G4S Loses Australia Contract Amid Detention Center Revamp

G4S Plc (GFS), the world’s biggest provider of security services, lost an Australian government contract for an asylum seekers detention center after an investigation found deficient safety arrangements.

Australian rival Transfield Services Ltd. (TSE) will take over from Crawley, England-based G4S next month to provide security and welfare services at the offshore detention center at Manus Island in Papua New Guinea, according to Immigration Minister Scott Morrison.

To improve safety and conditions, the government aims to establish a consistent system based on one security provider at the centers on the islands of Manus and Nauru, Morrison said on Feb. 23 at a press conference in Sydney. Transfield is already in charge of security at Nauru. Morrison ordered an investigation last year into security arrangements and adequacy of infrastructure at all processing centers.

“We inherited a center that was under-resourced and under-capacity and the security arrangements were deficient,” the immigration minister Morrison said in an interview with broadcaster ABC about the center in Papua New Guinea, according to a transcript on the ministry’s website. “The contractors that have been operating at the center, I haven’t renewed their contracts and I put new contractors in place, which have actually started this week.”

A G4S representative said via phone today the company isn’t currently able to comment on the minister’s remarks. Transfield’s A$1.22 billion ($1.1 billion) contract allows it to operate the Manus and Nauru centers until October 2015.

The offshore detention centers came into the public spotlight following several violents incidents, including one at Manus last week that left one dead and 62 injured.

Violent Riots

The majority of the rioting at the Manus center, which houses 1,332 detainees, took place on the night of Feb. 17, Morrison said on Feb. 23. G4S said last week it restored order “without the use of force.” A 23 year-old Iranian man named Reza Barati, who arrived at the Manus center in August, died.

The Australian government and police are investigating the events.

“G4S will take the strongest disciplinary action against any employee found to have been involved in any wrongdoing against any person in our care,” the U.K. company said in an e-mailed statement yesterday, adding it will cooperate fully with the inquiries.

G4S said in a statement today that the Australian immigration department told the company in December about the plan to terminate the Manus contract. The contract was originally due to expire at the end of October 2013 and then received two extensions, the company said.

Reputational Damage

In the U.K., G4S had suffered a series of blows to its reputation over the past two years. Ashley Almanza replaced Nick Buckles as CEO in June after the security services provider failed to provide enough guards for the London Olympics. G4S and rival Serco Group Plc also last year agreed to an audit of their government contracts after irregularities were found over payments for tagging prisoners.

The U.K. justice ministry said at the time the companies must undertake “corporate renewal,” and threatened to exclude them from future government work if changes were unsatisfactory.

To contact the reporter on this story: Morgane Lapeyre in London at mlapeyre@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net

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