PROFILE-Security giant G4S trips up over Olympics
LONDON, July 16
LONDON, July 16 (Reuters) - Running care homes and prisons, fighting pirates and mystery shopping, G4S was long in the background of many people's lives before its London Olympics debacle put the company in the middle of a media and political storm.
The G4S group is made up of a list of businesses that spans five continents and employs more than 657,000 staff, making it the world's second largest private sector employer behind U.S. retailer Wal-Mart and the world's biggest security company.
But with size doesn't always come profile and so the British group, which made revenues of 7.5 billion pounds ($12 billion) in 2011, targeted London's Olympics as a flagship security deal that would put it on the map and help win new work at home and abroad.
What it got instead was a major headache after admitting it could not provide 10,400 venue guards it had been contracted to deliver, costing the firm up to 50 million pounds ($80 million) and forcing the British government to call up 3,500 extra troops as cover.
The hostile headlines, made worse by Prime Minister David Cameron calling for G4S to face the consequences, have been a harsh wake-up call for a company that has been an active part of most people's lives for much longer than they realise.
In its core British market, the firm with the slogan "securing your world" has a hand in everything from airport security and immigration, to running prisons, police forces and cleaning and catering in schools and hospitals.
The group also trains British troops before deployment, handles the administration of penalty train fares, installs residential smart energy meters, runs children's homes and manages cash transportation for banks and retailers.
Around the world it protects embassies, manages more than 40,000 electronically tagged offenders, guards ports and airports as well as nuclear, oil, gas and mining sites, and even protects container ships from pirates off Africa and Malaysia.
Staff range from spotty teenagers directing crowds at events such as Wimbledon to former SAS soldiers and police specialists able to construct anti-kidnapping strategies or assist local police forces.
Government contracts amount to over half of the company's British revenue and the market makes up over 20 percent of its bid pipeline, including contracts to run seven prisons that will be awarded later this year.
Dealing in such high security areas means its work has not been without controversy. The group, which became a global giant in 2004 when Securicor merged with Danish company Group 4 Falck, had had to deal with a number of prison riots and escapes before the merger.
Last year the firm left prisoners locked up for almost 24 hours at a Birmingham jail after losing the keys to cells, and in another incident guards tagged a man's false leg, allowing him to remove it and break a court-imposed curfew.
G4S, whose shareholders' meetings are often attended by protest groups, faced criticism over the death in 2010 o f Angolan deportee Jimmy Mubenga, who collapsed on a commercial flight from London's Heathrow Airport.
The problems have more recently spread to the boardroom.
Last year G4S, which competes against rivals such as Securitas and Serco, felt the wrath of its investors when it caved in to pressure to scrap a planned 5.2 billion pounds ($8 billion) acquisition of Danish cleaning firm ISS.
The failed move, which required a 2 billion pound ($3 billion) rights issue and would have seen the group become even larger with a push into the less controversial cleaning and catering sector, cost the firm around 50 million pounds ($80 billion) in advisers' fees.
Chief Executive Nick Buckles, admired internally for his wide knowledge of every part of the business, had his strong credibility to thank for not losing his job, but some have warned his 27-year stay may not last much longer following the Olympics debacle.
Buckles' damage control efforts began at the weekend with a series of media interviews but had little effect on Monday, when G4S shares fell 9 percent on the London Stock Exchange.
While the weeks ahead will be a nervous time for Buckles, the blame may also fall on senior UK events management figures such as Mark Hamilton - who has worked as a bodyguard to Paul McCartney - and Ian Horseman Sewell, who just 10 days ago told Reuters G4S was confident it could run the Olympics Games and another similar-sized event elsewhere at the same time.
On Tuesday Buckles will face a British parliamentary committee hearing to explain the Olympics fiasco - a meeting that could have some effect on the firm's ability to win new work in the crucial government sector.
Analyst Kevin Lapwood at stockbrokers Seymour Pierce said the repercussions for G4S will be short-lived, but not so for Buckles.
"What next? It appears certain that CEO Nick Buckles will fall on the sword along with other senior UK management. Whoever is in charge will have a lot of work to do to repair the company's reputation."
- Tweet this
- Share this
- Digg this
- Special Report: Why Madrid's poor fear Goldman Sachs and Blackstone
- UPDATE 6-Doctor with Ebola in NY hospital, nurse declared virus-free
- Gold sales jump about 20 pct for Diwali - trade body
- UPDATE 3-Ford's lower profit beats estimates; sales down on F-150 launch
- Three major nations absent as China launches W.Bank rival in Asia