Nov 2, 2010

No transparency in Serco dealings with contractors

Alongside the PR games, there are potential legal benefits for Serco by outsourcing security personnel services, write Paul Farrell and Antony Loewenstein.

As we reported yesterday, private company Serco contracts out some of its security personnel to MSS Security, a company owned by an Indian security company with links to Lehmann Brothers. By outsourcing to other companies, it's possible for Serco to distance itself from criticism and in turn, the Government can blame Serco for mismanagement and fine them accordingly (that provision is written into the contract). Equally, that provision means that Serco isn't necessarily compelled to report all perceived infractions due to its avoidance of financial penalties. Alongside the PR games, there are potential legal benefits for Serco by outsourcing these services further. When Crikey visited Villawood recently, MSS Security guards were patrolling the visitors' area.  The guards were clearly identified as MSS staff, not Serco officers, wearing an MSS uniform and ID card. One guard also said he only worked occasionally at Villawood and worked at several different places in NSW with MSS. This degree of flexibility in employment, as well as the identification as MSS guards rather than Serco staff, may mean that the relationship between Serco and MSS staff could be deemed as that of an independent contractor rather than employees. This is an important legal distinction. If the MSS staff were indeed held by a court to be contractors in this instance, it limits Serco’s vicarious liability for its actions if MSS staff were involved in conduct that resulted in tortuous legal action. Of course, it’s impossible to be certain about the exact nature of the agreement with Serco and MSS and what’s required of subcontractors under the detention centres contract because documents relating to it are deemed commercial in confidence. It also raises issues about the training of security staff. In July an MSS Security guard was caught in bed with an asylum seeker in a Darwin residential complex. At the time, a Serco Asia spokesperson said that MSS security guards had to have a minimum of Certificate II in Security Operations. But a Certificate II is the bare minimum entry-level requirement for unarmed guards and crowd controllers. These are by no means local issues and the accountability of private companies running prisons and detention centres is a global concern. Recently an Angolan man, who was being deported home from the UK, died on a plane at Heathrow Airport and security company G4S guards have been accused over his death. Now another related incident has come to light, with G4S being accused of mistreating a Colombian man as he was being deported from the UK. As a result of these recent controversies, G4S lost its deportation contract with the British government last week but the company is being embraced elsewhere by the Tory-led administration, renting out custody cells to police forces that "will cut costs by centralising facilities". G4S formerly held the Australian detention centre contract before Serco took over in 2009. Serco itself has also been criticised over its treatment of prisoners in the UK in a recent report into the Yarl’s Wood Prison and excessive violence in other privatised institutions in the UK. The detention business is a multibillion dollar industry and Serco and G4S have proven in the UK, under Labour and the current Tory-led Coalition, that privatising detention is a profitable enterprise. There is no evidence of this trend reversing; if anything, under David Cameron’s radical cost-cutting exercise, outsourcing will only increase, with the private sector relied upon to fill the gaps with a dwindling public service. The Gillard government’s recent announcement of an expansion of current detention centres around the country and opening of new ones means now more than ever Serco’s role, and the role of outsourcing, must be questioned as tax-payer money is being spent with no transparency. *Paul Farrell is a Sydney-based freelance journalist. Antony Loewenstein is an independent journalist and author.

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4 thoughts on “No transparency in Serco dealings with contractors

  1. michael crook

    I was in the UK when the returnee was murdered on the aeroplane by G4S employees. The incident received a lot of negative comment in the UK media, and I did understand that charges were to be laid. This is quite unlike unlike the G4S murder of Mr Ward in WA, where nobody was to blame apparently and the commercial media were not interested. The growth of private armies such as Serco and G4S is very very concerning as they seem to have, at least in Australia, the appearance of being above the law. This is very similar in many ways to the mode of operation of mercenary armies such as the disgraced Blackwater organisation in Iraq and Afghanistan, who were also above the law. The respective Labor governments that have employed the G4S and Serco poorly trained thugs are equally culpable in whatever crimes they commit. Let us return to the days of Australian Protective Services, part of the AFP who were highly trained operatives with a career path and a proper set of operating proceedures and accountability. No more private thuggee corporations please.

  2. Rena Zurawel

    Interestingly, some foreign companies have more power in Australia than Australian government.
    Is it really in our national interest?

  3. ?

    Great article guys!!! you further indicate how public private partnerships is really the corporate take-over of Govt.

    We live in a corporation, not a country, we are customers, not people. We are corporate citizens of Babylon….wired, geared and soon to be, numbered.

  4. Sean

    Once again, this story really doesn’t go anywhere. Out of the thousands of people in custody for whom Serco has prison contracts for, there are one or two documented cases of problems. Paul and Antony are not mentioning for comparison’s sake, for instance, the numbers of deaths in custody by state police services, problems of prisoner abuse such as the drunken man who had a fire hose put in his mouth by two police officers and turned it on, all recently caught on film, and other cases of retaliation and excessive force used by ‘highly trained’ police officers every day in Australia, all formally trained for up to a year and beyond, public servants all. And similarly for jails — you think there is a 0% drug problem in jails, that smuggling contraband is impossible, that all public sector guards are above reproach? I would be doing some research here also.

    This is the classical statistical fallacy of studying the single cell group without comparison with the other treatment groups — is there any statistical difference between numbers of incidents with privately employed staff in a contract, and public service employees? And in which direction is the difference? It may well even be the case that Serco has fewer problems than the traditional public servant staffing approach. So far no such analysis has been undertaken by our intrepid writers, and so all we have so far is an attempted beat-up and smear.

    OK, so the writers have a purposeful agenda — to attempt to discredit private companies handed outsourced contracts by governments (as though that is suddenly going to stop). Let’s say they are actually even mildly successful somehow, and Company A decides it can no longer stand the withering onslaught provided by Paul and Antony, and withdraws from the contract, possibly by onselling the contract to another operator. Then Company B, which may be a security systems specialist, willingly takes on the gig. Let’s say somehow, inexplicably, the Australian govt in the end simply cannot find any company willing to run a detention centre for money, a role mandated in various Immigration acts — then they will simply resort to recruiting public servants in-house as a specialist unit of the AFP — and hiring external psychologists and doctors and similar professions as contractors as necessary. It will not and can not change the fundamental resolve of the Federal govt to set up and operate detention centres as a response to border control issues, no matter whether they are staffed by public servants or on an outsourced contract basis to save taxpayers’ money.

    And do you think the new public-service run detention centre won’t also have its fair share of recruitment problems, unsuitable employees, the occasional scandal? Of course they will, it’s almost inevitable, unless you put in a very expensive failsafe recruitment system which employs nothing but registered saints at very high cost including isolation allowances, massive levels of scrutiny of supervisors over supervisors beyond what is already done, and so on. Will the broader Australian public even care, given their very obvious lack of interest in refugee matters in general?

    So the entire exercise here will be fruitless, and it seems so far to be mostly a waste of words. As noted by another commenter in yesterday’s article, the fact that companies are owned by other companies is really no great cause of surprise or alarm. e.g. the defunct Lehmann Bros owns around 3% of a global security company that owns MSS (a very well known and trusted Australian security company) which is used by Serco as an emergency subcontractor with its skilled security personnel to deal with labour shortages — why should this cause any alarm to anyone? A 3% shareholding? What do people in Australia think their superannuation is invested in, for instance? What will happen to that 3% shareholding from Lehmann Bros? I suppose it may well be sold off to repay Lehmann’s creditors at wind-up time to other owners.

    The sorts of arguments we see being made here by people who have never worked in any of these sectors or in business anywhere at all are surprisingly naive and it is surprising they’ve gotten past Crikey’s editorial staff, to be honest.

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