Rogers-linked firm sees CEO exit post

Serco Inc.’s parent company probed

Christopher Hyman, the chief executive officer of global services provider Serco Group PLC - parent company of the firm that plans to employ 1,800 people in Northwest Arkansas - has resigned amid an investigation into claims the company overcharged the U.K. government for monitoring criminals.

Hook, England-based Serco Group PLC is the parent company of Serco Inc., the firm’s Americas division. Serco Inc. landed a $1.25 billion federal contract to process written applications for state and federal health-insurance exchanges, part of President Barack Obama’s health-care overhaul.

Ed Casey, who has led the Americas division since 2005, has been appointed Serco Group’s acting CEO.

Serco Inc. announced Tuesday that it needs 1,100 employees in addition to the 700 already working in Rogers at its Patient Protection and Affordable Care Act processing center at North 13th Street and West Roselawn Drive.

“At this time, nothing is more important to me than rebuilding the relationship with our U.K. government customer,” Hyman, who has led the company since 2002, said in a statement Friday. “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.”

Casey has been asked to begin a search for a new CEO from outside Serco. Shares in the company gained as much as 5.4 percent Friday in London trading, valuing Serco Group PLC at $4.5 billion.

Serco said it has been “cooperating fully with reviews and audits across a number of our central government contracts” and expects the reviews to conclude in coming months.

The company will split its U.K. and Europe divisions, with one focused on the U.K. government and the other on the “wider public sector,” the company said in the statement.

Serco Group PLC is struggling to regain its reputation as a reliable government services provider since the U.K. Justice Ministry opened an inquiry this year into its handling of a contract to monitor prisoners. The company agreed to repay any profit,estimated to be about $3.2 million, earned since the seven-year, $460 million contract was renewed in 2011, and to forgo future profit. Electronic monitoring typically involves requiring offenders to wear an ankle bracelet so the company can track their location.

In July, Britain’s attorney general said two firms, Serco and G4S, had charged the government millions of dollars for people they were not actually monitoring. In a few cases, offenders they were supposedly monitoring were dead.

An executive with the Rogers-Lowell Chamber of Commerce said in July that he had been told Reston, Va.-based Serco Inc. is “compartmentalized” and separate from Serco Group PLC.

The company has said its North America branch works directly with the U.S. government and its clients include all branches of the military, as well as many federal civilian agencies and the intelligence community.

Requests Friday for comment from Arkansas’ Sens. John Boozman, a Republican, and Mark Pryor, a Democrat, and Arkansas’ U.S. Reps. Rick Crawford, Steve Womack and Tom Cotton, all Republicans,were not returned by Friday evening. Rogers Mayor Greg Hines and Raymond Burns, president and chief executive officer of the Rogers Chamber of Commerce, were both at a retreat and unavailable for comment, according to their spokesmen.

In addition to Rogers, Serco Inc. has health-care application processing centers in London, Ky.; Lawton, Okla.; and Wentzville, Mo., where potential users have been asked to mail health insurance applications and Serco employees make sure paperwork includes all necessary information and is accompanied by required documents before entering the application into the government’s computerized eligibility system.

John Lau, a program director for Serco, said Thursday that his company was seeing an increase in paper applications because of glitches in the online system and that problems in that system have created challenges for Serco, as they have for consumers.

Information for this article was contributed by Natasha Doff of Bloomberg News, by The Associated Press and by John Magsam and Cyd King of the Arkansas Democrat-Gazette.

Front Section, Pages 1 on 10/26/2013

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