Serco Christopher Hyman
Serco\'s Christopher Hyman has quit as chief executive of the outsourcing giant (Serco/Reuters)

Serco Chief Executive Christopher Hyman has quit his role amid investigations by the government and City of London police into suspicions of fraud on one of its public sector contracts.

As well as the fraud probe, outsourcing giant Serco has wrestled with poor first half results in 2013 and the government's threat of a moratorium on public sector contracts. Hyman has been CEO since 2002.

Hyman's resignation follows that of rival Richard Morris at G4S, who was the Serco rival's UK chief executive. G4S is caught up in a similar probe by authorities over one of its contracts with the Ministry of Justice, where it is accused of charging taxpayers for the tagging of prisoners when the work had not taken place.

"I have always put the interests of Serco first. At this time, nothing is more important to me than rebuilding the relationship with our UK government customer," said Hyman in a statement announcing his resignation.

"In recent weeks it has become clear to me that the best way for the company to move forward is for me to step back.

"I have been fortunate enough to have had the privilege of working at a great company with extremely talented people. I wish everyone at Serco the very best for the future."

Serco is rejigging its business to convince the UK government that it is shaping up and should be given more public sector contracts in the future.

Among the changes is a separation of the UK & Europe division into two, with one focused on its UK Central Government customer and the other on the wider public sector.

In July, the Ministry of Justice said it had seen evidence of misreporting by Serco on its £285m contract to ferry individuals from courts to prisons. It is accused of reporting the delivery of prisoners to and from courts when no such journey had taken place.

"It's become very clear there has been a culture within parts of Serco that has been totally unacceptable, and actions which need to be investigated by the police," said Justice Secretary Chris Grayling at the time.

"We have not seen evidence of systemic malpractice up to board level, but we have been clear with the company - unless it undertakes a rapid process of major change, and becomes completely open with government about the work it is doing for us, then it will not win public contracts in future.

"The taxpayer must know that their money is being properly used."