17 Jul 2012

G4S chief executive: we regret signing the Olympics contract

Nick Buckles, the G4S chief executive who says he is worth his £1.2m annual pay package, admits to MPs he regrets signing the contract to provide security for the Olympics.

Nick Buckles, the G4S security chief who says he's worth every pence of his £857,000 annual pay package, faces MPs today after providing only 4,000 of the 13,700 security guards needed for the Games.

The army has been called in to make up the shortfall, and G4S is set to lose up to £50m on the contract for failing to meet its commitments. G4S has a £284m contract with the UK government to provide 13,700 security guards, according to the parliamentary web site.

Answering questions from the home affairs select committe, Mr Buckles also said G4S had taken on the Olympics contract to enhance the company’s reputation and not for the contract’s financial value to G4S.

“We won’t be claiming money for the shifts we aren’t able to cover,” he told MPs, having earlier confirmed that G4S will compensate police forces that have had to send officers to cover security requirements at Olympic venues.

The company will also pay a fine on the failings, confirmed G4S’ Olympics contract manager Ian Horseman-Sewell. But G4S says it will still claim a management fee of £57m for the contract and expects to make a profit.

Among the questions MPs will want to ask is when the Home Office learned about the shortage of security guards. While there are reports that HM Inspectorate of Constabulary noted concerns in September 2011, the Home Office denies HMIC undertook an investigation into G4S.

For his part, Mr Buckles has insisted he operated in a transparent manner and kept the London Olympics organising committee and government ministers informed of the situation. He said he only became aware of the problems within the last two weeks because of the complexities in vetting staff.

“The shortfall in security guards which were due to be provided by G4S and the drafting in of armed forces personnel is a concerning development so close to the Games,” Keith Vaz, home affairs committee chairman, said in a statement.

Read more: The chronology of the G4S cock-up

Do you speak English?

MP are also likely to grill G4S about whether the 4,000 security guards they did train have the ability to do their jobs properly following television interviews in which Mr Buckles could not confirm the guards could speak fluent English saying that was a “difficult question to answer”.

MPs will also probe why it took so long to hire staff. In a radio interview, Mr Vaz said he has had numerous emails and texts from people who applied for G4S jobs six months ago but were only contacted in the last few days and asked if they were ready to start work.

Mr Vaz has also said the situation raises serious questions about the ability of private firms to deliver quality services on other important public contracts.

£20m exit

Mr Buckles, 51, joined the company, then called Securicor, in 1985 and his base salary is now £830,000, according to G4S’s annual report. He was promoted to chief executive in 2002 after leading the merger of Securicor and Denmark’s Group 4 Falck in 2004. He told Channel 4 News that he earns £1.2m a year but did not expect to get a bonus after the problems emerged.

He told The Telegraph newspaper that he may quit over the fiasco. But even if Mr Buckles crumbles under tough questioning and resigns, he will still walk away from G4S with about £20m in pay and benefits, depending on how his performance-related shares fare.

The Commons public accounts committee will question G4S, two government departments and Games organiser Locog in September.