The parent company of a private firm bidding to run services at Mount Eden prison has been ordered to repay $US20 million it overcharged customers in the United States.
International firm Sodexo, which owns Kalyx, the company vying for the Auckland contract, was providing catering services to private schools and a university in New York.
Sodexo overcharged for its services over five years and the New York State's Attorney General has ordered it to pay $US20 million.
The office of the Corrections Minister, Judith Collins, says the minister cannot comment on whether this will affect Kalyx's bid, because the tender process is still underway.
The minister's spokesperson says the privatisation plans have checks and balances set up to avoid these situations.
He says observers from the Corrections Department will monitor privately run prisons.
Green MP David Clendon says despite New York state monitoring of the private firm, it took a whistleblower to expose the five-year period of overpayment.