G4S (LSE: GFS.L - news) is close to reaching a final settlement over the Olympics security fiasco which will force it to take a loss on the contract larger than the £50m originally estimated by the company.
It is understood the FTSE 100 (FTSE: ^FTSE - news) group is in the final stages of signing a deal with the organisers of the Games, Locog, following protracted negotiations over the £240m contract. The two sides were said to be initially “miles apart”.
G4S has already taken a £50m loss against the contract , but it is understood it will have to take a total hit of between £50m and £100m, based on what Locog has signalled it is willing to pay. Confirmation of a settlement is expected imminently.
The news comes as The Sunday Telegraph can also reveal that G4S has lost a multi-million pound contract to investigate alleged “war crimes” by British troops in Iraq.
The Ministry of Defence confirmed that G4S has lost a contract it has held for two years. Its subsidiary, G4S Policing Solutions, had provided 40 former police officers to the Iraq Historic Allegations Team (IHAT).
The team will now more than double in size under a new contract which has been handed to a medium-sized recruitment company with an annual turnover of just £6.6m.
The MoD is understood to be announcing this week that London-based Red Snapper Group will provide up to 100 civilian investigators all former detectives to look into claims British troops abused civilians during the invasion of Iraq.
MoD documents seen by this newspaper revealed the contract was worth up to £5m a year, for up to three years.
An MoD spokeswoman said: “We can confirm Police Skills, part of the Red Snapper Group, has been awarded a 12-month contract to provide support to the Iraq Historic Allegations Team. They were awarded the contract because they provided the best value for money for the taxpayer.”
The contract could be extended for a further two years.
Last year, Locog stopped payments to G4S on July 13, two weeks before the Olympic Opening Ceremony and two days after G4S said it would be unable to provide all 10,400 guards it had agreed to because of problems processing applicants.
By that point the organisers had paid £90m to the company.
G4S said that ultimately it managed to deploy 7,800 guards at peak times during the Olympics, with the Government forced to draft in additional troops and police at the last minute to make up the shortfall.
The company has always said it would meet the cost of the military and police, but it has also had to negotiate with Locog an appropriate financial penalty for failing to fulfil its contractual obligations.
G4S chief executive, Nick Buckles, said in November (Xetra: A0Z24E - news) he hoped negotiations would be settled by the end of 2012, but it is understood the process dragged on because of the vast gulf between what both sides considered appropriate, and because both wanted to see detailed documentary evidence to support claims.
A spokesman for G4S would not comment on specific details but said “we hope to complete a deal soon”. A spokeswoman for Locog said on Friday that discussions were “ongoing”.