Prison Privatisation Report International
No. 58, October 2003
Published by the Public Services International Research Unit (PSIRU) University of Greenwich, London, England.
This publication is supported by a grant from the Foundation Open Society Institute.
IN THIS ISSUE
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Wackenhut at Guantanamo Bay
It was not press released and it is not listed on the company’s website. But a small classified advertisement in the employment section of Gazette, 26 September 2003, “the authorised publication for members of the military services stationed at Naval Base Guantanamo Bay” states: “WCC has been awarded a contract by the Department of Homeland Security Bureau of Immigration and Custom Enforcement for the security operation of the Migrant Operations Center at Guantanamo Bay. Wackenhut Corrections is now hiring approx. 20 positions, including: custody officers; supervisory custody officer; recreational activities coordinator and administrative clerk. Full and part time positions available.” According to WCC’s in-house publication All Points Bulletin, Third Quarter 2003, the company will be providing custodial services for some 100 detainees.
Perpetuating the myths
A Times (UK) article (South Africa turns to private jails, 6 October 2003), reported from Johannesburg that “the construction of giant, multimillion pound private sector prisons is being hailed by South Africa as the most cost-effective way of tackling the country’s burgeoning prison population.”
The newspaper doesn’t say who is doing the hailing but it is not the government. However, it could be Group 4 and Wackenhut Corrections Corporation, who are involved in running the two prisons. The government is locked in to contracts that guarantee returns to the consortia of 25% and 29.9% respectively (see PPRI # 56, 54, 52, 51, 42, 38, 36, etc).
The daily costs of the two private prisons have caused a crisis in the public sector with thousands of jobs frozen and a shortage of funds for rehabilitative programmes. The private prisons are protected from overcrowding while the public sector is 68% overcrowded. Lower recidivism rates are yet to be proven. On 2 September 2003, speaking at a meeting of South Africa’s correctional services portfolio committee, the chief deputy commissioner for corporate services referred to the contracts as “25 years of slavery”. At a conference on private prisons in London in June 2003, a senior South Africa Treasury official said: “We ordered a Rolls Royce when we should have ordered a Toyota.”
Despite the newspaper’s assertion that “many more [private prisons] are expected to follow if the experiment proves successful” the government has not yet committed its next four prisons to the private sector. It hopes to renegotiate the costs of the existing unaffordable contracts. But the companies might only agree if they are guaranteed more business.
However, the Times is correct when it states that there are calls for an investigation into alleged improprieties surrounding the private prison contracts. In a report published in July 2003 (see PPRI #57), professor Julia Sloth-Neilsen of the University of Western Cape, said: “It is inexplicable that faced with the department’s [of corrections] admission of impropriety in the privatisation process, matters have not been taken further. If this matter is not being taken up by any other investigative authority ... this should be a priority of the Committee [corrections portfolio] ... if indeed state officials (or former state officials) benefited materially from the privatisation process, this must be exposed and, if necessary, criminal charges lodged.”
Latest research undermines industry claims
The private prison industry’s claims for cost savings, innovation and lower recidivism rates are not supported, according to the findings of a new report prepared for the National Institute of Justice by Abt Associates Inc.(see PPRI #25).
Researchers examined state and federal governments’ practices of contracting with private firms to manage prisons. Focusing on secure facilities holding convicted adult offenders the report includes case studies from Texas, Florida and Oklahoma, “the states with the longest and most extensive experience with contracting for privately operated imprisonment.”
Abt found that nearly all contracts active on the last day of 1997 reportedly received some oversight from the contracting agency but that the levels contrasted “sharply” between out of state and in-state facilities and that “practices of monitoring … vary widely.” In 38 per cent of all contract agreements with out-of-state facilities, “the monitors or administrators rated the quality of service as below that of comparable facilities in their own department of correction, compared with seven per cent of the contracts with in-state facilities.”
However, Abt also note that: “most assessments of performance rely on the contract officers’ judgments regarding contract compliance. There are a number of methodological issues that must be resolved when assessing whether or not objectives are being achieved.”
On the three state case studies, Abt concluded that: “in short the evidence from Texas suggests that the private firms are delivering a service that would cost the government approximately 9-10 per cent more if the state’s corrections department operated the facilities directly. This assumes that the estimates of the department’s costs … are accurate, of course. Lacking more information about how these costs were estimated, it is not possible to evaluate them.”
They also note that: “contracting for management services alone doesn’t seem to have relieved overcrowding any faster than would have happened if the state built and then operated the facilities.” The answer to the question, did contracting achieve conditions of confinement any faster than was achieved in the state-operated facilities was “probably not.”
Responses from the Texas Department of Justice to an Abt Associates survey in 1998 were that the performance of 15 private facilities was equal to comparable publicly operated facilities.
Abt’s findings on whether Florida’s private prisons resulted in less criminality were that “absent a stronger methodology, however, the [Florida’s commissioned] study does not provide indisputable evidence that privately operated prisons are doing any better or any worse than the public prisons.” Abt found that there had been “no formal assessment” of whether private firms had introduced innovation into the state’s prison system. As Abt point out: “The legislature may have assumed that any innovation of significance would result in more effective prisons (ie, lower recidivism) and less costly ones. The existing studies of comparative costs and of comparative recidivism rates do not support any strong influences about the state’s obtaining more innovative imprisonment from the private sector.”
Finally, in Oklahoma Abt found that the primary motivation behind the state’s decision to privatise was to prevent the acquisition of prison properties. Abt’s view on whether the state had been able to avoid locking itself into political obligations to support the private prison industry “for now … seems to be yes”.
The state reduced overcrowding and also avoided expanding the government workforce. “Had the state built enough prisons to house those now held in privately operated facilities … the DOC workforce would have increased substantially ... public employees are represented by union representatives who wield substantial political power in state elections.”
Governments’ Management of Private Prisons, Abt Associates Inc, 15 September 2003. Prepared for the National Institute of Justice, 810 Seventh Street, NW. Washington DC 20531
CSC in wrongful death finding
Correctional Services Corporation (CSC) and a nurse formerly in its employ have been ordered by a Texas court to pay $35 million compensation plus a further $5.1million in punitive damages to the parents and estate of Bryan Alexander (see PPRI # 55, 52, 45-42, 36, 30, 26, 24, etc ).
Eighteen year old Mr Alexander had been a prisoner at the company-run Tarrant County Community Correctional Facility in 2001. He died in hospital of a rare penicillin-resistant form of pneumonia on 9 January 2001, two days after being moved from the boot camp. Unless overturned on appeal CSC will be responsible for $26 million of the judgment while nurse Knyvett Reyes will have to pay $14.1million. The 370 bed boot camp was closed six months after Mr Alexander died.
The lawsuit brought by Mr Alexander’s family claimed that CSC and its nurse did not provide adequate and timely medical care. Ms Reyes testified that she treated Mr Alexander for a cold, flu and strep throat. Witnesses said that the nurse thought Mr Alexander was faking. The jury found that the nurse and CSC acted with malice in ignoring the prisoner’s pleas for help.
CSC had received $2.9 million a year to operate the boot camp. According to the family’s lawyer, Charlie Smith, “This case was more like a homicide case than a wrongful-death lawsuit because of the way this young man died. Bryan’s family was hopeful that this jury would speak loud about the conduct of these defendants so it will not happen to another child in the same circumstances as Bryan Alexander.”
According to an accountant who testified in court, recent financial reports filed with the Securities & Exchange Commission showed that CSC is worth more than $50.8 million. CSC’s lawyers stated that the company has about $35 million in insurance coverage. “In this case, the plaintiffs are asking the jury to punish the company. If the jury punishes the company, they are probably going to be punishing the stock holders ...” said Vic Anderson, a lawyer for CSC. The company is expected to appeal against the jury’s verdict.
New York State Board of Elections has opened an investigation into whether Correctional Services Corporation (CSC) broke state law by providing unreported help to New York lawmakers. In February 2003 the company was fined $300,000 by the state Lobbying Commission for handing out expensive gifts to state lawmakers (see PPRI # 55, etc). In March 2003 the Board of Elections ordered CSC to obtain refunds from some New York lawmakers for over-contributions to campaigns. Between 1992 and 2000, CSC received $25.4 million from the state to provide halfway house services to the New York prison system.
Two prisoners being held on drugs charges escaped from the CSC-operated 391 bed Frio County Detention Centre, Texas. They were reported missing on 8 September 2003.
YSI loses contract
CSC subsidiary Youth Services International (YSI) - run Genesis Treatment Centre for young people closed on 10 October 2003. The 51 bed facility in Newport, Virginia had been open for just two years, was under-utilised, under staffed and problematic. State inspectors investigated two incidents in which staff members improperly restrained patients: one patient suffered a broken arm , the other a broken nose. As a result, two YSI staff were fired and others received training. A number of former staff have filed discrimination complaints with the US Equal Employment Opportunity Commission.
Prior to this closure CSC, through YSI, claimed to be the leading private provider of juvenile programmes in the US with 19 facilities and 2,500 juveniles in its care. CSC also operates 12 facilities with some 4,500 beds for adults.
MTC problems in New Mexico
Mckinley County, New Mexico, is terminating its contract with Management & Training Corporation (MTC) to run the county jail (see PPRI # 55, 51, 50, etc). There have been numerous problems at the facility although these were not mentioned in MTC’s press release announcing that the county and the company had reached a mutual agreement to end the contract by 1 December 2003. Four prisoners escaped from the facility on 4 July 2003. As a result, MTC fired the warden and a corrections officer for administrative lapses in judgment.
MTC also runs the 672-bed Santa Fe County jail in New Mexico. That facility has also been problematic. In July 2003, a state audit found that prisoner classification, grievance procedures, discipline, record keeping and prisoner programmes all needed improving. Also cited were inadequate staffing levels and poor handling of prisoners’ property. The audit was prompted by concerns about how MTC was managing the McKinley County Detention Centre. The company was given 30 days to improve or face losing the $2.8 million Santa Fe contract. Four months earlier a US Department of Justice report detailed problems at the jail including poor medical care for prisoners.
MTC, Physicians Network Association and Santa Fe County have all been named as defendants in a lawsuit filed in Santa Fe’s US District Court by the family of Tyson Johnson. They claim that staff at the Santa Fe County jail neglected prisoner Tyson Johnson, who hanged himself on 13 January 2003.
Despite being placed on suicide watch, Mr Johnson hanged himself with a supposedly ‘suicide-proof’ blanket inside a padded cell. Mr Johnson’s family alleges that instead of tending to his psychiatric care staff neglected and taunted him. The family are seeking monetary damages as well as changes to the jail’s policies.
Arizona - private ‘super prison’ stopped
The state of Arizona’s Governor Napolitano has decided not to commission a private ‘super prison’ for women (see PPRI # 55 & 52). She told the Arizona Republic, 2 October 2003, that she was not convinced that private prisons save money or provide better services.
While prison reformers in the state have welcomed this decision they are still campaigning for sentencing reform in the light of the governor’s decision to spend $700 million on building some 9,000 additional prison beds at existing prisons. More details: American Friends Service Committee, www.afsc.org/az
CCA’s promising outlook - “surface barely scratched”
Corrections Corporation of America (CCA) now has 58,732 beds, representing some 49.4% of the private prison market in the US. This compares with Wackenhut Corrections Corporation’s 21% (25,021 beds), Management & Training Corporation’s (MTC) 9.2% (10,927 beds), and Correctional Services Corporation’s 6.3% (7,474 beds). CCA claims to be the sixth largest prison system after the Federal Bureau of Prisons and four states. It has 59 facilities in 20 states and the District of Columbia.
Speaking at the 2003 Deutsche Bank Global High Yield Conference, 8 October 2003, Irving J. Lingo, CCA’s chief financial officer, said that the company will benefit from the following domestic conditions: public sector prison overcrowding will continue to increase; there is a steady increase in the population of the 18-24 age group - which is most likely to commit crime, be caught, convicted and incarcerated; and favourable 2004 federal budget initiatives.
The company expects to pick up new federal contracts as the Office of Federal Detention Trustee will receive $810 million, an increase of $41 million over 2003; the budget calls for the Bureau of Prisons to meet needed bed space through the use of excess state and private prison capacity (as at 1 September 2003, CCA had around 7,000 spare beds); and the Bureau of Immigration and Customs Enforcement is budgeted for $2.48 billion in 2002, an increase of $113 million over 2003.
Mr Lingo also said that 46 states have projected budget deficits for 2004 which makes new prison construction “ difficult at best.” CCA believes it has opportunities in Florida, Texas, Arizona, Colorado and Kansas to expand facilities by between 2,000 and 4,000 beds by 2005.
According to Mr Lingo the US corrections market is worth $50 billion and so far only 6.1% of that is outsourced. There are now some 120,000 private beds today compared with 10,973 private beds in 1990. Corrections privatisation has “barely scratched the surface,” he said.
Spirited talk from Wackenhut
Following the buy-back of Group 4’s 57% stake in the company in July (see PPRI # 57-55, 50, 49, 47 & 44), Wackenhut Corrections Corporation hopes to become a billion dollar company by 2004. Like CCA, the company is pinning its hopes on new federal contract opportunities related to homeland security. Federal contracts already provide the company with 20% of its revenues.
The company is also planning to remove itself from what it regards as risky and more costly aspects of the corrections business, operating facilities for women and juveniles. Problems at some of these facilities have caused high profile scandals in recent years. However, the company continues to win new contracts. For example, on 15 July it renewed a four year contract worth around $52 million with Michigan’s department of corrections for the operation of Michigan Youth Correctional Centre.
Wackenhut plans to expand its mental health business, acquire new businesses and change its name. The company currently has some 41% of the international corrections market.
According to All Points Bulletin, Special Edition August 2003, Vol IX, No.3, Wackenhut Corrections Corporation dubbed 9 July 2003 - the day the company repurchased its stock from Group 4 - as “independence day” describing the move as “the wind beneath our wings that will allow us to fully pursue our dreams of independence, autonomy and extraordinary growth.”
Lawsuit in Colorado
The Colorado Criminal Justice Reform Coalition (CCJRC) has filed a lawsuit to prevent Wackenhut Corrrections Corporation taking control of land that a city council wants to sell to the company. The CCJRC claims that Pueblo City Council violated Colorado’s open meetings law and local zoning ordinances when it committed land to the company. The lawsuit seeks to void the council’s actions and to uphold the zoning status that forbids government use of the land.
Stephen Raher co-director of the CCJRC said: “Pueblo City Council has demonstrated a pattern of conducting public business behind closed doors and ignoring the opinions of Pueblo residents. The laws that were designed to ensure open process in government have been flagrantly violated and the people of Pueblo have been shut out of this process.” The CCJRC advocates prison only as a last resort. More details from: CCJRC www.ccjrc.org
MTC contract renewal in doubt?
Management & Training Corporation’s (MTC) contract to operate the Central North Correctional Facility at Penetanguishene, Ontario may not run beyond its first five year term (see PPRI # 49, 44, 38, 37, 35, 34 & 32). A provincial election in October swept the pro-privatisation ruling Progressive Conservative party from office, replacing them with the Liberals. In opposition, the Liberals argued against against prison privatisation. It is unlikely, however, that the new administration will buy out MTC’s contract before its expiry date. Early termination could take place if the company fails to meet performance standards.
However, Liberal corrections critic Dave Levac told the Mirror, 10 October 2003, that: “We’ve been unable to see it [MTC’s contract] in its entirety, so we will have to look for an escape clause. I wouldn't do it at the expense of the taxpayer, which means we may have to wait,” he said.
A government threat to privatise prisons in the Republic of Ireland has been met with fierce opposition from the country’s leading figures in criminology, law and human rights. Ostensibly aimed at cutting the overtime worked by the country’s 3,400 state employed prison officers, who earn an average of Euros19,000 a year from overtime, the director general of the prison service has said that prisons may be privatised and smaller ones sold off if an agreement cannot be reached with the Prison Officers Association. However, some observers believe that the government is simply looking for an excuse to privatise.
On 24 September 2003 an open letter was delivered to justice minister Michael McDowell. The letter, signed by academics and human rights supporters, challenged the claims that private prisons are economical or innovative citing instead international experience that “reveals privatisation to be a costly failure, with private prison companies being subsidised by taxpayers.” The signatories also called on the minister to publicly oppose prison privatisation and to commit to a process of “truly effective criminal justice and penal reform.”
Ivana Bacik, a law lecturer at Trinity College, Dublin, said: “Yes, the prison system is in desperate need of reform. But privatisation represents a copper-fastening of the mistakes of the past, rather than a recipe for a better future. If implemented, the Government will be trading one bad policy for another.”
“If the Government is truly concerned about the high cost of incarceration, they must look to address the root causes of crime, and reduce the number of people sent to prison,” said Dr Paul O’Mahony, a criminologist at Trinity College. “Crime reduction must be the goal of responsible government. The private sector does not and cannot share this goal, as corporations that imprison people for profit can only maximise that profit when prisons are full to capacity. If the Government privatises Irish prisons, they will be putting corporate interest before public interest.”
“While reform of the prison system is long overdue, it must be based upon sound international evidence and best practice, not the failed and simplistic ideological imperatives that have driven prison privatisation in other parts of the world,” said Rick Lines, executive director of the Irish Penal Reform Trust, an NGO. “The Government is attempting to manufacture a crisis in the prison service in order to force through an unpopular measure disguised as a ‘solution’. Let us be clear that privatisation is no solution.”
“If the Government is truly committed to addressing problems in the prison system, we challenge them to begin a national dialogue towards developing truly effective criminal justice and penal reform,” said Aisling Reidy, executive director of the Irish Council for Civil Liberties.
More information from: Rick Lines, Irish Penal Reform Trust, Dublin.
Premier’s view of the market
On releasing its financial results for the half year to 30 June 2003 Serco - now 100% owners of Premier Custodial Group - presented their view of the UK justice market on 3 September 2003.
Premier’s total revenue over the life of existing contracts for five prisons, one secure training centre, two immigration detention facilities and court escort, custody and electronic monitoring services in the UK is £2 billion. Immediate market opportunities are worth a further £3.4 billion, including extensions to Lowdham Grange prison and Dungavel House immigration centre, the building of Colnbrook House and the rebidding of escort and electronic monitoring contracts. The potential also includes contracts for two prisons in England and Wales, one in Scotland, two Secure Training Centres and an additional 200 STC beds at as yet unidentified sites, five immigration facilities, police custody suites, probation services, mental health services, customs and excise and tribunals.
However, not included in Serco’s calculations are two 1,500 bed prisons in addition to the two currently under construction (to be operated by UK Detention Services Ltd, see PPRI # 54, etc), and two others planned for sites at Woolwich in London and Ashworth on Merseyside, north west England which Premier would be bidding for. A recent Home Office strategy document has revealed that £32 million is to be spent on purchasing two sites for large multi-functional prisons in the 2004-2005 financial year. Meanwhile, the Treasury has not yet released funds for a tendering process for the London and Ashworth prisons.
Premier’s Dovegate - not a positive report
At Premier Custodial Group-run Dovegate prison bullying is ignored, staff are inexperienced, staffing levels are low and drug use is prevalent, according to the chief inspector of prisons for England Wales. The prison opened between July and November 2001 and is the most recent privately financed, designed, built and operated prison in the UK. The operators have been fined at least £426,597 for contract deficiencies (see PPRI # 56).
Between 31 March and 4 April 2003, Dovegate - run by Premier under a 25 year contract - was inspected by the chief inspector of prisons. Her report, dated June 2003 was published in September and included 135 recommendations for improvement. She also noted that neither the cost per place per annum nor the cost per prisoner place were available. Set out below is the complete introduction to the chief inspector’s report.
The contribution of the private sector to the management of prisons in England and Wales has been both controversial and significant. It has been controversial because critics are uneasy about the application of the profit motive to prisons, for example fearing that corners may be cut and cheap, inexperienced staff recruited. However, it has also been significant because, as has been made clear in a number of reports from this Inspectorate, the private sector has often been open to innovation and change, which the public sector Prison Service has in the past found it hard to achieve.
In some ways this inspection of the HMP Dovegate - financed, designed, built and now managed by the private sector - illustrates both sides of this debate. There was some welcome innovation, and good staff-prisoner relationships. But there was also a worrying lack of experience and confidence amongst a young, locally recruited staff, few of whom had any previous prison experience, and who were operating with low staffing levels and high staff turnover.
By contrast Dovegate’s prisoners were not inexperienced. As an 850 bed category B training prison, Dovegate receives large numbers of long-term, relatively sophisticated prisoners, used to the system and capable of exploiting any weaknesses or naivety in the staff who supervise them. These are not the most compliant or easily managed prisoners, and it is to the credit of the establishment that our inspectors, informed by impressive results from our prisoner survey, identified a largely safe prison, with mutual respect displayed between staff and prisoners.
Yet this is still not a particularly positive report. Dovegate has had a troubled start since its opening in 2001. There is a veneer of calm, but it disguises some fundamental concerns which the newly appointed – and very experienced - Director is now seeking to address: implementing more fully the normal processes and procedures required to manage the demanding prison population for which he is responsible.
And there is much to attend to. We identify weaknesses in a significant number of areas central to sustaining a safe prison, where a policy façade covered limited substance. For example, inspectors saw security intelligence that suggested illicit articles were not uncommon, yet found that cell searching lacked thoroughness; drug use appeared prevalent, yet drug reduction measures were given low priority; an incentives and earned privileges scheme was in place, yet few prisoners were downgraded even if their behaviour warranted it; and an anti-bullying strategy was in place, yet little worthwhile action had been taken to confront bullies.
We observed an inability or unwillingness to confront prisoners appropriately; and we consider that this is directly related to the youth and inexperience of staff and the fact that they were deployed in relatively small numbers on the wings. This personnel profile is not untypical of contracted out prisons, but the risks are obvious and it is to the Director’s credit that he was entirely open as to the need to support and nurture his young staff. And there is good work to nurture. Relationships between staff and prisoners across the prison were good, as was the accommodation and food. This was supported by excellent communication through Dovegate’s innovative in-house TV station.
Some failings identified in the inspection were not within Dovegate’s control. In common with other contracted–out prisons, adjudications were not carried out by Dovegate’s managers, but by a Prison Service controller. This is a cumbersome arrangement and sometimes meant that appropriate management action was not taken to resolve conflicts, and on occasions that prisoners were able to exploit the situation in order to avoid punishment.
However, other deficiencies were within the prison’s control. It had contracted to take a further 60 prisoners beyond its previous complement, but had chosen to place these new arrivals in a number of single cells “doubled” in a patently unsatisfactory and unhygienic way. Healthcare was poor. Though race relations appeared properly managed, the establishment appeared ignorant of the scale of its foreign national population - a quarter of all prisoners - and as a result provision for them was inadequate. Similarly, purposeful activity had not kept up with the growth of the establishment and activities themselves needed further development, for example to deliver accredited learning; although there were innovative practices, such as the use of more able prisoners as learning support assistants.
Resettlement was even more underdeveloped. The personal officer scheme existed in name only; sentence planning was of variable quality; there were too few offending behaviour programmes to meet evident needs; and drug treatment provision was inadequate.
Overall, the inspectors’ findings illustrate the distance still to go before Dovegate can be considered a healthy prison. The new Commissioner for Correctional Services, Martin Narey and his staff, now have direct responsibility for contracted out prisons. They will need to consider how to ensure improvements at Dovegate. This report should also be a salutary reminder that the Commissioner’s commitment to expose failing public sector prisons to private sector competition (“performance testing”) will not always deliver an immediate private sector panacea (a similar conclusion was drawn by the National Audit Office in its recent report on the operational performance of privately financed prisons) .
Dovegate, with its young and energetic staff, has been able to put in place some commendable innovations, which public sector managers might view with jealousy. But this inspection has also exposed concerns about the sustainability and long-term safety of the establishment where essential procedures and processes are not properly implemented: partly because inexperienced private sector staff have yet to develop the skills and confidence to properly manage their prisoners.
* A Full Announced Inspection, HMP Dovegate, 31 March-4 April 2003, HM Chief Inspector of Prisons. The full report is available on the internet:
More cashing in
President Bush has included $10 million to finance 100 prison-building experts for six months at $100,000 per expert in his $20.3 billion budget request for reconstructing Iraq (see PPRI #56). The experts will be needed as also included is $400 million for two new 4,000 bed prisons at a cost of $50,000 per bed.
Meanwhile, the British government has asked group 4 Falck to participate in the rebuilding of Iraq’s prison sector. A Group 4 spokesperson told Politiken, 28 August 2003, that: “We have no plans to actually operate prisons in Iraq. We will consult Iraqi prison personnel and provide relevant personnel training.” Group 4 is already providing other security services in Iraq.
Controversial firm to build and operate prisons?
Hochtief, the Essen-based construction firm, plans to construct and operate prisons as part of its new strategy to move away from traditional construction. However, the firm has courted controversy recently. For example, it could be prosecuted by the Government of Lesotho for alleged involvement in bribery related to the Lesotho Highlands Water Project.
Hochtief also recently survived a US Supreme Court case in which Hungarian-born Josef Deutsch alleged that he had been forced to work for the company as slave labour during World War II. However, the case hinged on the court’s refusal to review a US appeals court ruling that struck down as unconstitutional a 1999 California law suspending the statute of limitations so that prisoners of war could sue in US courts. Meanwhile, in Prague, top managers of CEZ, the power utility, have been charged with violating the country’ law on public procurement. The charges stem from the construction of the company’s new headquarters in 2002, work that was awarded without tender to AB Michle, a subsidiary of Hochtief. The contract should have been put out to tender. After choosing AB Michle, CEZ invested in the company.
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