[News] The G4S Scandal - Security Giant Admits $38 Million Fraud

[Anti-Imperialist News]

Weekend Edition November 22-24, 2013
http://www.counterpunch.org/2013/11/22/security-giant-admits-38-million-fraud/



*The G4S Scandal*


  Security Giant Admits $38 Million Fraud

by JAMES KILGORE

G4S, which bills itself as "the world's largest security company," has 
encountered rough going in the carceral marketplace in recent weeks. The 
latest episode in the troubles of this British-Danish security giant 
came with its public admission on November 18 that the firm had 
overbilled the British government roughly $38 million dollars (£24 
million) for electronic monitoring services in the criminal justice 
system. This admission came after authorities had begun an investigation 
of G4S and the UK's other large scale monitoring provider, Serco, for 
alleged wrongdoing. The investigation was slated to come to a head this 
week with the release of a report by the National Auditing Office (NAO) 
as well as a public hearing before the powerful parliamentary public 
accounts committee.

Ultimately, G4S admitted to billing the government for monitors that 
didn't exist. In some cases,  the clients for whom the Ministry of 
Justice was charged included people who had returned to prison, those 
who had been taken off of the monitor, and even a few who had passed 
away.  In one instance the justice ministry paid £3,000 ($4830) for 612 
days monitoring of a man who had been sent to prison for two years 20 
months earlier. G4S removed the tagging equipment but supposedly kept on 
billing because the court had not provided the relevant paperwork.

Once the parliamentary investigation commenced, G4S commissioned the 
Linklater law firm to do an investigation of the company's execution of 
this contract. The Linklater team failed to find any evidence of 
"criminal conduct," just overbilling on a grand scale.  After the 
submission of the Linklater report, a statement from G4S, while 
admitting the billing errors, claimed the security company essentially 
made only an error of judgment when it had "wrongly considered itself to 
be contractually entitled to bill for monitoring services when equipment 
had not been fitted or after it had been removed."

G4S' admission of guilt was accompanied by an apology and the re-payment 
of the money in the form of two credit notes valued at just over £24 
million (approx. $38 million). Because of the investigation, G4S 
withdrew its bid to extend the existing monitoring contract for people 
on parole but still plans to provide services for the probation 
department, worth about £450 million ($724 m).

This scandal follows on the heels of two other setbacks for this 
transnational mega-firm. In October, the South African Minister of 
Justice, Sbu Ndebele, took over the reins of the 2,900 bed Mangaung  
prison that G4S operates in Bloemfontein. G4S has run the facility under 
contract to the government since 2002. However, a recent investigation 
by a university-based think tank, the Wits Justice Project, revealed 
widespread abuse of prisoners including the systematic use of 
electroshock torture and forced administration of powerful psychotropic 
drugs.  The researchers gained access to internal videos which showed 
members of a cohort of guards known as the Emergency Security Team 
(EST), assaulting men incarcerated at Mangaung.  Allegedly the EST even 
had a space known as the "dark room," dedicated to the application of 
electroshock and other types of assault.

G4S's second major scandal also involved the firm's global reach. In the 
midst of the company's bid for security contracts at two major British 
universities, students organized a protest, targeting G4S's links to the 
Israeli police apparatus. The protestors alleged that G4S was profiting 
both from operating security at the checkpoints where Palestinians are 
routinely harassed as they travel in and out of "Israel" as well as 
providing security for illegal settlements in the West Bank.  According 
to the Palestinian solidarity group BDS (Boycott, Divest, Sanctions) G4S 
has also had contracts with Israeli prisons since 2007, including 
connections to the Ketziot and Megiddo facilities which hold Palestinian 
political prisoners. BDS also reports G4S involvement in two detention 
centers where systematic torture of Palestinian political prisoners has 
been alleged, including the detaining of children. A 2010 hearing by the 
Russell Tribunal pointed to yet another dimension of the corporation's 
collusion with the Israelis, claiming that G4S and other companies "all 
acknowledge and actively boast in their promotional material about the 
use of their equipment during the Gaza conflict, which unlawfully 
inflicted loss of life and extensive and serious damage on Palestinian 
civilians and their property."

In the US, G4S's prison operations have been dwarfed by Corrections 
Corporation of America (CCA) and the GEO Group. However, G4S has a much 
larger, more diversified global presence than their US counterparts. G4S 
has 657,000 employees in 120 countries, making it the world's third 
largest private sector employer behind WalMart and FoxConn.  They employ 
59,000 people in North America, with a high concentration of their 
activity focused on complex security systems and operation of 19 youth 
detention facilities. They also have an international technology 
division which claims to have deployed more than two million miles of 
fiber in more than 200 metropolitan and rural areas since 1988.  Their 
revenue in 2012 was £7.5 billion ($12 bn), about four times that of CCA 
and the GEO Group combined.

The firm's recent scandals, while serious, are not unprecedented. 
Numerous cases of brutality on the part of their officers have surfaced, 
including the 2010 death of Angolan Jimmy Mubenga, while being detained 
by G4S immigration staff in the UK. Unions, including the US-based  
Service Employees International Union (SEIU), have also directed 
campaigns at G4S for poor labor standards.   However, G4S's highest 
profile debacle was during the 2012 London Olympics when they failed to 
employ enough security guards to fulfill their contract to cover the 
games. Only a last minute mass deployment of 3,500 British soldiers 
filled the required posts. At the time Labour MP Keith Vaz claimed that, 
"G4S has let the country down and we have literally had to send in the 
troops." The company's stock plummeted nearly 10% in response.

Not surprisingly, earlier this year G4S garnered a nomination for the 
Public Eye Award, an annual NGO accolade for the world's worst company.  
However, G4S failed to secure the prize, not quite measuring up to the 
standards set by the two winners: Shell and Goldman Sachs. There's 
always next year.

/*James Kilgore* is a researcher, writer and social justice activist in 
Champaign IL.  He spent six weeks in a South African prison in 2002, 
before completing six and a half years in US prisons.  He writes 
frequently on criminal justice issues and has published three novels, 
all drafted during his time in prison. His article on mass incarceration 
in America is featured in the November issue 
<http://store.counterpunch.org/subscriptions/> of CounterPunch magazine. 
He can be reached at waazn1 at gmail.com <mailto:waazn1 at gmail.com>/

-- 
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