The Serious Fraud Office (SFO) has confirmed it has launched a criminal investigation into government contracts with G4S and Serco over the provision of electronic tagging services.

The Ministry of Justice has called for the SFO to probe G4S because it refused a further full audit after the results of the initial audit found substantial disparities between tagging and charging, that led to over-billing by both companies of Government worth over tens of millions of pounds.

G4S confirmed today that it had received notice that the director of the SFO has opened an investigation into the ‘contract for the provision of electronic monitoring services which commenced in April 2005 as amended and extended until the present day’.”

Serco, subject to a full audit by accountancy firm PwC following the announcement of the initial audit in July confirmed it will also co-operate fully with the SFO investigation – which could lead to fines or prosecution.

Neither company can win any further British government work until a second investigation run by the Cabinet Office into contracts it has with each company, whose results are expected at the end of November, is completed.