Serco ‘self-cleaned’, says ministry
But peers say it’s justice ministers who should have come clean
The Ministry of Justice has been criticised by a House of Lords committee for not disclosing that a company awarded an electronic tagging contract worth at least £200 million was fined £19.2 million as part of a deferred prosecution agreement with the Serious Fraud Office and ordered to repay the government more than £70 million.
In 2019, Serco Group gave undertakings relating to a fraud by one of its subsidiaries, Serco Geografix Ltd. Mr Justice William Davis found that the subsidiary had “engaged in quite deliberate fraud against the Ministry of Justice in relation to the provision of services vital to the criminal justice system”.
Serco Geografix agreed to pay a financial penalty of £19.2 million plus legal costs of £3.7 million. This was in addition to the £12.8 million compensation already paid to the Ministry of Justice as part of a £70 million civil settlement in 2013.
The judge approved a three-year agreement under which Serco Group agreed to report any evidence of fraud, strengthen of its ethics and compliance functions as required and report annually on its assurance programme.
The full statement of facts was released for publication in 2021. It says:
Through the conduct of its directors, Serco Geografix Ltd caused the reporting of false costs to the Ministry of Justice by Serco Ltd, intending to ensure that the Ministry of Justice did not, on seeing high profit margins, attempt to limit any of Serco Ltd’s future profits, recover any of Serco Ltd’s previous profits, seek more favourable terms during renegotiations of contracts or otherwise threaten the revenue stream Serco Ltd obtained as a result of the continuing operation of the contracts which, over the period October 2010–November 2013, totalled approximately £132 million.
New regulations
Under legislation passed in 2000, prisoners may be released early if their location is electronically monitored. This involves fitting a tag to the offender’s ankle, which is then monitored by a company that has been approved by the secretary of state.
Regulations signed by a junior minister last month approved Serco Ltd for this purpose. The regulations were accompanied by a three-page explanatory memorandum which asserted that there were no matters of special interest to parliament.
This was an “egregious example” of a memorandum that sets out what the legislation does without giving sufficient context, the House of Lords secondary legislation scrutiny committee said in a report published on Friday.
Peers drew “special attention” to the regulations “on the grounds that the explanatory material laid in support provides insufficient information to gain a clear understanding about the instrument’s policy objective and intended implementation”.
The scrutiny committee had raised the issue with the Ministry of Justice. In response, the ministry replied:
Under previous contracts first awarded in 2005 for electronic monitoring services, Serco and G4S overcharged the Ministry of Justice including multiple times for the same cases and for cases where the monitored person had died. This issue came to light in 2013, contracts were terminated and the matter was referred to the Serious Fraud Office for investigation…
The Ministry of Justice’s recent procurement for new electronic monitoring contracts complied with the Public Contracts Regulations 2015. Although the regulations allow suppliers to be excluded from bidding for new contracts in certain circumstances such as fraud, criminal offences and previous poor performance, the grounds for doing so are narrowly drafted.
There were no grounds to prevent Serco or G4S from bidding as they had complied with the terms of the deferred prosecution, had not been convicted of an offence and had “self-cleaned” (in the language of the regulations) by taking measures to prevent a repeat of the events under the earlier contracts.
The Cabinet Office added:
The Cabinet Office conducted a review into the misconduct by G4S and Serco during the SFO investigation and prior to the deferred prosecution agreement being agreed by the court.
This investigation concluded that although the actions of G4S and Serco would constitute grave professional misconduct, which is a discretionary ground for exclusion under the Public Contracts Regulations 2015, the self-cleaning evidenced by both suppliers was sufficient to demonstrate the suppliers’ reliability.
This was signed off at a ministerial level, subject to three years of enhanced monitoring of G4S’s corporate renewal actions which concluded on 8 April 2024.
The Commons public account committee had published a report in October 2022 on tagging services provided by another supplier, Capita.
It said:
HM Prison & Probation Service’s transformation programme for electronic monitoring has failed to transform the service as intended. [It] launched the programme to improve efficiency and increase the usefulness of tagging for police and probation services but, after significant setbacks and delays, the failure has cost taxpayers dear.
Its high-risk and over-complicated delivery model, poor oversight of suppliers, overambitious timetable and light-touch scrutiny from the Ministry of Justice all contributed to its failure to introduce a new case management system, which underpinned the intended benefits and transformation.
These avoidable mistakes wasted £98 million of taxpayers’ money and left the tagging service reliant on legacy systems that needed urgent remedial action, costing a further £9.8 million.
Last week’s report from the Lords scrutiny committee suggested that peers might wish the ask the government for more information about the Serco contract.
The committee said:
It appears to us remarkable that a contract can be awarded in circumstances where a company has been investigated by the Serious Fraud Office and is subject to a deferred prosecution agreement.
The house may wish to ask why the explanatory memorandum did not adequately inform the house about the relevant background to the contracts referred to in the order or explain how the Ministry of Justice has improved its monitoring of such contracts to address the public accounts committee’s concerns.
Lord Rowlands, a Labour member of the scrutiny committee, added:
The Ministry of Justice has granted new public contracts to these companies worth over £500 million but chose not to inform the house of its previous history with these companies. We find that omission inexcusable…
Our committee’s role is to make sure that the government’s explanation of its policy is clear… and to draw any flaws in the explanation to the attention of the house. We didn’t expect to have yet another egregious example.
While we received some additional information from the department, the responses provided are still obscure, referring to the firms “self-cleaning” and to Ministry of Justice’s “enhanced monitoring” without explaining what that actually means.
We wonder why the Ministry of Justice seems so reliant on companies which have been fined for misconduct.
Serco made no mention of its previous involvement in tagging when it announced last November that it had been awarded a six-year contract, which starts next month.
Rule of Law
Labour’s shadow justice secretary will promise to reinstate the rule of law in an election pledge later today.
In what is billed as her first major speech since being appointed nearly eight months ago, Shabana Mahmood MP will accuse successive Conservative lord chancellors of “failing to fulfil their historic duty” and promise that she will “never allow any government I am part of to ignore the law or blame the judiciary for simply doing their job”.
According to extracts of her speech released yesterday, she will criticise the Conservatives for believing they are above the law, referring to the “absurd and grotesque spectacle” of the current Rwanda legislation as well as the lockdown penalties accepted by Boris Johnson and Rishi Sunak.
Mahmood promised that people who report allegations of rape to the police — described as “victims” of rape in comments attributed to her yesterday — would receive state-funded legal advice and representation
She said:
Today, the law treats rape victims as essentially no different from any other witness and so fails to protect them at their greatest hour of need.
With our plans, there will be a free legal advocate at hand in every police force area in England and Wales.
There will be a local solicitor with experience acting for vulnerable people, trained on the specific challenges of rape cases. They will ensure that victims’ rights are respected.
In her closing remarks to an audience of legal professionals, Mahmood — who was a practising barrister until she became an MP in 2010 — will say that the law “must serve society, with no government and no individual above it and none below it, not least those who are most often failed by it today”.
Nothing would surprise me about the Ministry of Justice (should there be an 'In' before 'Justice'?) They tell me they see nothing wrong about the JCIO - the 'arms-length' body of the MoJ that investigates complaints about judges - being exempt from the Freedom of Information Act, the Act designed to ensure transparency and accountability. And they think it's right for the JCIO to share information with the Judicial Office who, they say, is also an 'arms-length' body of the MoJ though their role, of course, is to "protect judges' interests." So no conflict of interest in that "collaboration". And aren't the Judicial office also exempt from the FoI Act? [please correct me if I'm wrong] Hey-ho.
“Self cleaned”!?! My least favourite euphemism of the year (thus far). Does it perhaps come to this: the handful of mega- entities enjoying a quasi- monopoly of capacity to undertake such outsourced activities are perilously near to being the only “show in town”? It is a very small step from there to their becoming an alternative State. Tagging, to employ the straightforward vernacular, should surely more appropriately and safely be effected through the agency of the prison service on the model to which it should ideally be returned as a wholly public service? Instead that essential estate has been offering up juicy morsels of for example prison building and/or management to the private sector, where the companies then far too routinely contrive a second or third rate delivery of those services. They ought to have remained - largely - core functions delivered by knowledgeable, trained specialists in the direct employ of that prison service. Egregious conduct such as that described by the Committee would almost certainly have had anyone in my profession, if similarly exposed ,drummed out of practice.
As to Shabana Mahmood “hope is a song from a weary throat” [Pauli Murray] but it is in my- I hope- non-sententious view an obligation to applaud the sentiments she is reportedly about to give voice to and then, of course, to do our individual and, where possible, collective best to hold her to her words- and indeed her WORD.