Subtitle translation site raided

10 July 2013 Last updated at 12:44 ET By Leo Kelion Technology reporter

A website that allowed users to share subtitles has been taken offline after the Swedish police raided two properties used by the service.

Undertexter had provided fan-made translations of film and TV show dialogue, which could be merged with video files to provide on-screen text.

A spokesman for the police told the BBC they had acted after investigating a complaint by copyright holders.

Undertexter's managers insisted they had not broken the law.

Critics have suggested the raid marked an escalation in Hollywood's efforts to protect its intellectual property.

However, the Rights Alliance - the organisation that prompted the police to act - said it was not the first case of its kind in Europe.

Forensic tests

The national co-ordinator of the intellectual property crime division at the Swedish Police Service said that it had carried out the raid after tracking computers using Undertexter's internet addresses to buildings in Stockholm and Helsingborg.

"Our copyright law doesn't allow people to make a transcript from a film that is copyright-protected without the copyright owner's permission and certainly not to make it public," said Paul Pinter.

"The investigation is still in its early stages. Our forensic experts will now go through the material on the seized computers and there will be follow-up interviews."

He added that potential penalties ranged from fines to up to two years in jail.

The Rights Alliance said its members had been concerned that Undertexter had "a lot of" adverts on it, suggesting the owners were profiting from "the work of others".

"There were several reasons for us to act against the site," said Sara Lindback, a lawyer for the group.

"The movies they put subtitles on have often not yet reached Sweden or are still in cinemas. The translations have not been cleared by the rights-holders."

She added that the move followed the trial of a man in Norway last year who had run Norsub, a similar service.

A judge fined the 26-year-old 15,000 kroner ($2,450; £1,640) after hearing he had not profited from the site and had shut it down shortly after being warned he was breaking the law.

'Free country'

A post on Undertexter's Facebook page indicated its managers intended to fight on.

"Hollywood... we will never give up, we live in a free country and Swedish people have every right to publish their own interpretation of a movie/series," they wrote.

They added that they had never charged for the service.

Rick Falkvinge, a civil rights blogger and founder of Sweden's Pirate Party, has come out in their support.

"Fan-subbing is a thriving culture which usually provides better-than-professional subtitles for new episodes with less than 24 hours of turnaround, whereas the providers of the original cartoon or movie can easily take six months or more," he wrote on his site.

"What's remarkable about this raid is that the copyright industry has decided to do a full-out raid against something that is entirely fan-made."

Ernesto van der Sar - editor of the Torrentfreak news site - also questioned the wisdom of the move.

"These subtitles are created by the most passionate fans the industry has and they are not in any way out to make a profit," he told the BBC.

"These sites exist because they offer a service to the deaf and foreign language audience that's often lacking through legal channels."

However, the Rights Alliance defended its actions.

"See the movies, but make sure that the ones that created them are the ones that get paid, not the pirates," said Sara Lindback.

"That way new movies can be made, which benefits everyone."

She added that her organisation now intended to act against other subtitle services including Swesub.

The Swedish Police Service was not able to provide comment about other sites.

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Liquid metal structures 3D-printed

10 July 2013 Last updated at 13:23 ET

Stretchable electronics may start appearing in the near future, after researchers created liquid metal structures on a 3D printer.

A team at North Carolina State University used an alloy of two metals - gallium and indium - that are liquid at room temperature but form a "skin" when exposed to air.

When printed, the shapes can be stretched without reverting to blobs.

The technology could be used for micro-circuits and wearable electronics.

The technique is detailed in the journal Advanced Materials.

"The metal forms a very thin layer of oxide and because of it, you can actually shape it into interesting shapes that would not be possible with normal liquids like water," said the lead author, Michael Dickey.

He explained that the printer used a syringe to stack the droplets on top of one another.

The droplets retained their shape without merging into a single big droplet, which allowed the scientists to then shape the metal.

"It's an additive manufacturing technique, so you're basically directly printing the material in 3D space," Dr Dickey said.

"The resulting structures are soft, and if you embed them in, say, rubber, for example, you can create structures that are deformable and stretchable."

Gadget makers could potentially use the technique to make connections between electronic components that would not break if their device was pulled or twisted.

Wearable tech

The work was "potentially revolutionary," said Jason Heikenfeld, professor of electrical engineering at the University of Cincinnati, who was not involved in the research.

"Folks have tried to work with liquid metal for some time - some of us when we were younger would break up a thermometer and you'd see liquid metal - mercury - go all over the place," he said.

"It was evidence that although these materials have a significant upside, in terms of what you can do with them, they are extremely challenging to work with."

Flexible electronics are starting to emerge, with companies such as Samsung, LG and Nokia experimenting with bendy displays for phones and televisions.

But this technology was not stretchable - something you could achieve when you involved liquid metals, said Dr Heikenfeld.

"Stretchable is a whole other game because you're now talking about wearable and conformable," he said.

He added that the recent research also addressed another important issue of using liquid metals - toxicity. Unlike mercury, the gallium and indium alloy was safe, he said.

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Apple guilty of e-books price fixing

10 July 2013 Last updated at 13:49 ET

Apple conspired with publishers to fix the price of electronic books, a US judge has ruled.

Manhattan Judge Denise Cote said the iPad maker "conspired to restrain trade".

But the firm's spokesman, Tom Neumayr, said Apple would appeal against the ruling and fight "false allegations".

Five publishers that were originally named as defendants alongside Apple have already reached settlements, including Penguin.

The judge ordered a new hearing to determine damages to be imposed on Apple.

The US Department of Justice said the conspiracy was designed to challenge online retailer Amazon's dominance of the fast-growing e-books market.

Penguin settled its case for $75m (£49m). Hachette, HarperCollins and Simon & Schuster created a $69m fund for refunds to consumers, while Macmillan settled for $26m.

Continue reading the main story

This is certainly a big win for the US government. But what's interesting is how it proved its case.

It was the collusion between publishers and Apple that caught the eye of regulators and led to today's decision.

The court relied heavily on incriminating internal emails from Apple's Senior Vice President, Eddy Cue, to each of the publishers named in the lawsuit.

It also relied on testimony from the late Steve Jobs. Yes, Steve Jobs.

That came from transcripts of interviews with Walter Isaacson, the author of Mr Jobs' biography.

Judge Cote said: "The plaintiffs have shown that the publisher defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy.

"Without Apple's orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010," she said.

Fight continues

US Assistant Attorney General Bill Baer called the ruling "a victory for millions of consumers who choose to read books electronically".

He said the judge agreed with the Justice Department and 33 state attorneys general that executives at the highest levels of Apple orchestrated a conspiracy with five major publishers to raise prices.

"Through today's court decision and previous settlements with five major publishers, consumers are again benefiting from retail price competition and paying less for their e-books,'' Mr Baer said.

Consumer groups in the US cheered the news.

"If we let companies get away with this type of price fixing, consumers will be denied a substantial part of the benefits of the digital revolution," said Dr Mark Cooper of the Consumer Federation of America, which had filed a supporting brief in the case.

But after the ruling, Mr Neumayr insisted that Apple had brought innovation and competition to the market, not restricted it.

"Apple did not conspire to fix e-book pricing and we will continue to fight against these false accusations,'' he said. "We've done nothing wrong."

Warning to others

Previously, Apple's attorney, Orin Snyder, had told the court that Judge Cote would set a "dangerous precedent" if she concluded that Apple manipulated e-book prices.

However, Columbia University law professor Scott Hemphill said today's ruling was narrow and would be unlikely to set any legal precedent.

"It may send some signals to tech companies about what they can and can't do," said Prof Hemphill.

"But the precedential value is limited because the ruling is by a district court."

However, he added that the judge in this case took particular pains to anticipate a challenge from Apple - something that chief executive Tim Cook hinted at earlier this year, when he dismissed the idea of a settlement.

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PC sales in 'longest' historical drop

10 July 2013 Last updated at 23:18 ET

Global personal computer (PC) sales have fallen for the fifth quarter in a row, making it the "longest duration of decline" in history.

Worldwide PC shipments totalled 76 million units in the second quarter, a 10.9% drop from a year earlier, according to research firm Gartner.

PC sales have been hurt in recent years by the growing popularity of tablets.

Gartner said the introduction of low-cost tablets had further hurt PC sales, especially in emerging economies.

"In emerging markets, inexpensive tablets have become the first computing device for many people, who at best are deferring the purchase of a PC," said Mikako Kitagawa, principal analyst at Gartner, said in a statement.

'Some improvement'

Continue reading the main story

Slower growth in Europe and China reflect the risks, while the improved US outlook reflects potential improvement"

End Quote Jay Chou IDC Worldwide PC Tracker

Separate data released by research firm IDC also showed an 11.4% decline in global PC shipments during the period, from a year earlier.

IDC, which uses a slightly different method to calculate the data, said that shipments totalled 75.6 million units in the second quarter.

However, it said that the numbers were better than it had expected and were likely to improve in the coming months.

"With second quarter growth so close to forecast, we are still looking for some improvement in growth during the second half of the year," said Jay Chou, a senior analyst at IDC Worldwide PC Tracker.

But he warned that the sector was facing risks and much work needed to be done to turn around things.

"Slower growth in Europe and China reflect the risks, while the improved US outlook reflects potential improvement. Still, the weakness in emerging markets is a threat to a core long-term growth area," Mr Chou said.

"In addition, while efforts by the PC ecosystem to bring down price points and embrace touch computing should make PCs more attractive, a lot still needs to be done in launching attractive products and addressing competition from devices like tablets."

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Feds asked to avoid hacker meeting

11 July 2013 Last updated at 06:43 ET

Federal agents have been asked to stay away from one of the world's biggest hacker gatherings.

Revelations about the scale of US government spying meant emotions in the hacking world were "running high", said organisers of the Def Con convention.

As a result, federal agents should take a "timeout" from Def Con this year.

The main Def Con event takes place in Las Vegas from 1 August and will see 15,000 hackers debate security topics and demonstrate their coding prowess.

Freely mix

The request was posted to the main Def Con webpage by Jeff Moss, the founder of the hacking conference.

In the past, he said, the convention had been an "open nexus" where government security staffers and law enforcement agents could freely mix and share ideas with the other hackers, researchers and security professionals that attended.

"Our community operates in the spirit of openness, verified trust, and mutual respect," he said, a state of affairs that had led to an exchange of information that had seemed mutually beneficial.

However, wrote Mr Moss, many people now questioned that free exchange of ideas in the wake of ongoing disclosures about the US National Security Agency's Prism programme, which, since 2007, has been scooping up huge amounts of data about people's online activity.

As a result, "it would be best for everyone involved if the feds call a 'timeout' and not attend Def Con this year," he wrote.

"A little bit of time and distance can be a healthy thing, especially when emotions are running high," Mr Moss told Reuters.

Despite the request, Def Con organisers were not going to be checking the identities of everyone who attended to weed out federal agents and send them packing, he added.

Paper plea

Def Con's request comes as Yahoo seeks permission to publish information about a key legal case in 2008 that let the US government establish and justify Prism.

Yahoo has filed legal papers asking for permission from the Foreign Intelligence Surveillance Court (Fisc), which decides whether US government departments such as the National Security Agency can carry out surveillance programmes.

In 2008, Yahoo had "objected strenuously" to the Fisc over requests for it to co-operate with the early Prism programme, it said. But its objections had been over-ruled by the Fisc.

Publishing those objections and the Fisc's justification for denying them would inform public debate about whether the Fisc had been correct to give the go-ahead for Prism and subsequent surveillance projects, it said. US laws mean the legal papers from 2008 are classified.

"Courts have long recognised the public has a right to access court records," Yahoo wrote.

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India to intercept Blackberry chats

11 July 2013 Last updated at 07:53 ET

Blackberry is ready to provide the Indian authorities with a way to intercept consumers' messages sent and received on its platform.

The news was revealed by the Times of India, which published part of a leaked government document.

It said officials appeared to have dropped demands that the firm also made it possible to access business emails sent over Blackberry Enterprise Server.

This would bring an end to a long-running dispute between the two sides.

In 2010 the country had threatened to impose a ban on Blackberry devices, saying its secret services needed to be able to access suspects' messages and have the keys to decrypt them in order to prevent terrorist attacks.

Blackberry has always said it does not have a "master key" or "backdoor" that would make encrypted corporate information sent through its service accessible either to itself or law enforcers.

The Times of India said the government now appeared to be "content" just being told which firms were using the Canadian company's Enterprise services.

'Lawful access'

The paper said it had seen an internal document from the country's Department of Telecommunications, which read: "Barring a few minor points for improvement of viewers, the lawful interception system for Blackberry services is ready for use."

It added that nine of 10 telecom networks offering Blackberry services were in the process of making it possible for authorities to carry out intercepts.

As a consequence, it said, authorities would be able to:

• track email and email attachments sent over the consumer-version of Blackberry Internet Service (BIS)
• see when chats sent over Blackberry Messenger (BBM) were delivered and read
• monitor which websites were visited

It added that the Canadian firm would soon sign an agreement to hand over its own Mumbai (Bombay) based monitoring equipment and train government officials to use it.

Blackberry has issued a statement confirming its co-operation.

"The lawful access capability now available to Blackberry's carrier partners meets the standard required by the government of India for all consumer messaging services offered in the Indian marketplace," it said.

"We also wish to underscore, once again, that this enablement of lawful access does not extend to Blackberry Enterprise Server."

Apple encryption

The news has prompted some analysts to wonder if Apple will now become the focus of the Indian government's attention.

The iPhone-maker has said that all conversations on its iMessage and Facetime services use end-to-end encryption, so that nobody except the sender and receiver can make sense of them.

"India is about to become a very significant market for Apple - demand for premium smartphones is starting to rise quite quickly there among the affluent classes," said Chris Green, a technology analyst at the Davies Murphy Group consultancy.

"The pressure will be on it to cut a deal. Apple could either change its system just in India or overhaul its entire messaging system - but that would be awkward in light of the Prism revelations about how the US government carries out surveillance."

It may be some time before India is able to make full use of the information it already has access to.

A report in the Wall Street Journal earlier this week said the country was having problems with its Centralised Monitoring System - the system which will allow officials to link their equipment up to local telecom and internet service providers.

Among the issues reported was the fact that the current version of the software being deployed was not capable of allowing officers to search for specific keywords, meaning they would have to read through every captured message to find the information they wanted.

It added that the centralised data centre where the messages would be stored to be analysed was not yet operational, but should be by October.

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Teen robot spoofs online predators

11 July 2013 Last updated at 10:03 ET

Spanish researchers have created a robot posing as a 14-year-old girl to spot paedophiles in online chatrooms.

Negobot uses artificial intelligence (AI) software to chat realistically and mimic the language used by teenagers.

The "virtual Lolita" starts off neutral but will adopt any of seven personalities according to the intensity of interactions.

Experts say it can help overburdened police but may risk trapping people unfairly.

The team behind the project at the University of Deusto near Bilbao say the software represents a real advance. One of its creators, Dr Carlos Laorden, said that in the past "chatbots" have tended to be very predictable. "Their behaviour and interest in a conversation are flat, which is a problem when attempting to detect untrustworthy targets like paedophiles," he noted.

By contrast, the Negobot uses advanced decision-making strategies known as "game theory" to simulate convincing chats as they develop.

It can take the lead in conversations, and remember specific facts about what had been discussed previously, and with whom.

Child-like behaviour

The so-called conversational agent also uses child-like language and slang, introducing spelling mistakes and contractions to further spoof the predator.

Negobot would be used in a chatroom where suspected paedophiles are thought to be lurking. It initiates a chat as a fairly passive participant. It then adapts its behaviour according to the grooming techniques used by the suspect to try to win over its trust and friendship.

For example, if the suspect does not appear to be enticed into having a conversation, the software can appear offended or get more insistent.

And it will respond to more aggressive advances - like requests for personal information - by trying to find out more about the suspect. This can include details such as their social network profile and mobile number, information which can then be used by police to start an investigation.

John Carr, a UK government adviser on child protection, welcomed any move to relieve the burden on real-world policing. But he warned the software risked enticing people to do things they otherwise would not.

"Undercover operations are extremely resource-intensive and delicate things to do. It's absolutely vital that you don't cross a line into entrapment which will foil any potential prosecution", he said.

To date, the software has been field tested on Google's chat service and could be translated into other languages. It has already attracted the attention of the Basque police force.

But researchers admit that it does have limitations and will need to be monitored. Although it is has broad conversational abilities, it is not yet sophisticated enough to detect certain human traits like irony.

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Microsoft unveils reorganisation

11 July 2013 Last updated at 11:40 ET

Microsoft chief executive Steve Ballmer said the company is being restructured in what is the first major overhaul for five years.

The software company will be streamlined around devices such as phones, games consoles, and services.

He said Microsoft would be able to react faster to changes in the market.

The move comes amid a decline in demands for personal computers, as consumers turn to tablets and other mobile devices.

In a memo to staff, Mr Ballmer said that the changes meant the company was "rallying behind a single strategy as one company - not a collection of divisional strategies".

Microsoft's new divisions include engineering, marketing and business development.

The company named veteran executive Julie Larson-Green as head of its devices and studios engineering group, overseeing hardware development, games, music and entertainment.

Terry Myerson will lead Microsoft's operating systems and engineering group, namely Windows. Qi Lu will head applications and services.

Under the reorganisation, Kurt DelBene, president of Microsoft Office, will retire, Microsoft said.

In November, Steven Sinofsky, then president of Microsoft's Windows and Windows Live operations, left the company weeks after the launch of Windows 8.

'Single experience'

In a world where more people are using mobile devices and web-based services, Microsoft wants to see more of its products used on devices besides personal computers.

"Although we will deliver multiple devices and services to execute and monetise the strategy, the single core strategy will drive us to set shared goals for everything we do. We will see our product line holistically, not as a set of islands," Mr Ballmer said.

The "One Microsoft" strategy would seek to bring together diverse areas such as Windows, Windows Phone, Xbox, Surface, Office 365 and others.

He said: "Today's announcement will enable us to execute even better on our strategy to deliver a family of devices and services that best empower people for the activities they value most and the enterprise extensions and services that are most valuable to business," he said.

Microsoft remains the dominant PC software firm, with its Windows operating system. But in the fast-growing mobile sector, Microsoft is behind players such as Apple and Google, which sell devices and make the operating systems for tablets and smartphones.

Mr Ballmer said: "We will strive for a single experience for everything in a person's life that matters. One experience, one company, one set of learnings, one set of apps, and one personal library of entertainment, photos and information everywhere. One store for everything."

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Nokia reveals 41 megapixel phone

11 July 2013 Last updated at 11:43 ET By Leo Kelion Technology reporter

Nokia has unveiled a new handset with a 41 megapixel sensor which it claims can record "details never thought possible from a smartphone".

It says consumers will be able to zoom in and reframe their photos without worrying about the image quality suffering.

Analysts who have tested the device said that it was "without doubt" the best smartphone camera on the market.

But they added that was not a guarantee that it would be a bestseller.

The consultancy IDC recently carried out a survey of smartphone owners in 25 countries to identify what factors were most likely to drive future purchases.

The results placed camera resolution 15th on a list of 23 features. Audio quality for voice, battery life, device security and browsing came top of the poll.

"Most people just look at their photos on their smartphone or via a social network on a computer - and for this the other vendors already provide very good quality," Francisco Jeronimo, a mobile phone analyst at the firm, told the BBC.

"Nokia needs to convince consumers that this new handset outperforms others in low-light conditions, otherwise they would only really notice the difference if they zoomed in on the images on a large screen or printed out a poster.

"It may be the best smartphone out there but I doubt it will be enough to convince many users to jump platform from Android or iOS which accounted for 92% of global shipments in the last quarter."

Zoomable video

The Lumia 1020 marks the second time Nokia has fitted a 41MP sensor to one of its phones.

Last year it launched the Pureview 808 model, but its appeal was limited by the fact it ran the ageing Symbian operating system for which few developers are still writing software. The new handset instead runs on Microsoft's Windows Phone platform which crossed the 100,000 app milestone last month.

Continue reading the main story

It may be too soon to sound the death knell for compact digital cameras, but perhaps the writing is on the wall.

Cameras in phones have certainly come a long way from the days of badly-lit, pixelated pictures but still have some fairly hefty limitations.

Not least is the size of their lenses and the ever-concerning matter of battery life.

Compact system cameras, basically much smaller versions of DSLRs (digital single-lens reflex cameras) are also becoming more popular.

So, these two types of device will probably squeeze out the cheaper, lower-end digital cameras at some point in the not-too-distant future.

As well as offering highly detailed 41MP-resolution photos, the new phone also uses a process called "oversampling" to combine the pixels of an image into a smaller 5MP version from which it removes unwanted visual noise.

Unlike its predecessor, the Lumia 1020 can save both types at the same time, meaning that the owner does not need to worry about switching settings.

In addition, the handset's video recording capabilities take advantage of the extra resolution, allowing the user to zoom in four times while recording a 1080p high definition video without losing quality, and six times into a 720p version.

It also adds optical image stabilisation by mounting the lens system on ball-bearings and using a gyroscope and motors to counteract any movement to prevent the problem of camera shake.

However, all this comes at a premium price. When it launches in the US it will cost $300 (£198) on top of a two-year contract.

One analyst suggested Nokia wanted the new handset to act as a "halo device", attracting shoppers to other products in its range.

"Nokia is positioning the Lumia 1020 as a flagship product for the next generation of smartphones," said Ben Wood, chief of research at the CCS Insight consultancy.

"Alone it will not transform Nokia's fortunes but the significant media coverage it will generate centred on its innovative camera technology will be a major boost not only to the Lumia brand but also the Windows Phone platform.

"Its high price will undoubtedly come under scrutiny and Nokia must carefully manage this, stressing that it is a flagship product that will likely generate relatively modest volumes."

Android rivals

Nokia's boast that its device is perfect for users wanting to "shoot first, zoom later" contrasts with the approach taken by other brands.

Samsung recently unveiled the Galaxy S4 Zoom - a handset with a 10x optical zoom which extends out of the device to allow users to close in on a scene at the time of the snap. This feature is more commonly found in compact cameras than smartphones.

Meanwhile, HTC introduced what it calls an "ultrapixel" sensor to its flagship One model.

Each pixel on its sensor is bigger than normal, a feature that the Taiwanese firm says allows it to offer high-quality low-light shots. But the trade-off is that fewer pixels can be fitted in. As a result its 4MP resolution means image quality deteriorates more quickly if users zoom in on photos to crop the shots.

As a result, IDC said Nokia now had the edge.

"For an amateur or professional photographer who needs a quality camera on the move, this is the best option available on a smartphone," said Mr Jeronimo.

"The camera's user interface is a lot more intuitive and easy to use, as well.

"But to be able to compete with Apple and Samsung, Nokia will need to price it aggressively and to increase activities in the stores to show consumers how much better the camera performs against the competition.

"Failing that, the Nokia Lumia 1020 will become a niche product for a niche segment - professional mobile photographers."

Nokia said the device would go on sale on 26 July in the US, and would launch before September in parts of Europe and China.

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G4S probed over tag overcharging

11 July 2013 Last updated at 12:30 ET

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Justice Secretary Chris Grayling accused the firms of charging for tagging people who were back in prison and in some cases for criminals who had died

The justice secretary has asked the Serious Fraud Office to consider investigating G4S over overcharging for tagging criminals in England and Wales.

Chris Grayling told MPs overcharging by G4S and rival Serco amounted to tens of millions of pounds.

He said some charges were for tagging people who were in jail or abroad, and a few who had died.

Serco agreed to a new "forensic audit" by accountants PriceWaterhouseCoopers but G4S declined, he added.

The firms have said they will repay any amount which is found to be due.

G4S said it had "co-operated fully" with a previous audit which PwC began earlier this year and was conducting its own inquiry but was not aware of any indications of dishonesty or misconduct.

Shares in the companies fell as Mr Grayling said there would also be a wider review of all contracts held by the two companies across government.

Last month, figures showed government spending on contracts with G4S had risen by more than £65m in 2012 to £394m.

In a Commons statement, Mr Grayling said he had also launched a disciplinary investigation into the way the contracts had been managed inside the Ministry of Justice after uncovering evidence that officials knew in 2008 there were problems with how both companies were billing for tagging.

Continue reading the main story

"Start Quote

In some instances, charging continued for a period of many months and indeed years after active monitoring had ceased"

End Quote Chris Grayling

2004 contracts

Electronic tagging of criminals is a key part of the government's strategy to monitor offenders in the community. The contracts are awarded to private companies who then place the electronic ankle bracelet on the offender or suspect and ensure that their movements comply with their bail or licence conditions.

Mr Grayling said that current contracts had been awarded in November 2004 and were due to expire shortly.

He said that an audit had revealed a "significant anomaly in the billing practices" of both companies.

Continue reading the main story

G4S in 2012

• £7.3bn turnover
• Pre-tax profit: £516m
• Quarter of turnover relates to government contracts
• Half of business in Europe
• Value of government contracts: £394m

Mr Grayling said: "It included charges for people who were back in prison and had had their tags removed, people who had left the country, and those who had never been tagged in the first place but who had instead been returned to court.

"There are a small number of cases where charging continued for a period when the subject was known to have died.

"In some instances, charging continued for a period of many months and indeed years after active monitoring had ceased."

'Open and transparent'

Mr Grayling said officials estimated that the total over-billing was in the "low tens of millions".

He said that Serco had agreed to the forensic audit of what happened, which included looking at executives' emails.

Mr Grayling said: "We put the same proposal for a further detailed forensic audit to take place to G4S. They have rejected that proposal.

"I should state that I have no information to confirm that dishonesty has taken place on the part of either supplier.

"But given the nature of the findings of the audit work that has taken place so far, and the very clear legal advice that I have received, I am today asking the Serious Fraud Office to consider whether an investigation is appropriate into what happened in G4S, and to confirm to me whether any of the actions of anyone in that company represent more than a contractual breach."

Continue reading the main story

"Start Quote

We are deeply concerned if we fall short of the standards expected of all of us. We are therefore taking this extremely seriously "

End Quote Christopher Hyman, Serco

Shadow justice secretary Sadiq Khan said the government should ask the police and the Serious Fraud Office to investigate both G4S and Serco.

"Both these companies are recipients of hundreds of millions of pounds of contracts from across government and local authorities," he said.

He also said plans to privatise probation contracts now needed to be evaluated through pilot schemes.

The BBC understands that G4S rejected the proposed forensic audit because it maintained that its own internal review had found no dishonesty. It also wanted to see the results of the first audit, which it had co-operated with.

The Ministry of Justice has confirmed that G4S co-operated with the first audit, but has not confirmed whether any results have been shared with the company. The ministry has also not commented on suggestions that G4S warned the MOJ in 2009 about anomalies in the charging arrangements.

Continue reading the main story

GOVERNMENT ACTION

• Serious Fraud Office asked to look at G4S after legal advice to ministers
• Justice Secretary considering excluding G4S from tendering for next tagging contract
• Forensic audit to look at Serco contract, including its internal documents and emails
• MOJ to set up "entirely new contract-management team", to be validated by independent auditors
• Disciplinary investigations into possible misconduct by MOJ staff
• Cabinet Office to review all contracts held by both G4S and Serco across government
• Review into how to better manage future contracts

In a statement, the company said it believed that "any evidence or indication of dishonesty should be referred to the relevant authorities including, if appropriate, the SFO".

G4S added: "We can confirm that we are working with the Ministry of Justice on their review of the electronic monitoring contracts.

"We believe that we are delivering our electronic monitoring service in a completely open and transparent way."

G4S chief executive Ashley Almanz said: "We take very seriously the concerns expressed by the Ministry of Justice. We are determined to deal with these issues in a prompt and appropriate manner."

Serco's chief executive Christopher Hyman said: "We are deeply concerned if we fall short of the standards expected of all of us.

"We are therefore taking this extremely seriously and will continue to work closely with our customer to resolve their concerns in this matter. We will not tolerate poor practice and behaviour and wherever it is found we will put it right."

Serco has withdrawn from the tendering process for the next generation of tags.

G4S faced controversy last year after it failed to provide all of its 10,400 contracted employees to the London Olympics.

Ian Lawrence, general secretary of the National Association of Probation Officers, said Serco and G4S should not be allowed to bid for any of the contracts under proposals to privatise the probation service

Andrew Neilson, director of campaigns at the Howard League for Penal Reform, said Mr Grayling "should rethink his plans to introduce yet more private sector involvement in the criminal justice system".

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