Chris Hyman quits as head of Serco

Chris Hyman unexpectedly quit as head of the outsourcer Serco yesterday following a string of corporate embarrassments, including allegations that it overcharged on electronic monitoring contracts and altered records on the transport of prisoners.

Mr Hyman will leave Serco immediately, a company where he has worked for 19 years and been chief executive for 11. Ed Casey, who has led Serco’s Americas division since 2005, has been appointed acting group chief executive.

Mr Hyman is the second top executive at a UK outsourcer to resign this week over the scandal. Rival G4S confirmed on Thursday that Richard Morris, its UK chief executive, has resigned.

Alastair Lyons, Serco’s chairman, said the company had hired headhunters to search for a new chief executive from outside the organisation as it thought it appropriate to “give the company a fresh start and start rebuilding the confidence” of clients. The process is expected to take months, not weeks.

Mr Hyman, who earned £2.5m last year, leaves with an expected £1.6m pay-off, equivalent to what he would have received for his contractual notice period of 12 months. In addition he is entitled to a deferred pension worth £2.2m.

Serco, which runs facilities from prisons and hospitals to air traffic control towers, has been given three months by the government to improve its performance and demonstrate “change and corporate renewal” or risk losing lucrative public sector contracts. With just five weeks left, Mr Hyman’s abrupt departure is intended to prove that the company has made progress.

Mr Hyman said: “At this time, nothing is more important to me than rebuilding the relationship with our UK government customer. In recent weeks it has become clear to me that the best way for the company to move forward is for me to step back.”

At this time, nothing is more important to me than rebuilding the relationship with our UK government customer

Serco employs 122,000 staff in 30 countries but about one quarter of its £4.9bn in annual revenues comes from work with the UK government.

The company has been under fire – along with rival G4S – ever since the government announced it could be referred to the Serious Fraud Office for the alleged overcharging of taxpayers for the electronic tagging of criminals even when they were dead, in prison or never tagged.

Serco has also been referred to the City of London Police following claims that staff recorded prisoners in London and East Anglia as having been delivered ready for court – a key performance measure on the contract – when in fact they were not.

The company also announced on Friday that the UK and Europe division was to be split in two, with one part focusing on the “UK government customers”, and the other on the wider public sector. Three new non-executive directors are to be appointed along with a new general counsel and a board committee for corporate responsibility.

A government spokesman said: “Whilst it is early days in their programme of renewal, this is a positive move by Serco and a step forward”.