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G4S's Olympics And Paralympics Security Bungle Costs It £70M

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G4S SECURITY OLYMPICS COST
G4S has taken a £70m hit on its Olympics pay packet after Locog demanded compensation for it completing just 83% of its contracts | Alamy

G4S - the security firm whose bungled attempts to provide enough people for the Olympic Games made headlines worldwide, is to take a bigger-than-expected £70 million hit on its Olympic contract.

The loss is £20m higher than previous estimates, and follow months of negotiations with Games organisers Locog. G4S was initially contracted by Games organiser Locog in 2010 to provide 2,000 security staff for £86m, but that figure rose to 10,400 personnel, making the contract worth £284m.

The group also incurred additional costs of around £18 million relating to charitable donations, fees and the cost of sponsorship and marketing.

Chief executive Nick Buckles said in a statement: "The UK government is an important customer for the group and we felt that it was in all of our interests to bring this matter to a close in an equitable and professional manner without the need for lengthy legal proceedings."

The two sides have been in talks over a final settlement for the £240m security contract, after G4S failed to provide all of its 10,400 contracted guards. The shortfall left the government with no choice but to step in with military personnel.

The company was dogged by scandal in the weeks running up to the Olympics games, ultimately forcing two G4S directors to resign - chief operating officer David Taylor-Smith and Ian Horseman Sewell, who was head of global events, carried the can for the fiasco, but Buckles remained in his post.

In June 2012, whistleblower Sarah Hubble claims she was made to leave the company after informing the media of G4S' "absolute shambles" of a vetting process.

Hubble, from County Durham, claimed that the company was straining to process applicants in time for the Olympics, resulting in employees who had not been vetted, such as herself, openly accessing applicants' personal details such as passport numbers, national insurance numbers and bank account information.

And a report in the Sun claimed the security firm had been skipping sniffer dog searches intended to prevent explosives being smuggled into the Olympic Park for three years, instead manipulating rotas to give the impression searches were completed.

The fallout of the shambolic period saw MPs calling for G4S to be blacklisted by the government for future contracts,

Caroline de La Soujeole, an analyst at Cantor Fitzgerald Research, told the Press Association the total cost of £88m was better than her estimate of between £100 million and £110 million, adding: "In our view this draws a line under the Olympics situation and will enable the company to win more government outsourcing contracts."

Locog, the Olympics organising body, said the taxpayer's interests have been fully protected in compensating for the difficulties experienced by G4S's shortcomings.

Chief financial officer Neil Wood said the overall agreement reduced the payment due to G4S by £85m, comprising £48m to cover step-in costs by police and military, and £37m primarily for project management failures.

He added: "The savings arising from this settlement brings the total savings to the public purse from the Locog venue security budget to £102m, compared to the position in December 2011."

G4S has a number of contracts with 10 central Government departments and agencies and 14 police forces in England and Wales. It was contracted to train and accredit 10,400 staff and manage 13,000 others for the Olympics, but only fulfilled 83% of its obligations.

Some 4,700 extra servicemen and women were drafted in at the last minute, taking the military's contribution to 18,200 personnel, and yet more police were needed to boost venue security.

In the wake of the Olympics, the Ministry of Justice failed to renew G4S's contract to run East Yorkshire prison and rejected its application to win any further prison contracts.

"On the evidence of deteriorating conditions at the Wolds, Britain's first private jail, it looks like trusting G4S to run the prison was a risk too far for justice ministers," Juliet Lyon, director of the Prison Reform Trust, said at the time.

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