U.K. Suspends G4S Contract to Run ‘Unsafe’ Birmingham Prison

(Bloomberg) -- G4S Plc has been expelled from running the main prison in Britain’s second-biggest city after the institution was deemed dangerous for staff and inmates, sending its shares as much as 3 percent lower.

A so-called step-in clause has been invoked to take over management of HMP Birmingham for an initial six-month period, the Ministry of Justice said in a statement Monday, citing “serious concerns over safety, security and decency.” A spokesman said the contract is worth 30 million pounds ($38 million).

London-based G4S said it welcomed what it termed a temporary move at an institution that “faces exceptional challenges including increasingly high levels of prisoner violence toward staff and fellow prisoners.” The contract started in 2011 and is due to last 15 years, according to a spokesman.

Drug Den

Chief Prisons Inspector Peter Clarke said the jail was “probably the worst” he’d inspected, and the only one where he’d been forced to leave a wing because of the effects the drugs being smoked were having on him.

“If you just think of squalor, filth, the air hanging heavy with the smell of drugs, a dilapidated physical environment, a sense of great instability, the feeling that at any time violence could break out: Put all that together and what you have is a sense of an establishment that could not possibly fulfill any of the objectives of imprisonment,” Clarke said in a BBC radio interview.

The stark picture painted by Clarke’s team showed the prison had reached “rock bottom,” persuading the government to take unprecedented action, according to Prisons Minister Rory Stewart. “It’s something the government has never done before, which is to step into a private prison and take control, and that reflects how serious we think the situation is,’’ he told BBC radio on Monday.

The suspension of the Birmingham deal is a new setback for G4S’s prison arm. It previously took a financial hit over claims it overcharged authorities for electronic tagging of criminals, suspended staff at a juvenile correctional facility after allegations that guards used excessive force, and was found to have employed Florida nightclub killer Omar Mateen as a guard in the U.S.

G4S also failed to supply enough security guards for the 2012 Olympics in London, forcing the government to deploy members of the armed services in order to make up the numbers. Government funds represented 20 percent of overall G4S revenue in 2017.

Shares of G4S traded 0.2 percent lower at 252 pence as of 9:30 a.m. in London, valuing the company at 3.9 billion pounds. The stock was the third-worst performer on the Europe-focused Stoxx 600 Industrial Goods & Services index today.

©2018 Bloomberg L.P.