Serco to pay Government $8m for costs of Mt Eden prison takeover

Serco and Department of Corrections bosses fronted a press conference at the Mt Eden prison in April.

Private prison operator Serco has apologised and paid up for their mismanagement of Mt Eden prison, but has refused to say exactly what that mismanagement entailed.

Corrections chief executive Ray Smith, along with Serco Asia Pacific chief executive Mark Irwin, fronted a press conference at Mt Eden on Monday morning.

Irwin said it was clear Serco had not lived up to the expectations of managing Mt Eden.

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Fighting in prison is no new phenomenon, but filming them on mobile phones and uploading to social media has lead to an investigation by Corrections.

"I want to begin by acknowledging immediately before the step in by the department there were certain aspects of our service delivery that did not meet the standards of the contract and certainly the standards we set ourselves and for that I am truly sorry."

But when asked what exactly those failings were he refused to comment as it was a matter still before the courts.

Serco took Corrections to court after taking issue with aspects of a prison inspectorate investigation into its management of Mt Eden.

The $8m settlement was to pay back Corrections for the costs it had incurred after taking over management of the prison.

"It was the department's decision to step was not our decision it was the Department's decision and we are contractually working for the department so we respected that decision.

"We paid them $8m because as a consequence of that decision they incurred those costs and we think it's the right thing to reimburse those costs."

Smith said the payment was made up of about $5m in running costs to date and $2.5m of performance bonuses that would be repaid.

Since taking over the management of the prison Corrections had added an extra 40-50 staff and would continue to run the prison after Serco's contact ended in 2017.

While it was not a complete explanation, a large jump in the prison population and remand prisoners had made Mt Eden an extremely difficult prison to manage, he said.

"We've had this quite dramatic uplift in the prison population. I'm not saying it's the only reason things didn't go the way we wanted them to go here, but it's significant."


Earlier, Corrections Minister Judith Collins said the $8 million payment would cover the costs of Corrections stepping in at Mt Eden – roughly $600,000 a month – as well as settling outstanding fines owed by the company.

The company and Corrections had also reached an agreement to "effectively narrow down the contractual arrangements", with Serco providing prison staff at cost – and no profit – until the break point in March 2017.

Serco started running Mt Eden Corrections Facility in 2011.

Serco started running Mt Eden Corrections Facility in 2011.

"It's a good's a reasonable deal, and I'm quite pleased with it."

Corrections would continue to run Mt Eden from March 2017, with a decision about the prison's long-term management structure to be determined at a later date.

Collins said she would not "pre-judge" whether Serco could be awarded the Mt Eden contract if it re-tendered in 2017.

ROSS GIBLIN\Dominion Post

Controversy-plagued private prison operator Serco's contract to run Mt Eden Corrections Facility will not be renewed, the Department of Corrections has confirmed.


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However, she said the private prison model had worked well in the past, and initial reports from privately-run Wiri prison in South Auckland were positive.

"I think you can [make it work], if you have the right operator with the right processes and you have the right conditions in terms of everything else."

Labour corrections spokesman Kelvin Davis said news of the Serco payment showed that the Government's privatisation experiment was a complete failure.

"This shows just how much of a mess Judith Collins created and she should admit it's failed."

Davis said Collins had "created this mess five years ago", when she held the Corrections portfolio when Serco was awarded the contract for Mt Eden.


​Allegations of organised fight clubs emerged in early 2015 after recordings of incidents at Mt Eden were posted online, while a number of inmates have also made accusations of mistreatment

Corrections took over control of the prison in July last year after the allegations were revealed.

Former Corrections Minister Sam Lotu-Iiga was a casualty of the troubles at Serco, losing his portfolio in last December's reshuffle by Prime Minister John Key.

Serco is awaiting the outcome of a High Court judicial review it sought, claiming it hadn't been given enough time to comment or respond to the findings of a report into alleged fight clubs.

Collins said Serco's payment is unrelated to the legal action.

 - Stuff

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