Serious Fraud Office launches criminal probe into criminal tagging by G4S and Serco G4S and Serco accused of wrongly billing for non-existent tags Estimates suggest one in six of 18,000 tags billed for were not real Ministers asked fraud investigators to look into claims after internal audit The Serious Fraud Office has launched a criminal investigation into claims private firms G4S and Serco were overcharging for tagging criminals. The probe comes after it was claimed taxpayers were charged tens of millions of pounds for "phantom" electronic tags on criminals who were either dead, in jail or had left the country. It is a fresh blow for government plans to outsource even more work to private firms in a bid to save money. Ministers fear taxpayers could have overpaid two private companies for their work tagging criminals The government launched a review of all contracts with G4S and Serco signed by every government department after doubts were raised about the use of taxpayers money. A disciplinary investigation was begun into former officials in the Ministry of Justice after discovering contract managers were aware of billing issues in 2008, but "nothing substantive was done." The scandal could date back as far as 1999, when tagging of criminals began in England and Wales. Since then the taxpayer has spent £1billion on tagging and monitoring offenders. The current contracts began in 2005. In some cases private contractors charged the Government for years after tagging had stopped and cases included being charged for tags for dead people. Justice Secretary Chris Grayling has previously condemned the 'wholly indefensible and unacceptable state of affairs'. In May it emerged auditors had been called in to examine payments to Serco and G4S, which monitor around 20,000 criminals at any one time. Today an SFO spokesman said: 'The Director of the Serious Fraud Office has opened a criminal investigation into G4S and Serco electronic monitoring contracts.' Probe: Global security firm G4S is to be investigated by the Serious Fraud Office over tagging contacts dating back more than a decade An audit by big four accountancy firm PricewaterhouseCoopers, launched in May, alleged that overcharging began at least as far back as the start of the current contracts in 2005 - but could have dated as far back as the previous contracts let in 1999. G4S, which made headlines around the world for failing to povide enough security guards for the London Olympics, previously refused to take part in an additional government audit to rule out any dishonesty. A spokesman for G4S said: "G4S confirms it has today received notice that the director of the Serious Fraud Office has opened an investigation into the "contract for the provision of electronic monitoring services which commenced in April 2005 as amended and extended until the present day." G4S has confirmed to the SFO that it will co-operate fully with the investigation. Justice Secretary Chris Grayling told the two firms that an independent forensic audit was required to look at, among other areas, internal email trails between executives to establish what happened. While Serco agreed to take part, G4S refused. A Government-wide review of all contracts held by Serco and G4S was sparked by the allegations last July. G4S was reported to the SFO when it refused to co-operate with a further audit, while Serco allowed a further forensic audit to take place. In the course of the audit in September, the Ministry of Justice provided material to the SFO in relation to Serco's conduct.