Shares in G4S (LSE: GFS) fell marginally today after the security firm announced the results of an independent review in relation to billings made to the UK government for electronic tags.
While law firm Linklaters found “no evidence of dishonesty or criminal conduct by any employee of G4S in relation to the billing arrangements under the EM (electronic monitoring) contracts”, the update went on to say:
“In certain circumstances, G4S [Care & Justice Services] wrongly considered itself to be contractually entitled to bill for monitoring services when equipment had not been fitted or after it had been removed.
“This billing practice, which the company believes was confined to the EM contract for England and Wales, was not consistent with the contract or G4S’ values.”
As a result, G4S has apologised publicly to the Ministry of Justice, and agreed to pay back £23.3m worth of credit notes for the amounts incorrectly billed between 2005 and May 2013, with a further £0.8m issued for billings for the period from June 2013 to date.
A sharp slide in the company’s share price this morning was prevented due to an impairment provision made in the group’s half-year results, with G4S incurring external investigation costs of around £2m.
Ashley Almanza, G4S Group Chief Executive, commented:
“The way in which this contract was managed was not consistent with our values or our approach to dealing with customers... As part of a wider programme of corporate renewal, we have changed the leadership of our UK business and we are putting in place enhanced risk management and contract controls.”
At the beginning of this year, G4S was on a roll as it reached 314p, comfortably beating the FTSE as it showed signs of regaining both customer and shareholder trust after the Olympics fiasco. However, the original allegations in June and the subsequent fallout saw it plummet to 206p. Today, it sits around 256p.
