tax profit to £106.1 million added to Serco’s woes.