Former Serco Directors “Hid £12m Profits”

Reading The Times,

it comes as no surprise here in West Lancashire to learn the saga of services outsourcer Serco corruption rolls on. Ten years on, the alleged tagging fraud, admitted by the company, and two former Serco directors are accused of fraud over electronic tagging contracts with the Ministry of Justice, conspired to conceal £12 million in profits, a court was told. Nicholas Woods, 51, former finance director of Serco home affairs, and Simon Marshall, 59, former operations director of field services, allegedly encouraged an unnamed man to submit fictional costs to the Ministry of Justice between 2011 and 2013.

Michael Bowes, QC,

prosecuting, said that the company set up a subsidiary, Serco Geografix, to falsely claim £500,000 a month in costs “which were completely fictitious”. Between October 2010 and September 2012, Serco allegedly reduced its apparent profits from £27 million to £15 million, concealing an extra £12 million.

Serco lost its contract to tag criminals in the UK in 2013. One of the largest government contractors, Serco is valued at £1.7 billion and operates in the immigration and prisoner services, hospitals, defence and transport sectors. Mr Bowes said that it was not possible to calculate the precise amount gained by the company or lost by the Ministry of Justice. “This is about a fraud on the taxpayer, on public funds, carried out by the defendants to benefit Serco, the company which employed them,” he told Southwark crown court.

“The false reports as to costs were made in order to conceal Serco’s high profit margins and to stop the MoJ from taking steps to recover any of Serco’s previous profits or otherwise reduce the revenue stream Serco was obtaining through its operation of the contracts for the tagging”.

Woods and Marshall are jointly charged with fraud said to have occurred in August 2011. Marshall faces two further counts of fraud in 2012 and 2013. They deny the charges. Mr Bowes said that as part of the Ministry of Justice contract, Serco was obliged to submit a regular financial report on the project.

“The information in that financial model had to be given to the MoJ, under the contract, had to be true and accurate, not false, misleading or fictitious,” Mr Bowes said. “The prosecution’s case is that the submitted costs were not true and accurate and so were false, misleading and fictitious. The prosecution’s case is that the defendants knew that and so acted dishonestly.” The trial, which is expected to last up to 12 weeks, continues.

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