G4S boss fighting for his job over Olympics blunder

Nick Buckles, chief executive of security outsourcing firm G4S, is under pressure from shareholders over the cock-up with the government's Olympic contract.

by Michael Northcott
Last Updated: 19 Aug 2013

Many were stunned over the weekend that the firm hired by the government to provide security personnel during the Olympics had left it until just two weeks before the Olympic games to come clean about its inability to recruit enough staff. The government had to sequester 3,500 troops from the armed forces to make up the shortfall, prompting many to condemn G4S (and its boss) as completely incompetent. 

The company’s shareholders have had a weekend of fretting, as the firm announced after the close of trading on Friday that the contract will result in a £50m loss. Add severe reputation damage and calls from government minister Keith Vaz to ban G4S from any future government contracts, and shareholders are right to be jittery. The share price fell 10% in this morning’s trading, on top of a 4% drop at the end of last week. The drops have wiped around £350m off the firm’s value, down to £3.57bn. Ouch!

Unlike what we have seen with other recent corporate scandals, management figures at the FTSE 100 firm do not appear to be closing ranks with Buckles. John Connolly, the newly appointed chairman of G4S, told the Financial Times: ‘We don’t want to do anything that smacks of short-term expediency, but it would be right to consider whether any members of the senior team are best placed to take the company forward.’ Without resounding support from his senior management peers, alarm bells really ought to be ringing for Buckles by now. He will answer questions to the Home Affairs Select Committee tomorrow. Another parliamentary roasting on iPlayer to enjoy over your lunchtime sandwich…

It is worth noting that reports this morning said that the Ministry of Defence actually knew months ago and had begun prepping soldiers for the G4S phone-call, if ever it came. So it is perhaps unfair to assume that G4S kept the debacle quiet until this late in the game. But Buckles’ other problem is that he also failed to pull off a bid to buy the Danish security group ISS eight months ago, so investors are not all too impressed with him as it is. 

G4S is one of the largest security companies in the world, and around £1bn of its annual revenues come from government contracts, making the UK government one of its biggest global customers. With Vaz’s comments about banning it from future contracts, the company’s financial bedrock is under grave threat. Will Buckles last, or will yet another FTSE 100 CEO have to walk (albeit with a £20m pension pot)? We will watch with interest…

 

To read MT's exclusive (and rare) 2005 interview with Nick Buckles, click here

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