‘Mortified’ Serco admits fraud over prisoner tagging scandal

A “mortified” Serco was slapped with a £19.2 million fine by fraudbusters on Wednesday for an outsourcing scandal where taxpayers were billed for tagging prisoners who had died.

Serco ended a six-year investigation into the infamous prisoner-tagging episode after it signed a deferred prosecution agreement with the Serious Fraud Office.

The government contractor, which has 50,000 employees, admitted three offences of fraud and two of false accounting at its electronic tag subsidiary Serco Geografix.

The penalty comes after the firm “dishonestly misled” the Ministry of Justice over profits made for tagging people released from prison 2010 and 2013.

Serco was one of the contractors responsible for electronic monitoring of offenders, supplying ankle tags for around 14,000 people freed from prison.

But an internal government probe in 2013 found the outsourcer had overcharged the MoJ by billing it to tag released convicts who had gone back to prison, left the country or in some cases died.

The scandal led to a freeze on Serco bidding for government work, shares crashing and the exit of then-chief executive Chris Hyman.

Chief executive Rupert Soames, who has led a turnaround, stressed that no executives or board members who had been running Serco at the time remained there, and he apologised again for the crisis.

“Those of us who now run the business are mortified, embarrassed and angry that, in a period between six and nine years ago, Serco understated the level of profitability of its electronic monitoring contract in its reports to the MoJ,” he said. “Serco apologised unreservedly at the time, and we do so again.”

The company will take the fine, plus £3.7 million of costs to the SFO, as an exceptional item in next year’s accounts. Shares fell 1% down 1.4p to 144.4p