A criminal investigation has been launched into a contract between security firm G4S and the Government for tagging criminals.
The Serious Fraud Office (SFO) opened an inquiry after it emerged G4S - along with rival Serco - had charged the Ministry of Justice for monitoring offenders who were either dead, back in prison, had their tags removed, had never been tagged or had left the country.
In July, the Government reported G4S - infamous for the botched handling of its Olympics security contract - when the FTSE 100 company refused to take part in an additional audit to rule out any dishonesty.
A spokesman for the company 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."
In August G4S withdrew from the bidding process for new contracts for tagging criminals after the overcharging scandal erupted. It had initially refused to do so.
The company's chief executive Nick Buckles resigned in June over a series of earlier controversies, including the failure to fulfil its contractual obligations to provide security staff for the 2012 Games.
Military personnel were drafted in to make up the numbers at the Olympic sites.
Under Mr Buckles' leadership G4S's share price had soared as the firm - the biggest of its kind in the world - expanded into some 125 countries.
After news emerged of the SFO tagging investigation shares in G4S dropped 1.75% to 250p, before easing in afternoon trading to 0.65% down.
Serco chief executive Chris Hyman resigned late last month in a last-ditch bid to restore its reputation amid a wider restructuring - splitting the British central Government work into a separate unit - to help improve transparency.
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