Serco (SRP) ... at it again?

Monday 6th January 2014

Having closed my prior short in Serco, I've sold short again, this time at 511p/shr.

Not that I usually tune in, but I did and listened keenly to a small report on Western Australia’s, 6PR’s, news beat at www.6pr.com.au about Serco.

Serco have found themselves at the centre of a prisoner escape in Western Australia over recent days. This appears to be widely known and is not that major a news story. However, 6PR is also reporting a separate story on an investigation into whether Serco has been overcharging. 

  

6PR reports ...
“Meantime the state government is looking into claims private security firm, Serco, is overcharging on its WA prisoner transport contracts. Corrective Services Minister, Joe Francis, says “it’s launching an investigation.””

I am told that the Western Australia Prisoner Transport contract was won in May 2011 and is a five-year contract for the provision of Court Security and Custodial Services (CSCS) to the Western Australian Department of Corrective Services. The contract value is £140m.

Although a sizeable contract, this is less relevant. What is more concerning is that it is the first I’ve heard on reports of overcharging being committed outside the United Kingdom. If there is a case then it suggests that Serco’s wrongdoing is more widespread. I doubt that is fully priced in.

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