Corrections Corporation of America (CCA) has emerged as the leading  light behind a proposal to privatise all of Tennessee’s 21 adult correctional facilities. The company first offered to take over the state’s prisons in 1985 but, at the time, the state declined the offer.

The current debate amongst legislators is  heating up  but  a decision is apparently not going to be rushed. The chairman of the state Corrections Oversight Committee has said that operations  at all of CCA’s facilities in the US, Australia and the UK will be scrutinised as part of the committee’s deliberations. While some politicians anticipate the claims for cost savings, concerns have also been raised about the recent performance of a CCA-run facility compared with two state prisons in Tennessee.

CCA’s  South  Central Correctional Facility reported 29  incidents  per 100 prisoners in 1995-96, which was  twice as many as North East Correctional and one-third more than North West Correctional. Overall, incidents throughout Tennessee prisons increased 7.6 per cent between 1994 and 1996. At  South Central the increase was 15.1 per cent and North East’s was 12.2 per cent,  while North West’s rate  dropped by 13.6 per cent.

In the first half of 1996-97, South Central reported 33 incidents per 100 prisoners compared with 16 at North West and 15 at North East.  The company’s explanation for the figures was that it was not the prisoners choosing to act out more “but the staff choosing to be stronger disciplinarians.”

There are also conflicting views among the trade unions about CCA’s plan. The Tennessee State Employees Association believes that the company will not be able to provide a cheaper service unless conditions for staff are such that security will be compromised.  But ahead of the possibility of securing major expansion in Tennessee, CCA has signed an agreement with the Tennessee affiliate of the AFL-CIO, the American trade union federation. Enshrined in the CCA-led Bill being considered by legislators is a provision that CCA employees will be able to unionise. According to the AFL-CIO, this should allay fears about wages and conditions. This agreement is a radical departure for the company.

n The Tennessee Supreme Court is to consider a South Central Correctional Centre prisoner’s claim that  a private prison contractor has no lawful right to discipline prisoners. The state maintains that any disciplinary action is approved by a state official and, in any event, existing law does not mandate that everyone involved in disciplinary action must be a state  official or employee.

 

 

CANADA

 

Ontario’s private boot camp

      Canada’s first privately owned and operated correctional facility is scheduled to open in July 1997. Situated in Medonte Township, between  Barrie and Orilla, Project Turnaround is  a ‘strict discipline facility’ for high risk,  male repeat offenders aged between 16 and 18. The Ontario government awarded the contract to Encourage Youth Corporation Inc, a Canadian  company. According to the government, dozens of Canadian and American companies and organisations had expressed interest.

The facility’s regime  will be  highly structured, with 16 hour days, mandatory education, life skills training and rigorous physical activity. There will be no idle time. Following custody, the youths  will have to participate in a community-based day programme in Toronto to prepare them for discharge.

Protection for whistleblowers

      South Australian coroner Mr Wayne Chivell has called for changes to the state’s whistleblowers’ protection law. His recommendation, made on 23 May 1997,  arises from evidence which emerged during his inquiry into the death of prisoner Murat Susic at Group 4-run Mount Gambier prison. Mr Susic died from morphine toxicity in December 1995, soon after the prison opened.

Mr Chivell expressed concern about the dismissal by Group 4 of  a witness, Mr Robert Marslen, who told the inquiry that he had been fired by the company for breaching a confidentiality clause.  The coroner  said it was not clear whether state legislation covered Group 4 or other private contractors’ staff.  He called on the government to ensure that they have the same immunity as state employees.

Mr Chivell also  highlighted a “perceived attempt”  by the former police minister to discourage police from investigating inside the prison. He criticised the lack of cooperation between police and Group 4, saying that, before Mr Susic’s death, there had been no proper relationship where intelligence could be exchanged for mutual benefit.

The Australian Public Service Union has supported the coroner’s findings, saying that the Mount Gambier case highlights the need for public-sector style controls over the private sector. When the prison opened, the state’s minister for correctional services said that Mount Gambier “was the first prison in South Australia over which the government has an absolute guarantee of performance.”  

 

Two OK, three on schedule

      According to the Victoria government, its recently opened second private prison, the Wackenhut-run Fulham Correctional Centre for men, has been running smoothly and has attracted no adverse publicity.

Isabel Hight, Group 4's director of Victoria’s third private prison, the Men’s Metropolitan Prison, has  resigned. But construction of the 600 bed facility is on schedule for a September 1997 opening.  Group 4 has contracted with the an order of nuns, the Sisters of Charity, who will run the prison’s 20 bed hospital as well as treat out-patient prisoners from across the state.

 

New drugs row

    A Melbourne newspaper is claiming that leaked prisoner incident reports from CCA’s Metropolitan Women’s Correctional Centre (MWCC) in Victoria appear to undermine government claims that the prison’s drug problems have been exaggerated by critics. According to the reports, during a three month period to the end of January 1997, nine prisoners recorded positive drug tests. One woman returned six positive tests in eight weeks. Prison officers have referred to government-commissioned  independent drug testing  as a “complete sham”.

The government refutes these claims, saying that the time periods for the leaked documents and the independent testing do not correspond. Also, at least one of these prisoners shows four positive results due to illicit drugs when three of these results should have been recorded as positive due to medication. At the time the MWCC was entering results as positive pending screening for prescription drugs which may also return a preliminary positive result.

Meanwhile, on 21 May 1997, the police executed a search warrant at the prison’s  management unit as part of an investigation into a  riot on 28 April.  That incident was ended when prison staff used tear gas and a stun grenade on the prisoners. Results of the police action have not been made public as the investigation is ongoing.

 

Shareholder action

      Those opposed to private prisons should buy shares in the publicly traded companies and use shareholder meetings to argue their case. This is part of a ten point anti-privatisation strategy adopted at a recent national conference of community based criminal justice activists in Australia.

 

Probity guide

      The Independent Commission Against Corruption in New South Wales has just published ‘Probity Auditors: When, Where and How’ to help government agencies reduce opportunities for corruption in public sector projects. The report is available from: ICAC, 191 Cleveland Street, Redfern,GPO Box 500, Sydney 2001 Australia. Tel: ++29 318 5999.

 

 

NEW ZEALAND

 

 

Auckland in 2000

        Plans for New Zealand’s first private prison appear not to have been disrupted by a change of government. The original tender documents for the proposed Mt Eden Remand Prison, Auckland,  required the invited tenderers to submit a bid for the design, construction, finance and management of the proposed prison.

As  the tendering  process required an integrated response, comprising a total package of design, construction, finance and management, the result was two composite tenders that could not be recommended in their current form without substantive negotiation.

On 20 May 1996, following an extensive, independent evaluation process,  the  government rejected both tenders. The Department of Corrections was asked to to re-tender separately for the design/build aspect and, at a later date, the management contract.

It is now expected that a building contract will be awarded by 15 June 1998, a management contract negotiated by May 1999 and the prison to be operating by February 2000.

 

FRANCE

 

Awaiting decision

      The outcome of the general election will determine whether plans to extend the use of semi-private prisons will be implemented. The Ministry of Justice wants to create a further 4,000 prisoner places in new prisons  financed with public money and using state employed prison officers. Companies would build, maintain and provide all other services. There are currently 21 such prisons in France. There are also plans to privately finance, build and run catering facilities at three prisons.

 

 

UNITED STATES

 

Wackenhut’s health

      Wackenhut Corrections Corp. has formed a new subsidiary, Atlantic Shores Healthcare Inc, and agreed to purchase a private psychiatric hospital in Ft. Lauderdale, Florida for $6.5m. Wackenhut has also formed a construction development subsidiary, WCC Development Inc. Both moves are seen as extensions to the company’s core corrections business.

n Interviewed for Wackenhut Corrections Corporation’s recently published 1996 annual report, Charles R. Jones, the company’s senior vice president for business development said: “This is the time of year when the various legislatures are  in session. We invest significant time introducing privatisation legislation and testifying for its adoption. This can be a lengthy, involved process, but it is vital to our business to have empowering statutes adopted. Once the statutes are implemented, a request for proposal usually follows. This legislative process also affords us an opportunity to work closely with elected officials and thereby understand what is important to them.”

 

 

Montana latest

       The state of Montana is the latest to pass enabling legislation for private prisons. Companies will be able to build and operate facilities but only following a public hearing into any proposals. Operators will  not be allowed to build within one mile of schools nor will they be allowed to import prisoners from other states. Minimum health and safety standards will also have to be met. Some $19m is being allocated to house 600 prisoners in private prisons, either in Montana or other states, over the next two years

 

More trouble for Bobby Ross

      One prisoner died and six others were seriously injured following a major disturbance on 9 May 1997  at the Bobby Ross Group-run Dickens County Correctional Centre in Spur, Texas. A lockdown following the incident caused another disturbance two days later in which 20 prisoners set fire to a housing unit. This was ended by guards using tear gas and a stun grenade.

The first incident is being blamed on prisoners from Montana who thought that Hawaiian prisoners were receiving preferential work opportunities and special meals. The company offers work to prisoners on a first come, first  serve basis. But at a press launch of the findings of a preliminary inquiry into the incident, Hawaii’s director of public safety revealed that the Montana prisoners were believed to be white supremacists, adding a racist dimension  to problems at the prison. At the time of the first incident in May, the facility held 100 prisoners from Hawaii, 150 from Colorado and 250 from Montana.

Although no blame for the incidents has been attributed to the company, Montana’s  head of corrections has said that staff at the facility were “relatively inexperienced.”

In August 1996, a protest by prisoners over strip search procedures at the facility was ended with warning shots being fired by guards. The then warden lost his job.

The Bobby Ross Group is still facing a lawsuit over conditions at its Karnes City, Texas facility.

 

Company pulls out

     US Corrections Corp. of Kentucky  has  pulled out of  a contract won in April to build and run the state of Georgia’s first two private prisons. The company miscalculated its successful bid by more than $5m and asked to be released from the contract. The state agreed, but only after ensuring that the company repaid a $4m advance payment plus interest of $6,900 and a further $200,000 to reimburse the cost of the tendering process. The company is the third largest prison contractor in the US, even though it has just eight contracts for adult jails.

 

On the battlefront

       Residents of Nicholas County, South Carolina had such an acrimonious debate over a proposed private prison that the county’s commissioners recently decided against pursuing the project. In Pennsylvania, state prison guards prevented the privatisation of a new prison despite a projected saving of three million dollars. At Anchorage, Alaska  local residents in the south of the city have forced the Corrections Group North consortium to find another site to build and run a prison. The company is now negotiating with other communities.

 

 

CORPORATE WATCH

 

 

Pension or ESOP?

    A recent study of two retirement plans shows how private prison companies can undercut public sector operating costs - but at their employees’ expense.

According to Major Charles S Casey, commander of the Bureau of Administration at Monroe County Sheriff’s Office in Florida, prison companies have reduced costs by as much as 15 per cent to 25 per cent per employee by replacing traditional pension plans with employee stock ownership plans (ESOP).  He examined  the retirement plan offered by a typical sheriff’s office such as Monroe County (MCSO) and a large private firm such as Corrections Corporation of America (CCA), both of which operate medium-sized pretrial detention centres in Florida.      MCSO participates in the state's retirement plan and pays an amount equal to 27 per cent of  an employee’s base salary into the system annually. These employees are in a special high risk category because of the nature of the job and can vest in the system after 10 years. They can retire at age 55 with 10 years of service at 30 per cent of their average final compensation (calculated on the five highest paid years) or after 25 years of service at any age with roughly 65 per cent of the average final  compensation. 

CCA administers an ESOP as a method of saving for retirement. Employees can build retirement savings  owners and become shareholders in the company after five years. Under the ESOP, employees can buy company shares and the company matches the amount purchased on a dollar-for-dollar basis. The employee can access these funds at any time throughout his/her career simply by selling.

Major Casey compared an MCSO and CCA employee after 10 years of service, assuming each officer started in 1985 at $17,500 and received four per cent annual increases. He calculated that, by 1995:

n MCSO would have contributed $63,715 into the officer's retirement  account. This money would in turn have been invested by the Florida Division of Retirement which is charged with ensuring the plan meets the needs of eligible participants and is operated in compliance with existing federal and state laws governing such plans. Assuming the employee vests at 10 years and waits until age 55 to retire, s/he would receive approximately $7,195 annually or a total of $122,315 (this figure does not include cost of living adjustments made annually) if the employee lives to the normal life expectancy of 72.

If s/he retires at age 50 with 25 years of service, this employee would receive $26,990 annuaIly or a total of $701,740 and any cost of living adjustments during his/her lifetime. 

n CCA would have contributed just $8,500 towards the officer's ESOP in dollar-for-dollar matching stock assuming that the officer purchased the recommended amount of $8,500 in stock during the 10 year period  (about $700 worth of stock per year in the first five years and $1,000 in stock per year during the last five years). Based on this $17,000 investment, the employee's ESOP would be worth $101,500 after 10 years. If the employee invests this amount for 20 years, the company projects s/he would have $316,500 at age 55. CCA’s figures assume that the company does well, the stock appreciates and the employee receives dividends.

Major Casey argues that a typical public retirement plan is superior to the ESOP in terms of contributions made by the employer on behalf of the employee and the risks associated with the use of such funds. Traditional government retirement plans are diversified, so the health of the fund is not tied to the performance of any one category of stock or bonds. These funds are typically invested in government‑insured bonds and low‑risk, long‑term securities. Therefore, it is highly unlikely that the invested funds will not be available to employees at the time of their retirement.

Also, as state employees can predetermine the amount that they will obtain from the fund based on a simple formula, it is easy for them to plan for retirement. Stability and reliability of the fund are crucial aspects of any effective retirement plan.

ESOPs, on the other hand, are not diversified and because of this they operate under the ‘all the eggs in one basket’  theory. Therefore, they are at greater risk from the volatility of the market. If the company does badly or goes out of business, the stocks can lose their value. Employees who planned to use these funds for retirement would be left high and dry. Further, because the fund is tied to the market, it is difficult to project the amount of money that will be available at any given time. Major Casey concludes that, in short, while an ESOP can have its benefits, it is a poor substitute for a real retirement pension plan. Source: American Jails, February 1997.