Privatized services operator admits to fraud

Both Serco and G4S operate privatized services in Canada where wrong doing could have very serious consequences.

Ottawa (04 July 2019) — Serco, a company operating privatized services in Canada and many other countries, has admitted to 3 counts of fraud and 2 counts of false accounting. The company also paid a fine of £22.9 million (roughly $37.6 million Canadian). The admission ended a lengthy investigation into a Serco subsidiary for overcharging the British Ministry of Justice by an estimated £70.5 million (roughly $116 million Canadian).

The British Serious Fraud Office is still investing another company, G4S, for overcharging the Ministry of Justice for privatized services. G4S has admitted to overcharging the Ministry of Justice by £108.9 million (roughly $166 million Canadian).

Overcharging for privatized correctional services

The service where Serco and G4S admitted to overcharging the British government was a privatized correctional service – electronic tagging of people on bail or offenders serving sentences in the community. What is ironic is that many of the people who were tagged would have committed far less serious offences than fraud of $116 million or $166 million.

Both Serco and G4S operate sensitive privatized services in Canada

Both Serco and G4S operate privatized services in Canada where wrong doing could have very serious consequences.

Serco operates services like air traffic control and fire/emergency at 2 Canadian military bases – Moose Jaw and Goose Bay. It also operates driver testing, security guard testing and private investigator testing in Ontario.

G4S has the contract for passenger and baggage screening at airports in the Pacific Region. This includes Vancouver and Victoria.

Companies that committed fraud can control services where people with criminal records could never get hired

All of these services are ones where a lot can go wrong if there are ethical issues. In fact, you can’t even be a security guard, private investor in Ontario unless you have a clean criminal record. A criminal conviction would also affect your ability to work in jobs in secure areas of airports.

But even though people with criminal records may not be able to get frontline, a company that has admitted to 3 counts of fraud and another that is under investigation for fraud are still permitted to run these services.

Usual excuses provided for privatization problems

Whenever a problem occurs with a privatized service that is so bad that no amount of PR or lobbying can make it go away, the privatization industry is ready with its excuse: 'It was an isolated example and the individuals responsible are no longer with the company.'

Canadians who have seen how SNC-Lavalin responded to bribery scandals, including one related to a P3 privatization scheme in Montreal, will have heard that excuse a lot.

Serco is using that same excuse. According to Serco's Chief Executive, the senior executive are, “mortified, embarrassed and angry.”

That’s very different from what the company said when the scandal first came to light. A British National Audit Office report from late 2013 states that, “Serco has stated to us that it considers it charged in line with its genuine interpretation of the contract.”

For most people, the idea that overcharging the public by $160 million is just a matter of interpretation is ridiculous. Most people would also argue that it makes no sense for a company that has admitted to trying to defraud the public to be delivering sensitive public services. But when public services are privatized and governments depend on companies operating privatized services, both of these things continue to happen.

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The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 390,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. — NUPGE