G4S faces £38m fine to settle tagging fraud

G4S has agreed a preliminary deal with the Serious Fraud Office to end an investigation into fraud offences related to the security outsourcer overcharging the Government to monitor electronically “tagged” offenders.

Almost a decade ago, the FTSE 100 company ran into trouble after it emerged that for years it had overcharged the taxpayer to monitor offenders. In some cases, it is alleged that criminals thought to have been tagged turned out to be dead, back in prison or had their tags removed. Some had even left the UK or never been tagged at all.

G4S has agreed in principle a “deferred prosecution agreement” with the SFO, taking responsibility for three offences of fraud related to financial reporting to the Ministry of Justice about the contracts.

The deal involves allegations over G4S “dishonestly misleading” the MOJ over how much it profited from the contracts. Under a DPA, a company avoids criminal prosecution if it admits wrongdoing and complies with agreed conditions such as checks on its behaviour, as well as financial penalties.

A judge will next week hear the terms of the DPA. If they are approved, G4S will pay a £38.5m fine – which has been reduced by 40pc because of the company’s co-operation – and the SFO’S £5.9m costs, ending the case.

Investigations into allegations of improper billing, which were initially the focus of the SFO’S review, have now been concluded without any criminal charges. G4S paid the MOJ £121.3m as part of a civil settlement in 2014.

Ashley Almanza, G4S chief executive, said the company’s “behaviour which resulted in the offences committed is completely counter to the group’s values and standards, and is not tolerated within G4S”.

The company says it has since implemented “significant changes to people, policies, practices and controls”.