It is expected that Serco will be dropping out of Britain's blue chip share index this evening after its share price slumped by 10 percent in the third quarter following allegations of fraud and threats from the government that it may be excluded from all future public sector contracts.

It was recently revealed that the Ministry of Justice (MoJ) had asked police to investigate an apparent disparity between Serco's records of performance and the 'situation on the ground', following months of investigating the management of the company's Prisoner Escorting and Custodial Services contract.

Serco is a massive business process outsourcing provider to the government and gets approximately 45 percent of its revenue from public sector contracts.

It has also come under fire, alongside G4S, for allegedly overcharging the government for years on an electronic tagging contract.

The FTSE 100 announcement is due this evening and a spokesperson for Serco said that the company will not be commenting on the expected exit.

The Cabinet Office and MoJ have also put Serco on notice that the company will have to undergo a process of 'corporate renewal', which would include an overhaul of the management at Serco, a review of internal audit procedures and opening up all their management and accounting information on government contracts, which will be subject to intense scrutiny.

After a three-month period, the changes Serco has put in place will be assessed by a specially convened committee of government non-executive directors. It will be this committee that will advise government, and if it is not satisfied that the changes made by Serco are sufficient to guarantee the future integrity of government contracts, it will then face exclusion from all new and future work with government.

The company's chief executive, Chris Hyman, placed the blame on a select few working at Serco, rather than it being a company-wide problem.