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Serco to cough up $8m to Corrections

NZ NewswireNZ Newswire 3/04/2016
A Serco sign at Mt Eden prison © RNZ / Diego Opatowski A Serco sign at Mt Eden prison

Embattled private prison operator Serco will cough up $8 million to cover the cost of Corrections taking over the management of Auckland's Mt Eden prison and outstanding performance penalties.

Corrections Minister Judith Collins says an agreement has been reached with Serco to effectively strip down its contract to a labour supply agreement.

That means Corrections will continue to manage Mt Eden prison with Serco providing staff at cost until March next year, when the contract formally ends.

Serco will make no profit from the arrangement.

"This is a pleasing outcome as it both recovers costs and gives more certainty over the future management of the prison," Ms Collins said.

Corrections announced it was taking over the management of Mt Eden in July last year following weeks of revelations about prison fight clubs, access to contraband and poor inmate behaviour.

In December, Corrections said it would not be renewing Serco's contract to run the prison beyond March 2017.

Serco's Asia-Pacific chief executive Mark Irwin on Monday said he accepts that before Corrections stepped in, "there were certain aspects of our service delivery which did not meet the standards of the contract and certainly the standards we set for ourselves".

"For that I am truly sorry," he said.

Mr Irwin said the settlement was reached by mutual agreement and it acknowledges that since Corrections came in to the prison, it has incurred significant costs.

"It is right for us to pay that," Mr Irwin said.

Of the $8m that Serco will pay to Corrections, $5m relates to the costs associated with the step in, while the rest is for outstanding performance notices.

Corrections boss Ray Smith said the agreement "clears the desks" in terms of some of the lingering financial questions around who would foot the bill for the department going in to Mt Eden.

Decisions around the longer-term management of Mt Eden are still to be made, but Mr Smith said he will be providing advice to the government on that at some point in the future. However, he said Corrections will continue running the prison beyond March 2017.

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