G4S Olympic contract review prompts two resignations
- 28 September 2012
- From the section Business
Two G4S directors have resigned after a review found that the firm failed to take account of the unique and complex nature of its contract to supply security for the Olympic Games.
Armed forces had to be drafted in when G4S failed to take on enough staff.
The two are David Taylor-Smith, chief operating officer, and Ian Horseman Sewell, a managing director.
Chief executive Nick Buckles, the public face of the company, however, has kept his job.
G4S had failed to recognise that its practices and management framework needed augmenting for the Olympic contract, the review said.
Mr Taylor-Smith had assumed day-to-day responsibility for the Olympics contract in the run-up to the Games, when the company failed to provide enough security staff to meet a 2 July deadline.
The review, carried out by the consultants PricewaterhouseCoopers, said key problems had been identified "at a very late stage".
MPs on the Home Affairs Select Committee last week called for the company to hand back the £57m management fee it received.
Committee chairman Keith Vaz welcomed the resignations, saying that they showed that "G4S at the highest levels have taken the report of the committee [and] the concern of the public very seriously indeed".
But he pointed out that it had not carried out the committee's other recommendations.
The issue of the management fee remained unresolved, he said, and the company had not compensated prospective employees who were waiting to start work with G4S for months, and may have lost other work as a result.
There could also be problems with staff payments, he added.
"Just this morning, I have been emailed by employees of G4S who have not been paid for work they have done at the Olympic and the Paralympic Games," Mr Vaz told BBC News.
A G4S spokesman said it had a total workforce of 16,000 during the Games and there had been "a few minor glitches" in the payments system.
"Everyone is going to get paid," he said. "Any discrepancies can be ironed out."
Chief executive Mr Buckles has previously admitted the company's handling of the contract was "a humiliating shambles".
A statement from the company said the review did not hold Mr Buckles personally to blame for what went wrong and said it was in the best interests of the company and its stakeholders that he should remain in charge.
"Whilst the [chief executive] has ultimate responsibility for the company's performance, the review did not identify significant shortcomings in his performance or serious failings attributable to him in connection with the Olympic contract."
Analysts suggested shareholders were happy for him to remain in post because of his performance over a longer period than just the last difficult six months.
"Nick Buckles has been with the organisation for more than 25 years, [and] he has been chief executive over the last seven years," said Kean Marden, an analyst at investment bank Jefferies.
"He has built it into the world's largest security company, the share price performance has been pretty impressive," he told BBC News.
G4S shares rose as much as 2% after it was announced that Mr Buckles would be staying on.
G4S has said it lost £50m on the £235m contract to supply security staff. It was unable to deploy enough staff to meet the contract and as a result, some 5,000 armed forces personnel were required to fill the gap at short notice just before the Olympics began.
G4S is making a number of changes to how it will deal with future substantial contracts.
It says it will appoint a chief operating officer to work closely with Mr Buckles on areas including customer service and project delivery.
It has also promised to examine new contracts more thoroughly and will ensure that the board of directors oversee contracts where annual income is above £50m.