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A private British prison company fired from managing a New Zealand jail amid a series of scandals last year is to pay the New Zealand government 8 million NZ dollars (5.49 million U.S. dollars) in compensation, the government said Monday.
Serco would pay the money to cover the costs of the government' s Department of Corrections stepping in to manage Auckland's Mount Eden prison in July, Corrections Minister Judith Collins said in a statement.
"An agreement with Serco has also been reached that effectively narrows down the contractual arrangements with Serco to a labor supply agreement with other transition services for the balance of the contract through to March 31, 2017," Collins said.
"Corrections will continue to run the prison from that time. The longer term management structure will be determined by the government at a later date following advice from Corrections."
The Department of Corrections announced it would not renew its contract with Serco to run the country's busiest remand prison in December last year and the contract would end in March 2017.
The department resumed responsibility for the prison in July after serious allegations involving injured prisoners, the emergence of "fight club" videos showing prisoners in organized fights, and drug use.
Serco, which signed the contract in 2010, continues to manage Wiri Prison in South Auckland under another 25-year contract with the government - a contract opposition lawmakers and union officials want ended.
The main opposition Labour Party on Monday called for an end to the government's "privatization experiment" on prisons.
The Public Service Association (PSA) union said Serco's management of Mount Eden prison had been "shambolic, costly and characterized by numerous breaches of its contract."
"Private prison operators put profit first - and that's not how New Zealand prisons should be run," PSA national secretary Erin Polaczuk said in a statement.
