Group 4 Falck

Denmark's Group 4 Falck and Britain's Securicor both security companies merged to form G4S in 2004.

Industry Areas

Mostly security and security related services. Security: guarding, alarm and cash services Safety: ambulance, rescue (including auto assistance), fire services, patient transport, psychological crisis therapy, personal care alarms and risk management. ‘Global solutions’: (public-private partnerships) includes prison and court services, meter-reading services, immigration services, education, prison transport and other outsourced services.^[1]

Market share/importance

Group 4 Falck A/S is the world’s second largest security services provider.^[2] The company has more than 230,000 employees in more than 85 countries, making it the world’s largest employer in the security sector.^[3] It has, since 2002, with its acquisition of the Wackenhut Corporation, increased its profit margin by 40%^[4], almost doubled its number of employees and increased its market share dramatically, however Securitas (www.securitas.com.) still claims to be the largest security company in the world.

History

Group 4 Falck is better known in the UK as Group 4, a name which has come to be associated with incompetence and failure.^[5] Group 4 Falck was created in 2000 by the merger of Group 4 Securitas (International) B.V. and Falck A/S. The companies were both formed in the beginning of last century in Denmark, when Philip Sørensen and Marius Hogrefe founded the guarding company ‘København Fredriksberg Nattevagt’(1901), and Sophus Falck established ‘Redningskorpet for København og Fredriksberg A/S’ (1906).

Redningskorpet for København og Fredriksberg A/S, which later changed its name to Falck, started off providing guarding, ambulance and fire engine services. In 1988 the Falck family sold the company to Baltica, a Danish insurance company, that went on to sell off 55% of Falck to a number of other major insurance companies. During the 90s Falck expanded in Europe by acquiring several companies (Patena Security in Sweden, Falken in Norway, SIMIS in Germany, Sezam Sp. z o.o. of Poland, AS ESS, a security operator with companies in all Baltic states, and Nederlandse Veiligheidsdienst (NVD), the largest security operator in the Netherlands).

In 1950 the Sørensen family established itself in the UK. At this time, all its companies were managed under the name ‘Securitas International’. In 1963, Store Detectives Ltd and Securitas Alarms Ltd, were set up by the family in the UK. Jørgen Philip Sørensen was appointed managing director of the UK part of the group in 1965. The UK part of the business was organised under the name Group 4 from 1968 onwards.

In 1981 the activities of the Sørensen family were split up into Securitas AB (the Swedish activities) and the Group 4 group (the rest of the European activities). Group 4 moved on to expand to several countries all over the world (India, United Arab Emirates, Ukraine, Turkey, etc). In 1990 the group acquired American Magnetics Corporation which specialises in access control systems. This helped Group 4 Falck to win the highly prestigious contract to handle security at the Pentagon.

Group 4 has been one of the benefactors of the UK privatisation policy during the 90s. In 1991, it got the first contract to manage the UK’s first privatised prison, Wolds in Humberside. British Gas also started a joint venture with Group 4 to provide meter reading to more than 19 million customers (they work together under the name Accuread).

After the merger of Group 4 and Falck in 2000, the expansion continued with several acquisitions (ADS (Germany), SOS (Austria), SPAC (Finland), BOS (Czech Republic), Unikey (Norway) and Banktech (Hungary)). The year 2001 was a good one for Group 4 Falck with an increased turnover and a 20% increase in profits. This was thanks to the growth in the markets in Indonesia, Kazakhstan and the republics in Central Asia (especially in the oil and gas sector).^[6] It also acquired the security company Euroguard (France). In 2002 Group 4 acquired the Wackenhut Corporation (US) and increased its profits further still.

Its acquisition of the Wackenhut Corporation adds a new and disturbing section to Group4 Falck’s corporate history. Formed in 1954 by former FBI agent George Wackenhut, its first major coup was the collection of two million files of US citizens implicated in the McCarthyite witch hunts of the 1950s.^[7] In the 1970s the company was implicated in supplying chemicals for weapons to Iraq^[8] Since then it has diversified into incarceration and other areas of security. The resale of part of the Wackenhut Corp. - Wackenhut Corrections - appears to signal a move out of incarceration and back to the company's ‘core’ security and safety business.^[9] Given the company's record in private prisons, campaigners will certainly hope this is part of a wider trend.

Privatisation

“We lead the privatisation programmes in both the prison services and the court services. We pioneered all these things” Jim Harrower, Group Chief and Operating Officer of the executive management board 25.

Group 4 Falck’s role in privatisation, and the mismanagement of privatised sectors can in itself be seen as a corporate crime. Wherever private companies can make a profit, Group 4 Falck is there: schools, prisons, prisoner transport, asylum detention etc. Group 4 has also tried to bid for the running of train services. It was however sent back to the drawing board with its bid for Central Trains in February 200126.

Although keen to cash in on public money, Group 4 is not as keen to contribute to the public good. The ultimate holding company of Group 4 (before it merged with Falck) was based in the Dutch Antilles, a tax haven.27 If any doubt remains about the altruistic nature of Group 4 Falck’s activities, the following quote from its Annual Report says a lot about the company trying to take over our public services:

‘However, Group 4 Falck considers its most important social responsibility to be ensuring that the company has a good and sound financial position and preserves the ability to generate growth and create jobs.’28

The company’s role in privatisation is described in more detail below.

Healthcare

Group 4 Falck has recently won a it’s first contract to build a hospital - the Nuffield Orthopaedic Clinic in Oxford.29

Schools

The outsourced education market is already worth more than £2.5bn.30 Group 4 Falck is mostly cashing in on the privatisation of education through Ensign, a joint venture with Tribal Group. Tribal group provides support services and training to the education sector. It owns SfE, an online education provider that covers around 70% of secondary schools and provides online training to around 20,000 teachers.31

Ensign bids for contracts to intervene in poorly performing local authorities. Ensign withdrew from its bid for a contract in Waltham Forest after it was alleged that it had offered £5,000 to two consultants working for PPI if the bid was successful. PPI is owned by Tribal and provided management support to Waltham Forest.32

When Henry Pitman of Tribal Group was asked about the suitability of its partner in Ensign he told the Financial Times that its experience with young offenders would be useful, “They have a lot of experience in dealing with difficult pupils”33.

In education, Group 4 won a £12 million contract in 1996 to administer the inspection of up to 20,000 nursery schools and playgroups participating in the then Conservative government’s controversial nursery voucher scheme.34 The NUT and teachers groups were sceptical about Group 4’s suitability35. Group 4 Managed Services now does the annual inspection of and reporting on educational provision at over 8000 nurseries on behalf of Ofsted.36

Group 4 Falck has a £12 million PFI contract with Wiltshire County Council for building and operating a secondary school in Chippenham, including support services such as catering and sports facilities, and extensions to two other secondary schools.37

Immigration detention

Campsfield House

Campsfield House IRC is the largest immigrant detention centre in the UK holding around 200 detainees (over 80% of them are asylum seekers). The detainees are held without charge, time limit, or proper access to legal representation. It basically operates like a high security prison for people coming to the UK seeking political asylum. The detention centre has been criticised repeatedly by campaigners and government officials, both in principle, and for the way Group 4 is managing it.

Official reports on Campsfield both in 1995 and 1998, by two different inspectors, found fear, boredom and stress among the inmates.38 In 1994 rioting broke out in Campsfield during which six prisoners managed to escape.39 In May 1995, following consultation with the Home Office, Group 4 set up the UK’s first ‘private riot squads’ to deal with future disorder at immigration detention centres. 40

In August 1997 the conditions of Campsfield erupted into a riot after detainees thought that one of the inmates was being strangled by Group 4. The trial that followed completely collapsed because of the lies of the Group 4 guards. Campsfield is due to close soon. The whole debacle is covered in Corporate Watch Issue 8. www.corporatewatch.org.uk/magazine/issue8/cw8g4.html

Yarl's Wood

The goings on at Yarl's Wood IRC Detention centre in Bedfordshire has a familiar ring to it. A fire broke out in February 2002 at the detention centre which destroyed half of the newly built centre causing damage of around £35 Million.41 An inspection by the Fire Brigade, before the centre opened advised very strongly that a sprinkler system should be installed. This advice was ignored by Group 4. 13 of the detainees are now currently held in prison awaiting trial which is scheduled for April 2003. The Home Office has since deported many, if not all, of the witnesses who could have testified on the accused behalf.42 The cause of the fire is disputed, although Group 4 claims that the detainees were responsible. There have been many associated reports of staff brutality and even the prevention of detainees fleeing the fire43. Group 4 has also refused liability for the fire and has demanded that the Home Office (the taxpayer) foot the bill44.

Tinsley House and Dungavel

With Wackenhut, Group 4 further increased its market share of immigration related services. Wackenhut runs the Tinsley House IRC detention centre at Gatwick airport and Dungavel IRC detention centre in Lanarkshire, through its subsidiary Premier Detention Services. Wackenhut also holds the contract to transport immigration detainees between centres and refugees to dispersed housing, and is planning to build a secure transit camp at Great Gransden in Cambridgeshire. In 2002, 40 people imprisoned in Dungavel immigration detention centre had a day of non-compliance in protest at conditions in the centre, and two have committed suicide. This in addition to complaints about inadequate medical care and the fact that children as young as six months old are held at the centre.45

Discrimination

Group 4 has also been accused of discrimination against job applicants. Harbhajan Birdi’s job application was rejected, however when he resubmitted an identical application changing his name and nationality to John Smith, British, he was shortlisted for interview. Mr Birdi accused Group 4 of racism. An Industrial tribunal later upheld his racial discrimination claims. Group 4 agreed to an out-of-court settlement.46

The above is by no means a comprehensive overview of Group 4 Falck’s worldwide involvement in practices surrounding racism and asylum issues. In Belgium, for example, Group 4 Securitas has the noble job of searching for immigrants hidden in lorries bound for England.47

Prisons and prisoner transport

Group 4 Falck runs three prisons in the UK on behalf of the Prison Service: HM Prison Wolds in East Yorkshire, HM Prison Altcourse in Liverpool, and HM Prison Rye Hill on the Warwickshire/Northamptonshire border48. They also run two juvenile prisons: Medway Centre and Onley. In 1999 Group 4 Falck's prison and escort services earned them £86m a year. When Group 4 became the first company to take on private prison escort in the UK, they became the laughing stock of the nation after managing to lose seven prisoners in one week. Nowadays their involvement is less of a laughing matter and more a cause for concern. 49

Juvenile Prisons (The Medway Centre and Onley)

Britain’s first child prison (12-17 year olds), ‘The Medway Centre’, is run by Rebound ECD (Education Care and Discipline), a subsidiary of Group 4 Falck. Rebound also runs a child prison (12-14 year olds) at Onley, Northamptonshire.

A report on the Medway Centre published in 1999 by the Social Service Inspectorate (SSI) found that staff were using unauthorised methods to restrain the inmates up to 150 times per month. The unauthorised neck and wrist locks used by the staff are against medical advice and the centre’s own rules. The Medway Centre has also been criticised by the social services for using excessive force when trying to contain a riot there.50

The special education programmes were reported to have ‘simply failed’, and it was concluded that the centre was more likely to strengthen criminal behaviour than to lessen it.51 A fine of £68,000 was imposed at Medway for failure of service and £ 638,000 was withheld for services not provided at Medway and Wolds.52

HM Prison Lectors (Liverpool)

The Altcourse prison in Fazakerley, built under the PFI, recovered all its costs within two years for the Group 4 Securitas and Tarmac Construction lead consortium. This will give the companies 23 years of profit from running the prison. The huge profitability is largely due to a refinancing deal that increased the expected return on capital from 13% to 39%. This has made it one of the most profitable contracts with the government for any company.53 If Group 4 has managed the financing of the prison better than the government expected, the same can hardly be said for the running of the prison. The company has received £28,000 in fines for failure of service at Altcourse54.

HM Prison Buckley Hall

The prison Buckley Hall was returned to the public sector after 5 years of management by Group 4. The reason was said to be that the prison service bid was more cost effective and provided higher standards of safety and security. In the early days of Group 4 running the prison, the company was criticised by the Prison Reform Trust for staff shortages and inexperience. Group 4 managers form Buckley Hall were offered new jobs at the child prison at Onley55.

HM Prison Wolds (Humberside, East Yorkshire)

Wolds Prison opened for remand prisoners in April 1992. Group 4’s management contract was at that point worth £6m.56 A little more than a year later, Judge Stephen Tumim, the Chief Inspector of Prisons, condemned the regime at the Wolds prison. Complaints included: ‘corrupting lethargy’, and a high incidence of violence and drug abuse.57

Frances Crook, director of the Howard League for Penal Reform was refused entry to the Wolds after having criticised the prison following an earlier visit.58

In March 1995 the inquest into the death of Darrell Barson ruled suicide. Barson was on 15 minute suicide watch, but had not been seen for several hours before his death. The prison doctor said staff were too inexperienced to tell suicidal behaviour from signs of drug abuse, and that 90% of the prisoners he saw were “drugged up to the eyeballs”.59

Rye Hill (Warwickshire)

Group 4 Falck and Carillion manage this prison (capacity 600). In April 2001, according to the Association of Prisoners, a teacher in the prison was not allowed to take her copy of the Guardian with her into the education unit. Mr Hirst, General Secretary of the Association of Prisoners speculated that this might have been because the Guardian reported about three prisoners’ High Court case for prisoners being given the right to vote.60

Prisoner Transport

In May 1993 drunk prisoner, Ernest Hogg, choked on his own vomit whilst in the care of Group 4 Court Services. Hogg lay unconscious and unnoticed in the back of a prison van for several hours before he died. Six Group 4 staff had their operating certificates suspended by Home Office. Group 4 were later found guilty of “lack of care”61.

In August 1993, a Home Office inquiry criticised Group 4 for using excessive restraint in handling a prisoner. Despite her asthma and low security risk status she was handcuffed and locked in a van cell for two hours.62

Worldwide

Group4 Falck also has prison contracts in Australia and South Africa (the 3000 bed Bloemfontein prison, is the first prison to be built, financed and designed by the private sector in South Africa).63

Opened in August 1997, Port Philip (Australia) has been blighted by drug abuse, violence, and suicides. 60 staff resigned in the first 7 months. In March 1998 a serious riot at Port Philip prison, Melbourne, was initially described by Group 4 management as a “passive demonstration”. Group 4 was severely criticised for cost-cutting, understaffing, inexperience and bureaucratic error.64

In 2002 Group 4 Falck were forced by media attention to withdraw security guards from their subsidiary Hashmira, which operates in the Occupied Territories. It was revealed that many of security guards were settlers, and routinely prevented Palestinian villagers from cultivating their own fields, travelling to schools, hospitals and shops in nearby towns, and receiving emergency medical assistance.65

Corruption

Group 4 was at the centre of a corruption scandal at the European Commission in Brussels. It was alleged that Group 4 beat the 12 other companies competing for the contract to run the Commission’s security because it was allowed to change its bid after the submissions deadline. The investigation into the matter by the commission found that there was ‘strong circumstantial evidence’ that the bid had been manipulated.66 After Group 4 had secured the contract, it changed the terms and conditions of it so that they increased its profits. It later admitted to overcharging inadvertently.

The Group 4 spokesperson tried to blame the managers of the security services at the commission, saying they were a bunch ‘nasty and very right-wing Belgians’. For example, they made Group 4 put ghost workers on its payroll (something Group 4 does not deny). In this way retired Belgian police officers were given second careers in the European security services. In response to these allegations a Group 4 spokesperson stated that 'we were told to hire these people by the managers of the security service, so we did.'67

Spying on the world

Group 4 Falck is part of consortium of three firms who got a 30 year contract to build and run the new £300 million GCHQ building (Britain’s spy centre to monitor communications worldwide).68

Facilitating environmental destruction

Group 4 guards the oil and gas fields for various companies, including Exxon Mobil and British Gas in Kazakhstan, in the Caspian Region.69 The exploitation of these fields has already caused massive environmental damage70. Wackenhut is responsible for guarding the Nevada nuclear bomb test site71.

Activist Bashing

In September 1994 Group 4 agreed not to use excessive force at the Stanworth Valley protest camp after an injunction application made by Chris Maile, and son Philip, from the local Green Party. In October of the same year, Philip Mail was hospitalised after a Group 4 security guard illegally used a pressure point hold to the back of his head. He spent three weeks in a neck collar.72

Resources

• Group 4 Falck: Products/Projects
• Group 4 Falck: Who, Where, How Much?
• Group 4 Falck: Influence / Lobbying
• Group 4 Falck: Corporate Crimes
• Group 4 Falck: Links, contacts & resources

References

1. ^Group 4 Falck, 3rd Quarter Report 2002, www.groupfalck.com/db/filesq3_2002_uk.pdf , viewed 10/2/02
2. ^ Group 4 Falck in Brief, www.group4falck.com/object.php?obj=3a000c , viewed 2/7/03.
3. ^ Ibid.
4. ^ Ibid.
5. ^ Mostly taken from www.group4falck.com/object.php?obj=obj3b000c , viewed 10/10/01; and www.wackenhut.com , viewed 10/02/03.
6. ^ Norton-Taylor, R. (1999) Group 4 wins Pentagon contract, 29 September 1999, viewed 26/11/01
7. ^ Marshall, C. (1994) The Last Circle, www.lycaeum.org/books/books/last_circle/4.htm , viewed 12/3/03; www.geocities.com/Area51/Vault/6291/govment5.htm viewed 18/02/03
8. ^ Rintoul, S. (2002) Detention company’s murky origins, The Australian, 28/12/02, www.theaustralian.news.com.au/common/story_page/0,5744,5756510%255E23592,00.html , viewed 18/3/03.
9. ^ PR Newswire (2003) WCC Announces Agreement to Buy Out Controlling Interest Held by Group 4 Falck, http://biz.yahoo.com/prnews/030501/flth013_1.html , viewed 2/7/03.

References

25 Weale, S. (1999) The Great Escape, The Guardian, 15/11/99. 26 Hemscott Investment Analysis (2001) National Express, 8/2/01, www.hemscott.com/hstoday/focus/nationalexpress_080201.htm viewed 28/4/03. 27 Weale, S. (1999) The Great Escape, The Guardian, 15/11/99. 28 Group 4 Falck, Annual Report 2000, p. 40, www.group4falck.com/db/files/file58e627ac99b.pdf, viewed 28/4/03. 29 Group 4 Falck, Annual Report 2001, www.group4falck.com/db/files/file9ded9f643ec.pdf, viewed 28/4/03. 30 Burkeman, O. (2001) Next stop, schools, The Guardian, 26/6/01, www.guardian.co.uk/guardianeducation/story/0,3605,512193,00.html, viewed 28/4/03. 31Labour Research (2000) Privatising education: Schools: profits for the taking, August 2000, available online at: www.cix.co.uk/~frizinghall/privatisation/information/privatising.pdf , viewed 28/4/03. 32 Burkeman, O. (2001) Next stop, schools, The Guardian, 26/6/01, www.guardian.co.uk/guardianeducation/story/0,3605,512193,00.html, viewed 28/4/03. 33 Town halls face revolution over education services, Financial Times, 16/5/01 34 Labour Research (2000) Privatising education: Schools: profits for the taking, August 2000, available online at: www.cix.co.uk/~frizinghall/privatisation/information/privatising.pdf, viewed 28/4/03. 35 The Guardian, 13 August 1996 36 Group 4 Falck, Project Management Services, www.group4managedservices.com/html/ProjectManagementServices.htm , viewed 28/4/03. 37 Labour Research (2000) Privatising education: Schools: profits for the taking, August 2000, available online at: www.cix.co.uk/~frizinghall/privatisation/information/privatising.pdf , viewed 28/4/03. 38 Beckett, A. (2001) Behind the wire, The Guardian, 22/5/01. 39 Weale, S. (1999) The Great Escape, The Guardian, 15/11/99. 40 Lynas, M. (1999) Group 4: Cry Freedom, Corporate Watch magazine, 8, www.corporatewatch.org/magazine/issue8/cw8g4.html, viewed 28/4/03. 41 Hamilos, P. and agencies (2002) Asylum centre wrecked by fire, The Guardian, 15/2/02, www.guardian.co.uk/Refugees_in_Britain/Story/0,2763,650642,00.html, viewed 28/4/03. 42 Ibid. 43 Ibid. 44 Ibid. 45 BBC (2002) Concern voiced over detention centre, 22/4/02, news.bbc.co.uk/1/hi/scotland/1942417.stm , viewed 28/4/03 46 Lynas, M. (1999) Group 4: Cry Freedom, Corporate Watch magazine, 8, www.corporatewatch.org/magazine/issue8/cw8g4.html , viewed 28/4/03. 47 The Frontline, The Guardian, 22 May 2001 48 Group 4 Falck, Annual Report 2000, p. 38, www.group4falck.com/db/files/file58e627ac99b.pdf , viewed 18/3/03. 49Weale, S. (1999) The Great Escape, The Guardian, 15/11/99. 50 Weale, S. (1999) The Great Escape, The Guardian, 15/11/99. 51 Travis, A. (1999) Child jail 'overuses force', The Guardian, 15/1/99. 52 Weale, S. (1999) The Great Escape, The Guardian, 15/11/99. 53 Hencke, D. (2001) Private jail makes huge profits, The Guardian, 4/7/01. 54 Weale, S. (1999) The Great Escape, The Guardian, 15/11/99. 55 Ibid. 56 Lynas, M. (1999) Group 4: Cry Freedom, Corporate Watch magazine, 8, www.corporatewatch.org/magazine/issue8/cw8g4.html , viewed 28/4/03. 57 Ibid. 58 Weale, S. (1999) The Great Escape, The Guardian, 15/11/99. 59 Lynas, M. (1999) Group 4: Cry Freedom, Corporate Watch magazine, 8, www.corporatewatch.org/magazine/issue8/cw8g4.html , viewed 28/4/03. 60 Group 4 bans the Guardian on Prison Education Unit, Press release from the Association of Prisoners, 10 April 2001. 61 Lynas, M. (1999) Group 4: Cry Freedom, Corporate Watch magazine, 8, www.corporatewatch.org/magazine/issue8/cw8g4.html , viewed 28/4/03. 62 Ibid. 63 Weale, S. (1999) The Great Escape, The Guardian, 15/11/99. 64 Lynas, M. (1999) Group 4: Cry Freedom, Corporate Watch magazine, 8, www.corporatewatch.org/magazine/issue8/cw8g4.html , viewed 28/4/03. 65 Lagerquist, P. & Steele, J. (2002) Group 4 security firm pulls guards out of West Bank, The Guardian, 9/10/02, www.guardian.co.uk/Print/0,3858,4518860,00.html, viewed 28/4/03. 66 Cohen, N. (1999) Who'll jail the jailers?, The Guardian, 21/3/99, www.guardian.co.uk/Archive/Article/0,4273,3842510,00.html ,viewed 28/4/03. 67 Ibid. 68 Weale, S. (1999) The Great Escape, The Guardian, 15/11/99. 69 Group 4 Falck (2002) Guarding Tengiz's hidden treasure, Group 4 Falck International Magazine, 44, www.group4.co.uk/resources/pdf/kazakhstan.pdf viewed viewed 28/4/03. 70 Energy Information Administration (2003) Caspian Sea Region: Environmental Issues, www.eia.doe.gov/emeu/cabs/caspenv.html viewed 10/02/03 71 Wackenht (2002) Contracts, www.wackenhut.com/services/wsi/contracts.htm , viewed 28/4/03. 72 Green Party press release, 11 September 1995.