Serco let off seven penalty fines over Mt Eden breaches of contract

Serco is paid about $31.5m a year to run Mt Eden Prison. Photo / Steven McNichol

Serco has been forgiven $620,000 of financial penalties after being issued performance notices by the Corrections Department since it took over private management of the Mt Eden Corrections Facility in August 2011.

Over the same period, Serco has forfeited $1.4 million in penalties to Corrections.

Figures released by Corrections show that penalties were very high in its early operating days, then dropped away, but have dramatically picked up again.

The $620,000 in forgiven fines comprises $275,000 in penalties that were withdrawn and $375,000 for cases in which the performance notice was upheld but Corrections decided not to deduct the penalty.

Among the latter group of cases upheld but no deductions made was a $100,000 penalty in relation to a breach of contract over Serco's handling of safety razors.

Green MP David Clendon said the notice for the razor blades was for a serious breach - giving prisoners razors but not taking them back again .

"This is an extremely serious failure that put the lives of staff and inmates at risk," he said.

Corrections Minister Peseta Sam Lotu-Iiga told Parliament today that seven notices had been withdrawn, a decision Mr Clendon criticized.

"It is inexcusable that Corrections has left Serco off the hook with no financial penalties despite their repeated failures."

But Corrections' commercial division director, Julie Robertson, said the first year of any contract was difficult as the operator became familiar with the site and the population they were required to manage.

Six notices issued in 2011 - 12 were withdrawn because the required improvement had been achieved and a seventh was withdrawn because of a court error.

"Regarding the safety razors performance notice - Corrections raised concerns with Serco about their compliance with the safety razors policy and issued a performance notice," said Julie Robertson.

"The department worked with Serco to address the concerns and based on their improved performance upheld the notice but removed the financial specific deduction."

Corrections statistics show that in the financial year that finished on June 30, the value of notices upheld has been $300,000 and the value of penalties associated with notices awaiting a response in $475,000 making a combined potential of $775,000, the same as its first-year fines.

Corrections has taken control of the Auckland remand prisons after a series of allegations including allowing fights clubs among inmates.

The Prison Inspectorate and the Ombudsman is conducting a review of the prison.

PERFORMANCE NOTICES FROM CORRECTIONS

• 55 Performance Notices issued to Serco
• 33 Upheld with financial penalties totaling $1.4 million
• 6 Upheld but No Deductions Made ($425,000 if deductions had been made)
• 7 Withdrawn ($275,000 if notices had not been withdrawn).
• 8 awaiting a response from Serco
• 7 awaiting confirmation of receipt by Serco

PENALTIES IMPOSED AGAINST SERCO

• 2011 - 12: $775,000
• 2012 - 13: $150,000
• 2013 - 14: $175,000
• 2014 - 15: $300,000 upheld so far
• TOTAL $1,400,000
• 2014 - 15: Notice awaiting response from Serco total $475,000

SEVEN BREACHES OF CONTRACT OVER WHICH PENALTIES WERE WITHDRAWN

• Unlawful detention of prisoner $25,000
• Breach of searching plans $50,000
• Incident and contingency protocol $50,000
• Programme delivery plan $50,000
• Parole Board reports $50,000
• Rate of serious assaults $50,00
• Timely health screening completions [error]