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<div class="entry-date">Weekend Edition November 22-24, 2013<br>
<a class="moz-txt-link-freetext" href="http://www.counterpunch.org/2013/11/22/security-giant-admits-38-million-fraud/">http://www.counterpunch.org/2013/11/22/security-giant-admits-38-million-fraud/</a><br>
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<div class="subheadlinestyle"><b><big><big>The G4S Scandal</big></big></b></div>
<h1 class="article-title">Security Giant Admits $38 Million Fraud</h1>
<div class="mainauthorstyle"><big><big>by JAMES KILGORE</big></big></div>
<div class="main-text"><big><big> </big></big>
<p><big><big>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.</big></big></p>
<big><big></big></big>
<p><big><big>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.</big></big></p>
<big><big></big></big>
<p><big><big>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.”</big></big></p>
<big><big></big></big>
<p><big><big>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).</big></big></p>
<big><big></big></big>
<p><big><big>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.</big></big></p>
<big><big></big></big>
<p><big><big>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.”</big></big></p>
<big><big></big></big>
<p><big><big>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.</big></big></p>
<big><big></big></big>
<p><big><big>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.</big></big></p>
<big><big></big></big>
<p><big><big>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.</big></big></p>
<big><big></big></big>
<p><big><big><i><strong>James Kilgore</strong> 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 <a
href="http://store.counterpunch.org/subscriptions/">November issue</a>
of CounterPunch magazine. He can be reached at <a
href="mailto:waazn1@gmail.com">waazn1@gmail.com </a></i></big></big></p>
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