UK Markets closed

Exclusive: G4S Wields Axe Over Olympics Chaos

(c) Sky News 2012

The security contractor G4S (Other OTC: GFSZF.PK - news) will this week confirm the extent of its failure to meet its commitment to police the London Olympics by sacking at least one of its top executives.

I have learned that the future of David Taylor-Smith, G4S’s chief operating officer and head of its UK and Africa operations, is to be discussed at a board meeting later. Senior (Xetra: 852271 - news) insiders said that they expected him to leave in the wake of the meeting and that he would "carry the can" for the Olympics fiasco, which left the company facing intense public and political criticism.

If he does get axed, Mr Taylor-Smith, who has worked for G4S since 1998, would be the first casualty of the crisis at the world's biggest private security services provider.

G4S directors will discuss the findings of a report on the contract failings written by PricewaterhouseCoopers (PwC), and are expected to decide that the culpability of senior managers will make at least one top-level departure inevitable.

A person close to the company stressed that the board had yet to discuss the PwC review or to reach conclusions about management changes, but conceded that Mr Taylor-Smith was "the person most in the frame".

I understand that the PwC report itself will not be published in full but that G4S will make a statement to the stock exchange detailing its principal findings. The statement could be made following the board meeting, according to a person close to the company, although it could wait until Friday.

The expected departure of Mr Taylor-Smith is likely to signal a reprieve for Nick Buckles, the G4S chief executive, who endured a torrid appearance before MPs (BSE: MPSLTD.BO - news) on the Home Affairs Select Committee in July. Mr Buckles called the Olympics fiasco, which saw G4S fail to recruit thousands of staff to fill security roles at venues around the country, a “humiliating shambles”.

Mr Buckles retains the support of many of G4S's leading shareholders despite the fact that his track record was blemished even before the Olympics fiasco by a botched bid for ISS, a leading support services company.

Ian Horseman Sewell, the head of G4S's global events arm, has also been facing question marks over his future although one insider said this evening that he was "marginally more likely to survive than Mr Taylor-Smith".

Last week's report from the parliamentary committee amounted to a coruscating attack on G4S’s handling of the contract, on which it says it stands to lose approximately £50m.

G4S rebutted suggestions that it should hand back its £57m management fee for the contract, arguing that it related to "real costs" incurred by the company, and said it was in discussions with the London.

"The Company acknowledges and regrets the serious failing of not identifying the workforce shortfall at an earlier date. As soon as the company knew that it could not assure the full workforce numbers in the build-up to the Games, the relevant people at LOCOG and the Home Office were informed. G4S has a longstanding track record of delivering on Government contracts to a consistently high standard," the company said last week.

"Everyone connected with the company is extremely disappointed that G4S was unable to deliver on its full commitments on this contract, but this does not reflect the high standards G4S delivers continuously in its other work for the UK Government every day."

G4S is one of the world’s largest private sector employers, with more than 650,000 people on its payroll.

The company declined to comment.