Prison Privatisation Report International
No. 74,
October 06
Published by the Public Services International Research Unit (PSIRU)
www.psiru.org/justice
This publication is supported by a grant from the Foundation Open
Society Institute.
IN THIS ISSUE
HONDURAS
CHILE DOMINICAN REPUBLIC BRAZIL HONG KONG JAPAN
CZECH REPUBLIC GERMANY BULGARIA FRANCE BELGIUM
UNITED KINGDOM UNITED STATES
SOUTH
AFRICA AUSTRALIA ISRAEL ELECTRONIC MONITORING
‘Emergency’ could
lead to privatisation
The
National Congress of Honduras has declared that its overcrowded prison system
is in a state of emergency. The declaration made in August 2006 possibly paves
the way for a private company to be commissioned to build and operate a new
maximum security prison.
The website www. cornershot.com describes Mr Staroselski as a
distributor in
Consortium backs out
A
consortium comprising Sodexho of France, Torno Construction of Italy and Besalco
of Chile have pulled out of a contract to finance, design, build and operate
non-custodial services at two prisons (see PPRI
#64). This follows a dispute over contract specifications, according to bUSiness
The
consortium’s first three prisons at
Privatisation “not
contemplated”
“The consequences of this
[privatisation] phenomenon cannot be more sinister,” according to Dr. Juan Ramón
de la Cruz Martínez, director general of the
Seven for Minas Gerais
The
State of
Researching PPPs
A 20-strong delegation of
government officials from
More contracting out
Costs under scrutiny
The cost of the country’s
first private prison project is being questioned by the ministry of justice
(see PPRI #69 & 67). A proposed
construction cost of approximately £36 million for a 500 bed facility is now
thought to be excessive and officials are examining ways of reducing the cost
by £12 million. Operating costs will be a further £3.2 million a year over a 25
year contract. Preparation for the project was approved by the Czech government
on
The prison is to be built in Rapotice and run to European standards. At the beginning of
2006 the government appointed an advisory team of Delloite
CZ, Atkins s.r.o and the law firm Havel
& Holasek. Atkins is a global company and is part
of the consortium that financed, designed, built and runs Parc
prison at Bridgend,
Bilfinger wins two justice contracts
The state of Saxony-Anhalt has awarded construction and concession firm Bilfinger Berger a 25 year contract to finance, design,
build and operate all non-sovereign services at a 650 bed prison to be built at
Burg. The prison is expected to open in 2009. The company has also won a 20
year contract from the state of
Legislation by end of 2006
Legislation enabling the
development of prisons under public private partnerships could be approved by
the council of ministers before the end of 2006 (see PPRI # 72/71). The first project is likely to be maximum security
prison in
Three more Semi-private
prisons
The
Themis consortium has been awarded a 30 year contract
to finance and build three semi-private prisons and operate the non-custodial
services (see PPRI #72/71, 69, 67,
52, 44, 2 & 11). The consortium comprises Dexia
Local Credit, Royal Bank of
Crisis but no privatisation
- yet
Parc prison “moved significantly backwards”
“At
our last inspection, we described Parc as being,
overall, a safe and respectful prison that was poised to move forward. However,
since that inspection, the prison had in fact moved significantly backwards,
with three changes of Director, and the slippage of many key areas of work.
This inspection found a prison in recovery, but still unable to meet three of
our four tests of a healthy prison.”
The
chief inspector of prisons for England and Wales inspected G4S- run Parc prison, Bridgend, Wales in January 2006 (see PPRI # 73, 65-63, 60, 56, 48, 44-42, etc
) although the report was not published until August. Parc,
one of
The
chief inspector found that: “Parc was not an unsafe
prison. There were relatively low levels of use of force and segregation. But
in key areas that support safety, procedures and policies were not sound enough
to provide protection for vulnerable prisoners. Reception, first night and
induction procedures were weak. There were gaps in the management and support
for prisoners at risk of self-harm or suicide. And, most worryingly, a good
violence reduction strategy was not being operated properly on the wings; nor
were managers monitoring this. “
“Our
previous report, and Parc’s own assessment of itself,
was that staff-prisoner relationships were respectful and positive. It was
therefore a considerable surprise to inspectors to find that prisoners, in
groups and individually, had an extremely negative perception of staff and some
recounted instances of poor or dismissive treatment. Inspectors did not find
examples of actively disrespectful treatment. But they did find that officers,
on very lightly staffed units, did not routinely engage with prisoners, were
not able to deal informally with their queries and needs, and were not actively
supporting prisoners, as personal officers or in implementing prison-wide
strategies. The exceptions were the small and well-run juvenile and Kainos units, where staff and prisoners engaged positively
and regularly.”
The
report noted that: “Black and minority ethnic prisoners, as in many other
prisons, had even more negative perceptions than white prisoners. It was of
particular concern that impetus in race relations had slowed considerably:
indeed there was no evidence of an action plan to deal with issues raised in
the recent critical Commission for Racial Equality investigation. Ethnic
monitoring was limited, and there was no record of racist incident investigations
for previous years.”
“At
one level, Parc provided a good level of activity for
a local prison. As its contract required, prisoners were out of their cells for
around 11 hours a day (though there remained some over-recording) and many
attended workshops. However, that did not mean that they worked. On one morning
during the inspection, we found that only six out of the 69 prisoners in
workshops were actually working. The claim made to inspectors that this
nevertheless instilled a ‘work ethic’ was scarcely credible. There was little
work skills training, and the quality of education was poor - this was
particularly unacceptable for the prison’s juvenile population.”
Resettlement,
however, was one area where Parc had made “real and
visible progress, with the active support of community and national resources
outside the prison. There was a well developed and well-managed strategy, and
effective reintegration work within the ‘Release Zone’. The prison had
established a post-release mentoring scheme for some of those on drugs
programmes, and could refer homeless prisoners to a unit in the community.
There were, however, still no custody plans for young adults or remanded
prisoners. And the absence of a visitors’ centre, in a prison that was far from
transport links, was a significant deficit.”
Parc holds a number of young adults, and has a specialised juvenile unit.
The cchief inspector found that: “they had widely
different experiences. There were no specific policies or activities for young
adults, who suffered equally with the adult population from the absence of sufficient
useful vocational work. Indeed, young adults did not even have custody plans to
assist in their rehabilitation. We were particularly concerned that vulnerable
young adults, who could not safely be held in the general population, were
placed in segregation, sometimes for lengthy periods. Nowhere in
“By
contrast, the juvenile unit was extremely well-run and focused on the needs of
young people. It had coped well with the transition to holding sentenced as
well as remanded young people. Training planning was done well, and the staff
engaged positively and appropriately with the young men there. It was somewhat
surprising that the unit was not full, given the number of Welsh children
serving their sentences in English prisons. The one important weakness was the
inadequacy of education, which needs urgent attention.”
“Though
this was in many respects a disappointing inspection, we were clear that the
prison was, once again, moving forward under a new Director and a clear
management strategy. The pockets of good practice – resettlement, the juvenile
unit and the Kainos wing - show what could be
achieved, given motivation, leadership and resources. But it is of some concern
that Securicor, who managed the prison, and the
Office for Contracted Prisons, had not taken decisive action earlier to halt
and reverse the drift downwards.”
The
chief inspector concluded that: “Parc can be a
significant resource for
HM Inspectorate of Prisons,
Report on an announced inspection of HMP & YOI Parc,
9-13 January 2006, published August 2006,
www. inspectorates.homeoffice.gov.uk/hmiprisons
Lowdham Grange: Too little
education, training and reintegration
Serco-run Lowdham Grange prison
near
The prison opened in 1998 and
holds long terms offenders including serious offenders. The announced
inspection was carried out 13-17 March 2006.
The chief
inspector found “mutually respectful staff–prisoner relationships
and
plenty of time out of cell for prisoners. However, the prison was based on an
outdated industrial model, too focused on menial, repetitive paid work of
little vocational benefit and with insufficient attention paid to education,
programmes and reintegration services. Lowdham Grange
was generally safe. Unlike some similar private sector prisons, it had begun to
improve staff recruitment and retention and, in this way, reduce the proportion
of inexperienced staff having to manage experienced prisoners”
Suicide and self-harm prevention
procedures were “effective, with good use of prisoner buddies”, although “first
night arrangements required development. Anti-bullying procedures were in their
infancy and, while most prisoners felt safe, minority ethnic prisoners reported
greater vulnerability than their white counterparts. There was also evidence
that the prison was facing a growing drugs problem.”
The
prison environment was “clean and well maintained”. Prisoners received plenty
of time out cell and 80% were in full time work. “However, the contract to
which the prison operated had preceded the Government’s current focus on
reducing reoffending. Instead, the focus was on prison
industries, with prisoner wages dependent on profits made by the workshops.
Much of this work was menial and repetitive. Prisoners were often bored and
disengaged and they had few opportunities to gain vocational qualifications
that might support employment on release.
This
dependence on production workshops also limited the development of adequate
education
provision, although a new education block had recently opened.”
The chief
inspector also noted that there were insufficient offending behaviour programmes
and reintegration services. “It was particularly disappointing that there was
no accredited drug treatment programme available. Significant investment was
also required to improve the cramped and limited physical education facilities.
The
prison was out of step with the regional offender manager’s reducing reoffending action plan, which required a much broader
portfolio of interventions to address offending behaviour.”
She said
that matters were not helped by Lowdham Grange’s
inability, along with other private sector prisons, to access the IT version of
the joint prison and probation and offender assessment system (OASys). To its credit the prison had not let this inhibit
its sentence planning, which was largely timely and of good quality, although
public protection work was less effective.
She also
noted that the failure of the establishment’s contract to focus adequately on reducing
reoffending is largely beyond the prison’s control. “The prison’s proposed expansion and the associated
redrawing of the contract ought to provide an opportunity to rebalance
provision. The regional offender manager should certainly satisfy herself that
an appropriate regime, focused on reducing reoffending,
is put in place before this expansion goes ahead.” The chief inspector made 125
recommendations for improvements and housekeeping points and highlighted 19
examples of good practice.
Report on a full announced inspection of HMP Lowdham Grange, 13-17 March 2006, HM Chief Inspector of
Prisons, July 2006, published October 2006, www.inspectorates.homeoffice.gov.uk/hmprisons
Money-go-round
Serco Group Plc
Serco has recently reiterated an announcement made in August 2006 that the
company is “in discussions with potential investors regarding the formation of
a strategic partnership and the disposal of a number of our PFI investments.
This would provide Serco with a large and lower-cost
pool of capital and allow us to bid for future PFIs
without using our own equity. For the disposal PFIs Serco would retain the associated long-term operating
contracts and would also provide management services to the investment partner.
There are several steps that need to be completed before any transaction can be
finalised and we will make future announcements as appropriate.” The company
made no mention of whether prison assets would be part of any transaction.
Serco is the sole owner of the Premier group of companies that until 2003 used
to be owned jointly by Serco and Wackenhut
Corrections Corporation. During 2005 Serco
restructured its Premier Custodial Group and justice divisions to create a
business focused on four key areas: civil resilience, offender management, law
enforcement and immigration control. These operations are included within Serco’s civil government sector which it regards as the
largest market and also includes health, education and IT.
The
company recently valued the
In
the UK not all the accounts of Serco home affairs
companies within the group were filed for the whole of financial year 2005 as
some were sold (within Serco) and ceased to trade on 30
June 2005. Neither does Serco include the financial
details of individual companies in its consolidated accounts nor does it
provide separate financial details of all its home affairs operations. However,
the following information is gleaned from Serco
companies’ recently filed accounts at Companies House.
In
2004 Premier Custodial Group Ltd was a holding company with subsidiaries
engaged in the design, construction, management and finance of custodial
facilities. During financial year 2005 Serco
Holdings Ltd reorganised the business: subsidiary Premier Prison
Services Ltd was sold to Serco Ltd
while subsidiaries Premier Custodial Investments Ltd and Premier
Custodial Finance Ltd were sold to Serco
Holdings Ltd. According to Premier Custodial Group Ltd’s
accounts Premier Custodial Investments Ltd and Premier Custodial
Finance Ltd ceased to be subsidiaries of the company on
During
2005 Premier Custodial Group Ltd paid a dividend of £7.5 million
(2004 -£15.43 million).
Serco plc’s annual review and accounts for the financial year
ended
Serco Ltd
Kilmarnock Prison Services
Ltd
Lowdham Grange Prison Services Ltd
Medomsley Training Services Ltd
Pucklechurch Custodial Services Ltd
Moreton Prison Services Ltd
The
accounts of Serco Ltd reflect the company’s
wider business interests as well as home affairs and there is no breakdown by
business segment.
Kilmarnock Prison Services
Ltd’s major activity is the design, construction, management and finance of
Lowdham Grange Prison Services Ltd financed, designed, built
and operates Lowdham Grange prison which
opened in February 1998. No dividend was paid but pre-tax profit for the
financial year ended
Medomsley Training Services Ltd’s major activity is the
design, construction and management of Hassockfield
Secure Training Centre which opened in September 1999. No dividend was paid for
the financial year ended
Pucklechurch Custodial Services Ltd’s major activity is the
design, construction, management and finance of Ashfield prison and young
offenders’ institution. The company made
a pre-tax profit of £1.23 million (2004 - £1.24 million) on turnover of £15.6
million (2004 - £11.7 million) for the financial year ended
The
major activity of Moreton Prison Services Ltd is the design, construction,
management and finance of Dovegate prison which
opened in July 2001.Pre-tax profit for the financial year ended 31 December
2005 was £2.67 million (2004 - £2.7 million) from turnover of £15.4 million
(2004 - £14.2 million).
According
to Serco Ltd’s
accounts for the year ended 31 December 2005 on 30 June 2005 the company
assumed the beneficial ownership from another group company of Premier
Prison Services Ltd, Premier Detention Services Ltd, Premier
Monitoring Services Ltd, Premier Training Services Ltd and Serco Geografix Ltd
for a combined cash consideration of £152.37 million. In terms of its
Premier Prison Services
Ltd –
custodial services
Premier Training Services
Ltd –
training centre management
Premier Monitoring
Services Ltd
– electronic tagging services
Premier Detention Services
Ltd –
immigration centre management
Serco Geografix Ltd – manufacture of tagging
equipment
The
principal activity of Premier Prisons Services was the provision
of custodial services, the manufacture and leasing of electronic tagging
equipment and the provision of electronic monitoring services to HM government
home office and immigration service. A dividend payment of £7.09 million
(£15.06 million whole year 2004) was made during the year to Premier
Custodial Group Ltd. Pre-tax profit was £83.5 million (£13.72 million whole
year 2004) on turnover of £53.38 million (£94.05 million whole year 2004) but
this profit also reflected a £77.09 million profit on the disposal of fixed
asset investments.
Premier Training Services Ltd’s principal activity was the
management of Hassockfield Secure Training Centre.
Pre-tax profit was £56,000 (£127,000 whole year 2004) on turnover of £2.01
million (£3.92 million whole year 2004). A dividend of £31,000 was paid
(£116,000 whole year 2004).
Premier Monitoring
Services Ltd
provided electronic tagging services to the electronic monitoring unit of the
home office. Pre-tax profit was £735,000 (£1.79million whole year 2004) on
turnover of £12.03 million (£27.6 million whole year 2004). A dividend of
£391,000 was paid (£2.8 million for whole year 2004).
The
major activities of Premier Detention Services Ltd were managing the
immigration detention centre at
At
the time of writing no accounts for Serco Geografix were available.
■
Outside of the UK Serco also operates Acacia prison
for the government of
Forest Bank: the CCA
connection
The business of Agecroft Prison Management Ltd (APM) is the design, construction,
management and financing of Forest bank prison. Contracts were signed on
The company’s directors
included Herb Nahapiet of UK Detention Services (now known as Kalyx) and Irving Lingo of Corrections Corporation of America. APM is jointly owned by Sodexho Alliance SA of France and CCA (UK) Ltd, the latter being a 100% owned subsidiary of CCA of Tennessee LLC which, in turn, is
owned by Corrections Corporation of
America.
A note to the accounts stated
that at the year end the company owed Sodexho Alliance SA
and Corrections Corporation of America
£3.15 million each as well as £1.89 million to UKDS. Another note stated: “On
CCA (UK) Ltd
is an investment holding company which “holds an interest in a company which
conducts activities related to the privatisation of correctional
facilities.” Its accounts for the
financial year ended
Another note to CCA (UK) Ltd’s accounts states: “On 10 April
2001 the company entered into an agreement with a third party whereby the third
party was effectively granted an option to acquire one third of the shares in
APM currently held by the company at a purchase price to be agreed by the
parties following the date of the agreement. The agreement requires that the
parties use their best efforts to reach agreement on such price within a
reasonable period of time following
Agecroft Properties (No. 2) Ltd is the company that leases
Forest Bank prison to Agecroft Prison
Management Ltd. Accounts were
recently filed covering the period
UKDS becomes Kalyx
UK Detention Services Ltd has changed its name to Kalyx Ltd. Another company, Kalyx Services Ltd, has also been registered.
Kalyx is still owned by Sodexho
SA of France. Kalyx’s
website www.kalyxservices.com states
that the name has changed “simply because our success has led to the name UK
Detention Services (UKDS) being too restrictive for us. Since 1987 we have
grown to manage four prisons, an immigration removal centre and two
post-release approved premises.” The website also states that “now we have our
first contract outside the broad field of detention and we are also optimistic
of working outside the
The
website mentions that the company runs Forest Bank, Bronzefield
and
GSL: assets sold and for
sale again
GSL UK Ltd is a wholly owned subsidiary
of Global Solutions Ltd but the ultimate parent company is De Facto
1119 Ltd. The principal activity of the De Facto 1119 group is the
provision of support solutions for public authorities and corporate
organisations within the
According
to De Facto 1119’s accounts, on
“GSL
remains a shareholder in all its existing portfolio companies and will continue
to provide day to day management through its board membership. However, GSL no
longer has access to the future economic benefits (or exposure to future
economic risks) of those companies. Therefore it ceased to consolidate the
results and assets of these companies from
As
a result of this transaction an exceptional dividend on the realisation of
value from the new joint venture vehicle arises of £36.4 million. No
corporation tax liability arises on this dividend.
According
to www.smif.com the partnership assets
included in the transaction related to prisons were Altcourse
and Rye Hill as well as Medway and Rainsbrook Secure
Training Centres and their expansions.
According
to GSL’s finance director Chris Elliott “The GSL-SMIF
investment partnership allows GSL to focus upon its core objectives within its
chosen markets of outsourcing critical business support services to the public
and private sector.” In his statement on www.smif.com
Mr Elliott also said that “we looked forward to continuing to work with SMIF in
the coming years.”
But
now SMIF, the biggest PFI fund in
■
In 2005 SMIF also bought into Agecroft
Properties the company involved with Forest Bank prison (see above).
GSL UK Ltd’s accounts include: Fazakerley Prison Services Ltd, (Altcourse prison) Onley Prison Services Ltd, (Rye Hill
prison) ECD Cookham
Wood Ltd, (Medway Secure Training Centre)
ECD Onley Ltd (Rainsbrook
Secure Training Centre) as well as Yarls
Wood Immigration Ltd, UK Court Services (Manchester) Ltd (Manchester
Magistrates Court) and Cheshire Custody Services Ltd (Cheshire Custody
Suites).
Onley Prison Services Ltd has a 26 year contract
signed on
The
company is a wholly owned subsidiary of GSL Carillion
Onley Ltd which in turn is owned jointly by Carillion Private Finance Ltd and GSL
Joint Ventures Ltd.
ECD (Onley)
Ltd is
engaged under a 16 year contract signed on 13 July 1998 for the provision of
design, construction and management services including related financial
arrangements for Rainsbrook Secure Training Centre in
Warwickshire. Pre-tax profit for the financial year ended
The
company is a wholly owned subsidiary of Education Care & Discipline
Three Ltd whose shares are in turn owned equally by Carillion
Private Finance Ltd and GSL Joint Ventures Ltd.
ECD (Cookham
Wood) Ltd is
engaged under a 16 year contract signed on 3 March 1997 for the provision of
design, construction and management services including related financing
arrangements for Medway Secure Training Centre in Kent. A dividend of £0.75
million was paid during the financial year ended
The
company is a wholly owned subsidiary of Education Care and Discipline Ltd whose
shares are in turn jointly owned by Carillion
Private Finance Ltd and GSL Joint Ventures Ltd.
Fazakerley Prison Services Ltd has a 28 year contract for the design, construction
and management services including related financing arrangements for Altcourse prison in
The
company is a wholly owned subsidiary of GSL Carillion
(Fazakerley) Ltd. Fifty per cent of the share
capital of GSL Carillion (Fazakerley)
Ltd is held by Carillion Private
Finance Ltd and the other 50 per cent by GSL Joint Ventures Ltd.
Under
the terms of the original contract dated
In
addition, Global Solutions Ltd and GSL UK Ltd provided
administrative and technical services to the group during the year: GSL UK
Ltd received £189,000. Similar services were also provided by Carillion Construction Ltd at a cost of £191,000.
At the year end there was £2.075 million payable to GSL UK Ltd and
£52,000 payable to Carillion Private
Finance Ltd.
Group 4 Securicor
G4S Justice Services Ltd, formerly known as Securicor Justice Services, made a pre-tax
profit of £2.34 million for the financial year ended
The
company’s principal activity is running prisoner escort and custody services
and prison management. The 2005 accounts reflected the company’s first period
of trading under its new electronic monitoring and immigration contracts which
commenced in April and May 2005 respectively. G4S Justice Services Ltd also has
a 50% joint venture investment in STC (Milton Keynes) Holdings Ltd and a
49.32% group shareholding in Bridgend G4S Justice Services Ltd. Its ultimate holding company is Group 4 Securicor plc.
For
the financial year ended
■
In its interim results announcement for January-June
2006, Group 4 Securicor
plc noted that “…we have recently won a three year immigration removal
centre contract in
MTC in the
Management & Training Corporation of
GEO gets RSI
GEO Group (UK) Ltd has acquired British firm Recruitment Solutions International Ltd (RSI)
for approximately $2.25 million plus transaction costs. RSI also has a
subsidiary, RSI Immigration Services Ltd. RSI provides detainee transportation
services to the home office’s nationality and immigration directorate. Geo
Group UK Ltd is owned by the Florida-based GEO Group Inc. Geo claims that RSI
will generate $3.7 million in annual revenues during 2006.
Recruitment
Solutions International Ltd was incorporated in the
On
■
As at
■ “Internationally we
are waiting for an RFP for a new 700 bed facility in the
The
State of
The
contracts, worth more than $153 million, were signed after Governor
Schwarzenegger declared a state of emergency in
In
a statement issued
She added: “Public prisons
are morally and fiscally accountable to the taxpayers of
As a result of this opinion the
California Correctional Peace Officers Association and Service Employees
International Union Local 1000, which both represent public sector prison
officers in