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SBD Global/July 18, 2012/Olympics

G4S Chief Nick Buckles Apologizes For Security 'Shambles,' Faces Fines, Penalties

G4S CEO Nick Buckles prepares to leave a Commons Home Affairs meeting Tuesday.
The full extent of the financial and legal penalties that security firm G4S could face for its failure to provide security guards for the Olympic Games "was laid bare" Tuesday, according to Booth & Haynes of the LONDON TIMES. The details of the penalty clauses in G4S’s Olympics contract were set out in a letter from LOCOG to MPs on the backbench Home Affairs select committee. LOCOG has the right to pay G4S "only for the guarding hours it actually supplies," and G4S is liable for "any losses suffered by LOCOG in making up the shortfall" (LONDON TIMES, 7/17). In London, Rosa Prince reported that G4S CEO Nick Buckles appeared before the Commons' Home Affairs Select Committee Tuesday and "refused to surrender" the firm's £57M ($89M) management fee. Committee Chair Keith Vaz asked "how the fee was warranted" given that G4S still could not guarantee that it would fulfill its revised promise to supply 7,000 guards by the July 25 opening of the Olympics. Buckles said, "We've managed the contract and we've had management on the ground for two years. We still expect to deliver a significant number of staff." Vaz said, "I find that astonishing" (TELEGRAPH, 7/17).

BUCKLES SORRY: In London, Nigel Morris reported that Buckles agreed with MPs that the episode had been a “humiliating shambles” for the company, leaving its reputation was “in tatters.” Buckles promised that all the army and police costs "would be reimbursed," including the cost of their accommodation. He even suggested that G4S "would look sympathetically on paying them bonuses" (INDEPENDENT, 7/17). Also in London, Fenton, Warrell & Plimmer reported that Buckels "appeared to concede that it was a relatively small contract within the group's global business model and was more important for the prestige of the company." He "strongly denied that it had not been taken seriously enough within the group because it was not a big enough contract." Buckles said to Vaz: "Clearly, we regret signing the contract, but now we have to get on and deliver it." Buckles was "deeply sorry" for the failure but said it happened because the "complex contract" was "back-ended," meaning the shortage of personnel became apparent only at a later stage. Buckles said he was still in his job because he felt he was "the best person to help the company through the problem and keep its reputation intact" (FINANCIAL TIMES, 7/17).

LACK OF CONFIDENCE: The London GUARDIAN reported that Tory MP Nicola Blackwood said Buckles' performance before the MPs "would lead quite a lot of people to despair." Blackwood said, "I had very little confidence in G4S fulfilling this contract before this session started, and now I don't have any confidence at all." Labour MP Bridget Phillipson told Buckles she was left with the feeling that he was "making it up as you go along" (GUARDIAN, 7/17).

INVESTMENT ALLIES: In London, Clark & Costello reported "top investors are lending qualified support" to the embattled Buckles. Leading City institutions "are reluctant to see him forced out." Invesco Investment Manager Neil Woodford said: “It is my view that the interest of shareholders are best served by keeping Nick Buckles, because his track record is excellent.” Woodward said the Olympic woes are due to local management failing to deliver “one of literally thousands and thousands of contracts” around the world. Another top-10 shareholder privately backed Buckles, saying, “He’s doing the right things, he’s apologising and trying to sort it for the Olympics. It’s a cock-up." And Panmure Gordan analyst Mike Allen said that there was considerable sympathy for the company in financial circles. Allen: “The scale of this contract was beyond what they normally do. It does beg the question -- if G4S couldn’t do it, should it have been outsourced in the first place?” (LONDON TIMES, 7/18)

MORE TROOPS: In London, Blitz, Warren & Plimmer reported the Ministry of Defence "is preparing for the possibility that it may need to deploy up to 2,000 more troops" to help cover security concerns in addition to the 3,500 who have already been called up. As "uncertainty" at Whitehall grows, military planners said "they are actively preparing to provide up to 2,000 extra troops if needed." No formal request has been made, but a senior figure said, "We're internally planning for the possibility that we may have to deploy those extra numbers. It’s a contingency because we always plan ahead. We assume this won't be needed but if it is, we're ready" (FINANCIAL TIMES, 7/18). Also in London, Anna Watson reported the long empty Tobacco Dock will serve "as a billet for military personnel drafted in for the Olympics" (LONDON TIMES, 7/18).

U.S. AGENTS DRAFTED: In London, Mark Duell reported that U.S. agents are being drafted into Heathrow and other British airports "to bolster security" during the Olympics. Transportation Security Administration officers are expected to help U.S. airlines with security during the Games. The Department for Transport is said to have "made an agreement" with the TSA for specialist agents to arrive one week before the Olympics, then leave one week after the Paralympic Games, which finish on Sept. 9. But the agents "will not be permitted to go beyond boarding gates, or onto British aircraft" (DAILY MAIL, 7/16).
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Olympics, United Kingdom

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