LONDON (Reuters) - Security firm G4S (GFS.L) stood by its chief executive Nick Buckles and said two other senior executives would go following its probe into an embarrassing Olympic contract blunder.
The debacle began when the firm admitted just two weeks before the Olympics that it could not provide a promised 10,400 guards, forcing troops to step in and make up the shortfall.
The firm said its review did not uncover any "significant shortcomings" in the CEO's handling of the contract that has put its commercial relationship with the British government at risk.
Government deals account for over half of G4S's 1.8 billion pounds British revenue. The group, which operates in over 125 countries, is expected to achieve total revenue of 8 billion pounds this year.
There had been speculation Buckles would fall on his sword in an attempt to shore up the firm's damaged reputation in Britain but instead chief operating officer David Taylor-Smith and global events director Ian Horseman Sewell resigned.
"Whilst the CEO has ultimate responsibility for the company's performance, the review did not identify significant shortcomings in his performance or serious failings attributable to him in connection with the Olympic contract," G4S said.
The company was capable of fulfilling the contract, the review found, but did not sufficiently allow for the scale and complexity of the task.
Buckles, who has been with the world's biggest security group for 27 years, has been the face of the Olympic failure, taking to television and radio airwaves to apologize to the British public and twice being hauled in front of a Parliamentary Committee to explain what had happened.
But he has also presided over a 76 percent rise in his company's share price since being elevated to the CEO role in 2005, and now needs to persuade the government that G4S can be trusted with upcoming contracts managing British prisons and police outsourcing deals.
"Are we surprised that Buckles hasn't gone? Frankly yes. Does it draw a line under the whole affair? I don't think it does," said Seymour Pierce analyst Kevin Lapwood.
The company was awarded a small electronic tagging deal in Scotland last week, but the government may find it awkward to award large outsourcing deals to G4S so soon after a parliamentary committee rapped it on the knuckles.
"It's not closure. They must waive their fee and pay compensation," tweeted Keith Vaz, who chairs the Home Affairs Committee, on Friday.
The Home Affairs Committee has called for G4S to waive its 57 million pounds ($92.29 million) management fee for the contract, while the company reiterated on Friday that it expected to make a 50 million pound loss on the contract.
Taylor-Smith was responsible for ensuring the Olympics contract was delivered on budget and on time, while Sewell was the account director who told Reuters just before the Games that the company could have delivered two events of that scale at the same time.
The report found G4S did not track its workforce effectively and failed to realize the problem until too late.
"Our review of the company's performance on this contract has been extremely thorough and, whilst the failures are largely specific to the very special nature of this contract, we will learn from mistakes made," said Chairman John Connolly.
G4S said it would carry out more vigorous risk assessment in future, with greater board oversight of large contracts.
It also tasked Kim Challis with repairing relations with the government, creating a new role of CEO for UK government opportunities and outsourcing.
The group is the second largest private sector employer in the world, running operations from immigration and border control to guarding ships from pirates and cash transportation. ($1 = 0.6176 British pounds)
(Editing by Elaine Hardcastle)
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