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Serco to Pay U.K. Government $112 Million for False Billing

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Dec. 19 (Bloomberg) -- Serco Group Plc will repay the British government 68.5 million pounds ($112 million) after an audit found the service provider overcharged for the electronic tagging of criminals, including some who had died.

The figure includes reimbursement for money owed on the electronic monitoring contract and for other costs incurred, including the cost of the review and 4.2 million pounds for the transition to new electronic monitoring arrangements, the cabinet office said in a statement today.

“It’s good news for taxpayers,” Francis Maude, minister for the Cabinet Office, said in the statement. “We are confident that the company is taking steps to address the issues which our review has identified.”

Serco’s stock has plunged about 30 percent since the Justice Ministry first reported anomalies in the billing practices of it and G4S Plc on July 11. Chief Executive Officer Chris Hyman resigned in late October over the issue. The stock rose as much as 8.6 percent today. G4S declined as much as 3.6 percent.

“We are very pleased to be making strong progress in further rebuilding the confidence of our U.K. Government customer,” Serco Chairman Alastair Lyons said in a statement. “The contract issues that were identified should never have happened and we apologize unreservedly for them.”

Both Serco and G4S have been referred to the Serious Fraud Office over the electronic tagging review. A separate criminal investigation was opened into G4S today after a Ministry of Justice audit uncovered “problems” with two further contracts held by the company for facilities management in the courts. related to these contracts.

“The MoJ has advised G4S that the Ministry does not have any evidence of dishonesty in relation to these contracts,” G4S said in a statement. “Furthermore, G4S has no evidence of such conduct.”

To contact the reporter on this story: Natasha Doff in London at ndoff@bloomberg.net

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