Serco chief executive Christopher Hyman has resigned, the scandal-hit services company has announced.
Mr Hyman quit as the firm attempted to rebuild its relationship with the Government following controversies over its handling of key contracts.
He said: “I have always put the interests of Serco first. At this time, nothing is more important to me than rebuilding the relationship with our UK Government customer.
“In recent weeks it has become clear to me that the best way for the company to move forward is for me to step back. I have been fortunate enough to have had the privilege of working at a great company with extremely talented people. I wish everyone at Serco the very best for the future.”
The firm faces investigation after the Government was overcharged millions of pounds for electronically tagging criminals and there are also allegations of potentially fraudulent behaviour in the management of its £285 million prison escorting contract.
Last month the Government handed material to the Serious Fraud Office (SFO) in relation to the security giant over the tagging scandal.
It emerged previously that Serco and rival G4S overcharged the Government by tens of millions of pounds for electronically tagging criminals – including for monitoring dead offenders.
G4S refused to co-operate with an audit and was referred to the SFO immediately, while Serco allowed a further forensic audit to take place.
In the course of the audit, the Ministry of Justice provided material to the SFO in relation to Serco’s conduct under the electronic monitoring contracts.
An audit by big four accountancy firm PricewaterhouseCoopers, launched in May, revealed that overcharging began at least as far back as the start of the current contracts in 2005 – but could have dated as far back as the previous contracts let in 1999.
Auditors discovered that the firms had charged the Government for tagging offenders who were back in prison, had had their tags removed, had left the country or had never been tagged in the first place but had been returned to court.
The shock revelations prompted Justice Secretary Chris Grayling to launch a Government-wide review of all contracts held by Serco and G4S.
In August this year police were called in to investigate fresh allegations, in relation to the prison escorting contract.
Serco employees allegedly recorded prisoners as having been delivered ready for court – a key performance measure for the contract – when in fact they were not, the Ministry of Justice (MoJ) said.
A Government spokesman said today’s announcement by Serco was a “positive move”.
He said: “The Government will take full account of all the changes Serco have made today. Whilst it is early days in their programme of renewal, this is a positive move by Serco and a step forward.
“In July the Justice Secretary announced that the Cabinet Office would lead a review of Government contracts held by G4S and Serco. That review is ongoing and will ensure Government’s contractual arrangements are robust and taxpayers’ money is spent responsibly, in a vibrant, competitive market for public services.”
Ed Casey, who led the firm’s Americas division, has been appointed acting group CEO but Serco’s board “believes it is appropriate to look outside of the business for a new group CEO”.
In addition to Mr Hyman’s departure, the company announced that its UK and Europe division would be split into two, with one part focused on dealings with Whitehall and the other on activities in the wider public sector.
The firm also announced measures to strengthen contract-level governance and transparency, the creation of a board corporate responsibility committee, formal ethics committees in the company’s divisions and full-time ethics officers.
Alastair Lyons, Serco’s non-executive chairman, said: “The decisive and comprehensive actions we have set out today, alongside the programme already under way, should leave no-one in any doubt about how seriously Serco takes these issues and our commitment to rebuild the confidence of our UK Government customer.
“Our focus now is on implementing these important changes that redefine the way in which we engage. We see an opportunity to take a substantial step forward in public sector outsourcing through an open, transparent approach to business with our customers based upon mutual confidence.”