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G4S and Serco under fire amid new fraud allegations

G4S referred to the Serious Fraud Office for a second time

Shady security privateers Serco and G4S took a hammering yesterday after a review into their combined £5.9 billion worth of government contracts unearthed shocking behaviour by the two firms.

Serco has agreed to repay the government £68.5 million for overcharging on tagging contracts - including for offenders who were back in prison, overseas or dead.

G4S has not agreed to give any money back, but discussions continue.

Meanwhile G4S has been referred to the Serious Fraud Office (SFO) for a second time after investigators found "serious" issues with invoicing, delivery and performance reporting in two of its court services contracts.

And police have been asked to investigate Serco staff caught recording prisoners as having been delivered ready for court when they were not.

Both companies have also been forced to back away from bidding for probation service contracts - but ministers have muddied the waters by saying they can support smaller firms.

The measures follow a SFO investigation involving both companies was initiated after it was revealed they had overcharged the government for tagging offenders, some of whom were found to be dead, back in prison or overseas.

Cabinet Office Minister Francis Maude claimed Serco's agreement to give back £68.5m was "good news for taxpayers."

But shadow justice secretary Sadiq Khan condemned the government for not excluding the pair from future work.

He said: "It has been left to G4S and Serco to rule themselves out of contracts, a decision neither company should ever have been left to take.

"David Cameron's probation privatisation gamble risks turning into a disaster.

"It is disgraceful they are going ahead and still allowing both companies to play a supporting role."

Probation union Napo welcomed the news that the companies will be at least partially shut out from bidding for a sold-off probation service.

But general secretary Ian Lawrence said the fight would go on to make sure G4S and Serco "have no future in the justice sector."

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