Serco has been fined $300,000 in the last year for breaching its contract with the Government, the Corrections Minister revealed this afternoon.

The breaches at Mt Eden Correctional Facility for the 2014/15 financial year included understaffing, mixing accusing prisoners with other prisoners, failing to give "minimum entitlements" and not giving adequate notification about incidents.

Mr Lotu-Iiga revealed the financial penalties under questioning in Parliament this afternoon.

Green MP David Clendon asked why the minister had recently described Serco's management as "exceptional", given the contract breaches.

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The minister said that the prison was currently ranked as "exceptional" in prison league tables which were compiled by the Corrections Department.

He rejected claims that there was a dysfunctional relationship between him and his department, despite the fact he was apparently unaware about violent incidents in some prisons earlier this year.

At an earlier press conference, Mr Lotu-Iiga said it was too early to talk about fining Serco over events which have emerged over the last week, which included allegations of "fight clubs" and drug use.

"But certainly Serco know that if they don't perform, there are financial penalties involved."

Mr Lotu-Iiga said the company was not on its last chance, but "certainly they need to improve".

In particular, he expected Serco to improve its safety and security measures and its communications with the Corrections Department.

Serco currently has contracts for the Mt Eden Correctional Facility and the Wiri prison in South Auckland.

Serco accused of a 'cover up'

Private prison operator Serco has been accused of a "cover up" after it attempted to keep from the public details about an inmate who suffered two broken legs.

The Department of Corrections released details this morning of an inmate's terrifying run for safety which ended with a fracture to his left ankle and right leg.

Just 15 hours earlier the Herald was told by Serco's media advisor Jane Palmer information about the prisoner's injuries would not be made public.

Ms Palmer rejected claims of a coverup today, saying she was acting on a request conveyed by the person when he was an inmate.

She said the company had "checked with the prisoner" and was not releasing the information at his explicit request.

Ms Palmer said the prisoners "medical matters" trumped any public interest there might might in his two broken legs.

Then, this morning, a detailed account of the Corrections prison inspector's investigation was made public by the department's chief executive Ray Smith.

Labour Corrections spokesman Kelvin Davis said Serco was attempting to "whitewash" the violence inside the Mt Eden Correctional Facility it was contracted to operate.

"It's a cover up. What are they hiding? This is a department out of control. It almost defies belief things can be this bad."

Mr Davis has made claims of prisoners being dropped off landings at Mt Eden prison as part of the insitution's culture of violence. He said in Parliament the other day he had been told of a separate case in which inmate Nick Evans had suffered a ruptured lung - the complications of which later killed him.

Serco has denied there is a practice of "dropping", saying inmates would be showing injuries if there was such a practice.

It was this statement which led to the Herald seeking details from Serco of the inmate with two broken legs.

In February, when the incident happened, the inmate's mother told the Stuff website her son was attacked by four gang members.

"He's suffered terrible, multiple injuries and has been told his injuries have the potential to affect him long-term or even permanently. He was attacked in his cell and managed to escape out of there. He was thrown over a balustrade and fell two floors."

Corrections said this morning the inmate was injured after falling from a balcony, but says he was not "dropped".

Mr Smith said the chief inspectorate's investigation into the incident had been completed and Serco had been asked to respond.

He said the inspectorate concluded that the prisoner fell as a result of being chased by another offender who then physically assaulted the prisoner.

"There was no suggestion made in the report of any practice of 'dropping'," he said.

The inmate was hospitalised, treated and returned to prison.

Corrections' national office was informed of the incident within the required 24 period for a serious assault.

"The Inspectorate's investigation found no evidence that MECF staff were aware that the prisoner's welfare was at risk prior to their officer witnessing him fall over the balustrade and being chased by another prisoner," Mr Smith said.

"The Inspectorate is satisfied that the unit was appropriately staffed on the day of the assault and that prison management dealt with the incident in a manner that was deemed appropriate at the time."

Corrections minister Sam Lotu-Iiga backed Serco on Tuesday, saying the company had no knowledge of prisoners being dropped from landings.

"I would note though, that if there is evidence of this practice known as 'dropping', which neither I nor Corrections nor Serco have ever heard of, there will be serious consequences."

Serco put on notice by Lotu-liga

Private prison operator Serco has been put on notice by the embattled Corrections Minister over its performance which "can and must be better".

Corrections Minister Peseta Sam Lotu-Iiga met Serco's director of operations Scott McNairn and managing director Paul Mahoney today to discuss recent incidents and allegations at Mt Eden Prison.

Mr Lotu-Iiga said that Mt Eden Corrections Facility - the site of a spate of alleged violence between prisoners - is a
Mr Lotu-Iiga said that Mt Eden Corrections Facility - the site of a spate of alleged violence between prisoners - is a "difficult prison to run". Photo / Ross Setford

"I have made my concerns clear to both Serco and the Department of Corrections, and have laid out my expectations going forward," Mr Lotu-Iiga said in a statement following the meeting.

"Serco has been left in no doubt that their performance across the board needs to improve and that they are on notice."

Mr Lotu-Iiga said that Mt Eden Corrections Facility - the site of a spate of alleged violence between prisoners - is a "difficult prison to run".

"Its status as a remand prison with a transient prison population presents a unique and challenging environment.

"However, this does not excuse Serco from their responsibility to provide a safe and secure environment. Serco's performance can and must be better, and I expect to see improvements."

Mr Lotu-Iiga said Serco would co-operate fully in the Chief Inspectorate review that will begin on Monday and look at contraband and incidents of violence in both Serco-run prisons and public prisons.

Mr Mahoney made a brief statement outside the Beehive after the two-hour meeting with the minister.

Speaking to reporters, he said Mr Lotu-Iiga had expressed concerns about recent issues at the Serco-managed Mt Eden Correctional Facility.

"We are taking these issues seriously," Mr Mahoney said. "We have strengthened the regime, in particular the searching for all staff who enter the main entrance at Mt Eden.

"We are in the process of a full lock-down search of the prison."

"There is a full investigation to be undertaken by the chief inspector in respect of the issues, including additional oversight by the Ombudsman. There are also matters being looked at by the coroner."

He said Serco would co-operate fully with the investigations and would look at all the issues and allegations raised.

Mr Mahoney and Mr McNairn did not answer questions after making the statement.

Inmate was not 'dropped' - Corrections

Meanwhile, Corrections has confirmed that an inmate at a Serco prison was injured after falling from a balcony, but says he was not "dropped".

Chief executive Ray Smith made the unusual step this morning of releasing details about the case, saying that there was a high degree of public interest.

Labour MP Kelvin Davis has made claims about violence between inmates at the Serco-run Mt Eden Correctional Facility.

The allegations have placed huge pressure on Corrections Minister Sam Lotu-Iiga, who has called Serco bosses for an urgent meeting this morning.

Serco executives Scott McNairn and Paul Mahoney refused to speak to reporters outside the Beehive, saying only that they were "here to see the minister".

Mr Lotu-Iiga called meeting because of increasing concerns about stories that continued to emerge about events inside the prison.

The minister said Serco would face "serious consequences" if they did not come clean about any other undisclosed incidents at the prison.

Corrections chief Ray Smith this morning confirmed that an inmate was injured after falling from the landing in a cell block at the Mt Eden remand prison in February.

He suffered a fracture to his left ankle and right leg.

As a result, the chief inspectorate began an investigation. That investigation was now completed, and Serco had been asked to respond.

Mr Smith said the inspectorate concluded that the prisoner fell as a result of being chased by another offender who then physically assaulted the prisoner.

"There was no suggestion made in the report of any practice of 'dropping'," he said.

The inmate was hospitalised, treated and returned to prison.

Corrections' national office was informed of the incident within the required 24 period for a serious assault.

"The Inspectorate's investigation found no evidence that MECF staff were aware that the prisoner's welfare was at risk prior to their officer witnessing him fall over the balustrade and being chased by another prisoner," Mr Smith said.

"The Inspectorate is satisfied that the unit was appropriately staffed on the day of the assault and that prison management dealt with the incident in a manner that was deemed appropriate at the time."

The case is separate to that of Nick Evans, who was injured in Mt Eden prison and later transferred to Ngawha Prison, where guards had him admitted to Whangarei Hospital after he fell ill.

He died last month as the result of complications related to a superbug.

Mr Davis has said that case and others showed those running the prison were failing badly - and the decision to give Serco the contract was wrong.