Security group buys more than it bargained for with Olympics

Tue, Jul 17, 2012, 01:00

G4S saw London 2012 as a deal to put it on the map, but was instead given a major headache, writes NEIL MAIDMENT

RUNNING CARE homes and prisons, fighting pirates and mystery shopping, G4S was long in the background of many people’s lives before its London Olympics debacle put the company in the middle of a media and political storm.

The G4S group is made up of a list of businesses that spans five continents and employs more than 657,000 staff, making it the world’s second largest private sector employer behind US retailer Wal-Mart and the world’s biggest security company.

But with size doesn’t always come profile and so the British group, which made revenues of £7.5 billion in 2011, targeted London’s Olympics as a flagship security deal that would put it on the map and help win new work at home and abroad.

What it got instead was a major headache after admitting it could not provide 10,400 venue guards it had been contracted to deliver, costing the firm up to £50 million and forcing the British government to call up 3,500 extra troops as cover. The hostile headlines, made worse by British prime minister David Cameron calling for the security group to face the consequences, have been a harsh wake-up call for a company that has been an active part of most people’s lives for much longer than they realise.

In its core British market, the firm with the slogan “securing your world” has a hand in everything from airport security and immigration, to running prisons, police forces and cleaning and catering in schools and hospitals. The group also trains British troops before deployment, handles the administration of penalty train fares, installs residential smart energy meters, runs childrens homes and manages cash transportation for banks and retailers.

Around the world it protects embassies, manages more than 40,000 electronically-tagged offenders, guards ports and airports as well as nuclear, oil, gas and mining sites, and even protects container ships from pirates off Africa and Malaysia. Staff range from teenagers directing crowds at Wimbledon to former SAS soldiers and police specialists able to construct anti-kidnapping strategies or assist local police forces. Government contracts amount to over half of the company’s British revenue and the market makes up over 20 per cent of its bid pipeline, including contracts to run seven prisons that will be awarded later this year.

Dealing in such high security areas means its work has not been without controversy. The group, which became a global giant in 2004 when Securicor merged with Danish company Group 4 Falck, had had to deal with prison riots and escapes before the merger. Last year the firm left prisoners locked up for almost 24 hours at a Birmingham jail after losing the keys to cells, and in another incident guards tagged a man’s false leg, allowing him to remove it and break a court-imposed curfew.

G4S, whose shareholders’ meetings are often attended by protest groups, faced criticism over the death in 2010 of Angolan deportee Jimmy Mubenga, who collapsed on a commercial flight from London’s Heathrow Airport.

Analyst Kevin Lapwood said the repercussions for G4S would be short-lived, but not so for chief executive Nick Buckles. “It appears certain CEO Nick Buckles will fall on the sword along with other senior UK management. Whoever is in charge will have a lot of work to do to repair the company’s reputation.” – (Reuters)