THE National Asset Management Agency (NAMA) has been forced to cancel a multi-billion euro contract with a British conglomerate after the latter was accused of fraud by UK authorities.
In July, the State's toxic loans agency awarded Serco a contract to help manage mostly mortgage loans with a face value of about €1.8bn that could be transferred to the agency from the former Anglo Irish Bank.
But barely a week after the company was appointed, the British government accused it of over-charging the UK taxpayer by as much as £50m (€59.7m).
In a statement, NAMA said it was going to tender for a replacement contract from next week.
"Following issues that have arisen out of the UK Ministry of Justice audit into government contracts held by Serco, and the referral of certain matters to the UK police, along with the timeframes required to prepare for the transition of the loans, the NAMA board has taken a decision not to proceed to contract completion with Serco," the statement said.
Serco was appointed as the lead partner in consortium with global financial services business Pepper Asset Servicing.
The decision to scrap the contract also involves Pepper but it is understood there is nothing to stop Pepper from re-applying for the new contract as it is not connected in any way with the allegations against Serco.
As part of the privatisation of Britain's prison service, Serco had a contract to run "tagging schemes" where offenders have to wear an electronic tag on their release from prison.
The tags allow authorities to track the wearer, and it is an offence to tamper with the tag.
However, it has been alleged that Serco had been charging the British government for tagging prisoners who were dead, had left the country, or did not have to wear one.
Sources inside Britain's Ministry of Justice said that although they typically had 15,000 offenders on a tag at any one time, security firms G4S and Serco had been charging them for 18,000 – meaning one in six of the charges was spurious.
In July, UK justice secretary Chris Grayling described the allegations as a "wholly indefensible and unacceptable state of affairs".
The NAMA statement said it would publish the tender next week. The deadline for receipt of the tenders is towards the end of October. A spokesman said the decision as to the preferred bidder would be made as soon a possible.
NAMA has already appointed Dublin-based Certus to handle day-to-day management of up to €22bn of commercial property loans. That contract is not affected. Certus is now expected to tender for the second contract.