Fraud inquiry into security firms overcharging the state Chris Grayling, the Justice Secretary, told the two firms an independent forensic audit was required to look at features including internal email trails between executives to establish what happened. In July, the Government reported G4S, noted for its botched handling of its Olympics security contract, to the SFO when it refused to take part in an extra investigation to rule out any dishonesty. Serco allowed a further forensic audit in September. During the audit, the Ministry of Justice passed material to the SFO. A spokesman for G4S said: "G4S confirms it has 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 cooperate fully with the investigation. A government-wide review of all contracts held by Serco and G4S was opened after the allegations were made last July. The SFO confirmed it had also opened a criminal investigation into contracts held with Serco, as well as G4S. There has been no comment yet on this from Serco. An audit by PricewaterhouseCoopers, which began in May, alleged that overcharging began at least as far back as the start of the current contracts in 2005 - but could have started as long ago as the previous contracts, which were signed in 1999. While Serco agreed to take part, G4S refused. Sadiq Khan, the shadow justice secretary, claimed that the SFO investigation was a "major development." He said: "I hope that the time taken to launch this investigation hasn't resulted in the loss of important evidence. With future Ministry of Justice contracts up for grabs, including more than £600 million of probation contracts, the Government must act swiftly and bar G4S from bidding for any more until the SFO has concluded its investigation. By failing to do so, David Cameron risks undermining public confidence in our justice system.