Serco Reaches $24 Million Deal to Settle U.K. Fraud Probe

(Bloomberg) -- Serco Group Plc agreed to pay 19.2 million pound ($24.1 million) to settle a six-year fraud probe into false accounting becoming the third major listed U.K. firm to strike a so-called Deferred Prosecution Agreement with prosecutors in recent years.

The agreement struck by its Serco Geografix Ltd. unit will now go before a U.K. judge for approval, the Serious Fraud Office said in a statement Wednesday. Serco has already paid 70 million pounds to the U.K.'s Ministry of Justice and must also pay the SFO's costs.

The investigation dates from 2013 when U.K. regulators begin looking into how Serco Group overcharged for electronic tagging services of criminals, including those who were already dead. The company lost contracts, its then chief executive officer and fifth of its value in the aftermath of the scandal.

“Those of us who now run the business are mortified, embarrassed and angry that, in a period between six and nine years ago, Serco understated the level of profitability of its electronic monitoring contract in its reports to the Ministry of Justice,” current CEO Rupert Soames said in a statement, stressing that no senior executives who worked for Serco at the time of the offenses do any longer.

“Serco apologized unreservedly at the time, and we do so again.”

Tesco Plc paid a $129 million fine in 2017 to avoid prosecution over the U.K. grocer's 2014 accounting scandal. Jet-engine maker Rolls Royce Holdings Plc agreed to pay the SFO 497 million pounds in 2017 to escape prosecution over allegations its representatives bribed officials to win business.

Serco acknowledged responsibility for three offences of fraud and two of false accounting over a scheme to dishonestly mislead the Ministry of Justice as to the true extent of the profits being made” from 2010 to 2013 by parent company Serco, the SFO said. The fine was cut in half to reflect the Hook, England-based company's cooperation with the probe.

To contact the reporter on this story: Hugo Miller in Geneva at hugomiller@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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