Serco's likely to be slapped with a $500,000 fine after a string of allegations about how the company's running Auckland's Mt Eden Prison.
Corrections boss Ray Smith says he is likely to sign off the penalties this morning before heading to the prison, which is being taken over by Corrections after the emergence of 'fight club' videos and a string of allegations about serious violence.
"I'd expect more financial penalties to follow," he told Radio New Zealand.
After the independent review is completed, he'll look into whether the company should face a final warning - or even a termination of the contract.
Mr Smith is sending in a team of about 20 officers to sort things out at the prison.
Serco staff will stay on at the prison while Corrections is in charge and the company will pay for the officers being sent in by Mr Smith's department.
Meanwhile, Prime Minister John Key told the Paul Henry programme if allegations prove true, Serco may be ditched.
"The broad legal advice I have – without delving too much into it – is yes, you can cancel the contract – there's a range of options available to you," he says.
Mr Key defended Corrections Minister Sam Lotu-Iiga, who came under fire last week over the situation, saying he was only working with the information he was given.
"He has acted," he says. "The fight club information emerged on the Thursday [and] by Sunday there was a full inquiry announced."
Serco has a $300 million, 10-year contract to run Mt Eden. The contract is now subject to its required six-year review.
NZN / 3 News