Olympics fiasco could hurt G4S' public sector role

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Security company G4S has admitted the failure to fulfil its Olympics contract cost it in the region of £50 million. Photo: PA Wire

Even the most hardened cynic would probably look back at the Olympics, smile, sigh and remember fondly that fortnight when the sun seemed to shine, Brits even smiled at each other on public transport, our athletes ran faster, jumped higher and shed more tears of joy than ever before.

But for one of our biggest companies the memories will be of a reputational car crash that has cost them dear.

G4S this morning revealed that their chaotic handling of the Olympics contract will cost them £50 million.

Very simply, they failed to recruit and train enough staff to deliver on the deal. And by drafting in extra help from the military and the police to keep the Games safe, they have had to pay.

The chief executive, Nick Buckles, said on a conference call this morning that it was too early to say how much damage that "reputational hit" would cause.

G4S chief executive Neil Buckles said he was "deeply disappointed" by the company's failure to fulfil its Olympics contract. Credit: PA Wire

The £50 million cost was enough to cause a sharp fall in the company's profits, along with £24 million on "restructuring".

But the firm is growing, and growing more than 10 percent in emerging markets. This is not a picture of a company in massive distress.

Yet in the coming months big decisions about G4S' involvement in the public sector in the UK have to be taken.

They already have a contract with Lincolnshire police. They are bidding to expand that to work with Befordshire, Cambridgeshire and Hertfordshire. They're hoping to run seven prisons, alongside the two they already operate.

The chief executive hopes their 20 years of providing public services as a private company will see them through.

But no doubt, the Games fiasco makes them a less tempting choice for government or councils when choosing who to employ.

PS The company insists plans for security for the Paralympic Games are in place and that they are not anticipating any problems.