Serco falsified performance figures 252 times in six months

Serco is a corrupt company with a well established history of fraud. It repeatedly falsifies performance data in order to meet its contracts with Governments.

Two days ago I posted this blog: How Serco pulled the wool over Corrections and Mt Eden was rated as ‘exceptional’. It pointed out that Serco appeared to be under-reporting the number of serious assaults at the Mt Eden prison leaving prisoners to suffer instead of taking them to hospital.

The article mentions that in 2013, Serco was investigated by the Serious Fraud Office after they were found to have overcharged the British Government for the monitoring of offenders in the community who were subsequently found to be dead, back in prison or overseas.

Corrections SamIt seems Serco also has a history of manipulating data in its contracts with the British National Health Service. See the following articles from the Guardian. I have provided the main points from each.

The Guardian 25 May 2012: Serco investigated over claims of ‘unsafe’ out-of-hours GP service

Serco, which runs a large range of outsourced services for the government and local authorities, was subject to an unannounced inspection by NHS watchdogs in Cornwall last month in response to whistleblowers who claim that it:

  • allowed queues of up to 90 patients at a time to build up at its telephone helpline;
  • met its targets, in part, by adjusting figures to blame delays on patients;
  • repeatedly took visiting doctors off roving duties in order to operate clinics and hotlines because it had too few staff on duty to cover the county.

Correspondence seen by the Guardian reveals that senior clinicians have repeatedly expressed concern to Serco management about staff shortages jeopardising the safety of the service.”

The Guardian 7 March 2013: Private contractor fiddled data when reporting to NHS, says watchdog

Serco, the leading private contractor of government services, falsified performance figures 252 times when reporting to the NHS on targets it had failed to meet, according to the National Audit Office (NAO).  The independent watchdog’s investigation into Serco’s out-of-hours GP service in Cornwall comes after the Guardian revealed last May that whistleblowers had concerns that the privatised service was regularly so short-staffed as to be unsafe and that its performance data was being manipulated.”

The Guardian 23 April 2013: Who will hold NHS contractors like Serco to account?

“The powerful parliamentary public accounts committee summoned Serco and the NHS body responsible for commissioning them, the Cornwall primary care trust, and gave them the roasting they deserved for a culture of “lying and cheating” and for “shocking” inadequacies in writing and monitoring the contract.

Neither Serco’s company systems nor the trust’s audits had managed to find the repeated shortages of staffing and falsifying of performance data that whistleblowers said had been putting patients at risk as far back as 2010. But then, as the committee’s formidable chair, former Labour minister Margaret Hodge, said, ‘they didn’t seem to want to look in the right place’.”

This is almost exactly what I said about the Corrections monitors in Mt Eden prison: “The monitors are incentivised to look the other way.”

Serco cartoo

How Serco pulled the wool over Corrections and Mt Eden was rated as ‘exceptional’

In 2012, the Corrections Department began comparing the effectiveness of its 17 prisons. Since then each prison has been ranked under one of four categories: ‘Needs Improvement’, ‘Effective’, ‘Exceeding’ or ‘Exceptional’ and the results are published every three months in the Prison Performance Tables.

Serc0Reports about fight clubs in Mt Eden prison, run by Serco, also go back to 2012. In September that year, TV3 reported on a former inmate who claimed that prisoners were running a ‘fight club’.  At the time, the Corrections Department said complaints about violence were “easy to make but difficult to investigate”.  So they didn’t bother – even though section 199F(2) of the Corrections Act was amended to enable  the Department to appoint monitors in contracted prisons who shall have…

free and unfettered access at all times to every part of the contract prison managed by that contractor; and all prisoners in that prison.”

KelvinThen in June this year, prisoners themselves confirmed on-going violence by posting video clips of fight clubs on social media. Labour MP, Kelvin Davis (left), joined in claiming that prisoners were being ‘dropped’ off balconies and had died from their injuries. In July it was reported that a prisoner committed suicide after being subjected to violent bullying.

Mt Eden rises to the top

Unbelievably, while all this mayhem was going on, the Mt Eden prison managed by Serco was climbing up the prison performance tables. It hit the number one spot in December 2013 and in that quarter, Serco’s performance was rated as ‘exceeding’.  Three months later, it was bumped up to ‘exceptional’ and has maintained this rating ever since.


In response to the violent video clips, Corrections claimed it had no idea that prisoners were routinely taking drugs and fighting.  The monitors must have been asleep. But there’s more to this cover-up. Under the contract, Serco is responsible for providing the Department with regular statistics on a variety of key performance indicators including ‘serious assaults’.  During all of 2014, Serco reported that these were all within acceptable limits; because the monitors never raised any concerns, chief executive Ray Smith just accepted whatever Serco said.

Serco operates at a loss

Serco is also responsible for advising Corrections how much it should be fined if it breaches performance standards in the contract. Every time Serco reports a prisoner has been seriously assaulted, it is supposed to penalise itself $35,000. Expecting a multi-national corporation like Serco to fine itself is a ludicrous contractual concept.  It’s just not going to happen.

These reporting clauses simply incentivise Serco to fiddle the figures – a practice for which the company has a well-established history. In 2013, a Guardian investigation into Serco found the company had

“falsified performance figures 252 times between January and June 2012 when reporting to the NHS on targets it had failed to meet…and data manipulation went back four years or more and was much worse before 2012.”

Also in 2013 Serco (and G4S) were investigated by the Serious Fraud Office after they were found to have been overcharging the British Government  since 2005 for the monitoring of offenders in the community. The two companies had to pay back $180 million after charging for the monitoring of offenders who were subsequently found to be dead, back in prison or overseas. In Britain, Serco is now operating at a loss.

It does not want to lose money in New Zealand as well. To avoid doing so, Serco is able to hide the serious assault statistics at Mt Eden using loopholes in its contract with Corrections.  The contract defines a ‘serious assault’ as one involving..

‘overnight hospitalisation in a medical facility’ or ‘bodily harm requiring extended periods of ongoing medical  intervention’.

On this issue, Kelvin Davis said: “There’s one way to keep those statistics down and that’s not send people to hospital.”

Fiddling the figures at Mt Eden

Injured prisonerSerco can avoid reporting serious assaults because the contract does not define ‘extended periods’.  So if an inmate is kept in prison for a week (or even a month) after an assault, Serco can avoid reporting this as a serious assault by pretending that one week (or one month) does not constitute ‘extended’ treatment. Occasionally, Serco has also transferred seriously injured prisoners to another prison – leaving the other prison to ensure the prisoner was hospitalised.

The monitors appointed by Corrections seem to have little incentive to bring this fraud (and inadequate medical treatment) to the attention of the chief executive, Ray Smith.  One difficulty in this regard is that although the monitors are supposed to have ‘free and unfettered access to all parts of the prison’, section 199F(3) of the Corrections Act provides an ‘out’.

It says: “a monitor must not be given access to the medical records of any person unless that person consents to that access.”

Unless the monitors know which prisoner has been injured, they can’t even ask for consent – making it next to impossible to ascertain the severity of any prisoner’s injuries.

The inquiry

As a result of the furore caused by video clips from the smuggled cell phones, the Corrections Minister is to conduct an inquiry.  It will examine whether violent incidents have been “under-reported”.  Hopefully it will also examine whether Serco has enough staff on duty to intervene when fights occur – to counter reports that understaffing leaves officers afraid to intervene.

You can bet there’s one thing the inquiry won’t examine – whether private companies like Serco, whose sole incentive is to make a profit, should be running prisons at all. And it won’t examine why the Government agreed to use a company like Serco with such a dubious track record overseas.

Cartoon corrections

Serco leaves prisoners to fight among themselves

Bevan HanlonIn early October, Bevan Hanlon, president of the Corrections Association (left), said 12 out of 20 new recruits employed at Mt Eden prison in the past two months had left their jobs because of security fears. Then last week, he  said staff at the prison sometimes leave up to 45 prisoners in a unit on their own with no supervision and as a result “ prisoners are assaulting each other and beating each other up.”  Hanlon says many fights go unreported because “no guards are there to see them happen… prisoners are being left to fight among themselves”.  

This reinforces comments made a year ago by former prison inmate, Martin Lyttleton (below), who said violence was rife in prison, especially in the Auckland Central Remand Prison (now MECF) where gang members seemed to be in charge.  Martin Lyttleton

“They were running fight clubs in the mainstream units, so a lot of people were getting bashed up… In some cases the guards were actually sanctioning assaults by inmates on other inmates”, he said. “There were few programmes or rehabilitation courses, and so the inmates were bored and looked for trouble”

“The guards were actually sanctioning assaults by inmates on other inmates.  They were conscious that an assault was going to take place. [They would] leave the unit, the assault would occur, then they would come back into the unit afterwards and it was discussed amongst the inmates that it was a guard-sanction assault.”


Mt EdenThe Mt Eden Correctional Facility (left) is operated by Serco, the British consortium with a history of dodgy management practices.  In July this year, the Guardian newspaper reported that the Serco-run Thameside facility has been rated as one of the three worst prisons in Britain. A month later the Guardian reported that police had been called in to investigate fraud allegations against Serco for overcharging the Government by as much as £50million to operate a contract to transport prisoners to and from courts across London and East Anglia. In September, Guardian Australia revealed that key performance reports from Serco and G4S, the companies that run detention centres on Australia’s mainland, and the regional processing centre on Manus Island, do not exist. The missing reports are supposed to monitor the welfare, care, security, health and medical, counselling and education of detainees.

In New Zealand, the Government’s contract with Serco still leaves the Corrections Department with ultimate responsibility to ensure that custodial sentences are “administered in a safe, secure, humane and effective manner”.  The Department is  required by the Corrections Act to ensure that all prison facilities are “operated in accordance with rules set out in the Act… and are based on the United Nations Standard Minimum Rules for the Treatment of Prisoners.”


It’s not just Mt Eden prison which has problems with violence.  The reality is that Corrections struggles to provide a safe environment in any of its prisons. In the last five years the number of prisoners attacking other inmates in New Zealand has nearly doubled.  In 2011, 862 inmates were assaulted by other prisoners, 48 of which were classified as ‘serious assaults’.   Jason Palmer In 2006/07, there were only 27 ‘serious’ incidents.  In 2010/11 there were also 241 assaults on prison staff and in May 2010, Jason Palmer (right) became the first prison officer to be killed in a New Zealand prison after he was punched by inmate Latu Kepu.

In a media interview in April 2012, Corrections general manager of prison services, Jeanette Burns, claimed the number of serious assaults on prison staff had dropped dramatically since 1995 and said fewer prisoners were requesting voluntary segregation to avoid violence and gang related problems in mainstream prison units.  That’s managerial spin. The reality is that Corrections revised its policy on voluntary segregation in 2011 and implemented a new screening process which allows staff to decline prisoners’ requests to be placed on segregation.

Ms Burn’s assertions were also challenged in October 2012 by new figures showing serious assaults on prison guards have, in fact, tripled in the past five years. During the year to the end of June, 18 staff were seriously assaulted – up from just six in 2007. Springhill fireEven the Auditor General said the number of serious assaults is “well above the expected level”.  Prisoner-on-prisoner assaults were 85% higher than expected and prisoner-on-staff assaults were 160% higher than expected. Much of the violence is gang related including the eight hour riot at Spring Hill prison in June this year in which buildings were set on fire (left) and three guards were left with broken bones. Repairs were expected to take six months and to cost millions of dollars.

Corrections perceptions

It should come as no surprise that violent assaults in prison have impacted on officers’ perceptions of their personal safety. In 2011, only 69% of staff reported feeling safe working in prison.  Nearly half believed they could not report unethical behaviour by other officers without fear of reprisal, or believed that Corrections would not hold officers accountable for such behaviour.  Radio New Zealand’s revelations suggest that staff at the Serco-run prison feel even more vulnerable than officers in Corrections’ prisons.

But the Department always puts a positive spin on things.  In May Corrections reported that Serco was outperforming most of the state prisons in comparative tables which measure one prison against another. The tables include the number of assaults occurring in each prison – the number being reported to be more precise – and Serco’s performance was rated as “exceptional”. What does that say about all the other prisons? The reality is that there is nothing exceptional about anything in the New Zealand prison system. Only Scandinavian countries can make such claims.

Management at Corrections are exceptionally good at just one thing – they have an extraordinary ability to spin the facts and turn a blind eye to the truth; and the truth, according to Deputy Prime Minister Bill English, is that our prisons are ‘a moral and fiscal failure’.

Corrections escapes but punishes Serco

The NZ Herald reported today (February 21) that Serco, the operator of Mt Eden prison has been fined $150,000 after a prisoner escaped. Serco is an international conglomerate based in Britain and given the contract to run the Mt Eden prison.

The Corrections Department has carried out a review of security after notorious inmate Aaron Forden escaped from the prison in the early hours of October 10, 2011. Corrections and Serco say both operational security and the physical security of the building infrastructure have now been enhanced.

Department of Corrections Chief Executive, Ray Smith, says a portion of the payment to Serco for the management of Mount Eden prison is performance-related and that it’s appropriate to levy a financial penalty for the escape. It seems that Corrections is not only responsible for administering punishments imposed on offenders by the courts, it is also responsible for punishing its approved private prison partner.

What about Corrections’ performance?

Does this mean that if anyone escapes from a prison run by the Corrections Department, they will pay the Government $150,000? Of course not.  What a shame. Two escaped in the last 24 hours – one  from Rangipo prison and the other from hospital in Chrischurch while undergoing medical treatment. It seems that between five and ten prisoners escape every year so if Corrections had to pay up every time, it would be penalised  about $1.5 million a year.

Shouldn’t  Corrections also be performance related for its (lack of ) success at rehabilitating and reintegrating prisoners.  70% of prisoners re-offend and 52% are back in prison within five years; nothing the Department has done it in its entire history has reduced recidivism one iota. Shouldn’t the Department be required to pay back $150,000 to the government every time a prisoner re-offends and returns to prison. That would buck up their performance.

Maybe that’s too much to ask. With that level of accountability, given its current record, the Department would have to pay back its $1 billion budget every year.