Serco has admitted responsibility for three offences of fraud and two of false accounting after misleading the Ministry of Justice on profits gathered from its electronic monitoring contract with the department.
Serco Geografix Ltd – a subsidiary of Serco Group plc – was accused of a “deliberate” fraud against the government in which the group hid true profits accrued between 2010 and 2013.
A ‘deferred prosecution agreement’ (DPA) announced earlier this month by the Serious Fraud Office means that the corporation will pay a penalty of £19.2m and the full cost of the SFO’s investigative costs - £3.7m.
Justice William Davis said: “SGL engaged in quite deliberate fraud against the MoJ in relation to the provision of services vital to the criminal justice system.”
In 2013, Serco was found to have overcharged for electronic tagging of offenders. Serco invoiced the ministry for offenders who were in dead, already in prison or were not being monitored at all, and therefore would not require tagging.
The DPA must now be approved by the courts following an investigation.
Director of the SFO Lisa Osofsky said: “SGL engaged in a concerted effort to lie to the MoJ in order to profit unlawfully at the expense of UK taxpayers. The SFO will pursue those who engage in this sort of criminal conduct so that they are held to account.”
The DPA concluded the SFO’s investigation of SGL and all Serco Group companies but the investigation into individuals associated with the case continues.
Rupert Soames, Serco Group chief executive, said: “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 Ministry of Justice.
“Serco apologised unreservedly at the time, and we do so again.”
