Security firm G4S has admitted the outcome from its failed 2012 Olympics contract will cost £38m more than first believed, bringing the overall loss from the fiasco to £88m.
Games organisers were forced to draft in the army
The company initially believed it was going to take a hit of £50m after it failed to arrange adequate security staff forcing the Games organisers to draft in the army. However after months of negotiations with the organisers, Locog, G4S decided to waive more of its management fee.
Bosses now hope they can put the incident behind them and continue winning big government contracts, which make up around 50 per cent of the company’s UK sales worth £700m a year.
However, they have also revealed they have no plans to bid to run security at large sporting events in the future, including the 2016 Olympics in Brazil.
The company said around £70m will be lost on the London Olympics contract, with a further £2.5m donated to a military charity, £7m in marketing and sponsorship, and £8.5m spent on accountants and lawyers for negotiations with Locog.
Nick Buckles, G4S’s chief executive said: “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 companies have been in talks for months over a final arrangement for the £240m security contract, after G4S failed to deliver all of its 10,400 contracted guards.
Two G4S directors resigned following an independent review into the company’s failed London Olympics contract, when the group could only fill 83 per cent of positions.
Ian Horseman Sewell, head of global events and the chief operating officer, David Taylor-Smith, resigned over the failure.
Buckles survived, but was forced to undergo a severe grilling from the home affairs select committee, where he agreed the incident had been a humiliating disaster.
Since then, G4S has lost out on a number of government contracts including running security checks at Oslo airport and the management of electronic tagging in Scotland.
The Ministry of Justice said three prisons would continue under public sector management and G4S’s arrangement to run HMP Wolds would not be renewed.
However, shares in the company have improved since the Olympics, trading just 3.5 per cent below the pre-Games high of 290p. The shares closed flat at 280p on Tuesday.
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