What do you do when your company finds itself at the centre of a controversy? Some companies draw up delicately worded apologies or at least look for convenient scapegoats, but Serco has taken the more traditional approach during the pandemic: stick to your position and insist there’s nothing to see here.

The outsourcing company will be winning no popularity prizes any time soon, not least because of its role in the UK’s expensive test-and-trace programme. The National Audit Office said there was no evidence the £22bn programme had reduced rates of Covid-19 in England.

Serco chief executive Rupert Soames, a grandson of Winston Churchill whose brother is former Conservative MP Nicholas Soames, has staunchly defended his company’s role, and said the test and trace team had done “bloody well”.

The rewards for Serco for that and other work have certainly been generous. In March it revealed that Soames had been paid £4.9m for 2020. Shareholders were also happy, enjoying a £17m dividend payout after Serco doubled profits in 2020 as Covid-19 contracts boosted revenues.

Labour leader Keir Starmer said the dividend payout was “outrageous”, and his frontbench colleague Rachel Reeves said the pay packets for Soames and chief financial officer Angus Cockburn were “typical of this government’s appalling waste during this pandemic”.

Yet political anger has yet to be matched by any corporate backlash. Investors are expected to wave through both the dividend and executive pay at an annual meeting to be held virtually on Wednesday.

That is not to say there are no rumblings of discontent in the City. Pirc, a proxy voting adviser, has advised its pension fund clients to oppose Serco’s pay policies. Pirc said Soames’s bonuses for 2020 were “excessive” at five times his salary. Soames was paid 61 times what his average employee earns, despite his pay falling by 5% compared with 2019.

However, a US-based adviser, Institutional Shareholder Services, recommended that investors vote in favour, despite noting that Soames’s pay was more than three times the average chief executive package. By Friday, Serco had received about 70% of votes on the pay report, and 95% of those had approved, it said.

Serco can fall back on its international footprint to defend big payouts for executives and shareholders. Some 75% of its profits are earned outside the UK, which dilutes the political controversy. A spokesman added that underlying trading profits – Serco’s own measure – have grown by an average of 33% over the past three years.

“The net impact of Covid on the business in 2020 was 1% of profit,” the spokesman said. “The remuneration committee adjusted the bonus outcomes to remove all material Covid-related benefits from the performance calculations to ensure that executive directors did not benefit from them.”

Serco has also shown itself remarkably impervious to scandal in recent years. In 2019 it paid a £23m fine to the Serious Fraud Office related to fraud and false accounting in its electronic tagging contracts between 2010 and 2013. It insists it has changed. Fines for failings related to housing for people seeking asylum do not stop it from winning more work.

It appears Serco and Soames have ridden out the worst of the controversy over the pandemic. That strategy will probably continue to pay off unless its government clients take notice. Public outcries only make a mark if someone is actually listening.

This content first appear on the guardian

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