CONTENTS

 

United Kingdom	Australia
Europe	United States
South America	Corporate Watch
Canada

 

 

UK prison costs claim still unproven

On 13 June 1996, Britain's prisons minister announced in Parliament that, for the year 1994/95, three of the country's four privately managed prisons were between 13 and 22 per cent cheaper than their public sector comparators and delivered equal or better performance on most measures. These were the findings of a report commissioned from consultants Coopers & Lybrand. (The fourth private prison, HM Prison Buckley Hall was excluded from the study.)

The minister did not mention, however, that the report contains a number of assumptions, estimates, and uncertainties which undermine the findings. Penal affairs organisations in the UK are now concerned that, without qualification, the minister's statement could mislead criminal justice policy makers looking to Britain as a model for privatisation.

Even Coopers & Lybrand had their concerns. In addition to expressing some disquiet about the comparators chosen by the Prison Service, they admitted that, individually, none of the definitions of cost measurement used were "entirely satisfactory." They added that "the results of this study have to be reviewed in the light of a wider knowledge of the circumstances of a prison. Any measurement of cost will also have to be considered in the light of other performance indicators ... it has been impossible to undertake any detailed analysis of the quantification of their impact ... as the Prison Service has not been able to provide any central source of data on these topics ... we can only note that the accuracy of the cost comparisons produced ... may be adversely affected by the absence of any direct allowance for these issues."

Trade unions were excluded from the consultation process during the report's preparation but are now being asked to comment on the methodology. The Prison Governors Association, which represents governors of public sector prisons, believes that the figures issued by the minister are biased in favour of the privately run prisons.

n Review of comparative costs and performance of privately and publicly managed prisons, Prison Service Research Report, No 1, June 1996.

n The Prison Reform Trust has published a commentary on the Coopers & Lybrand study, available from PRT for £3.

 

Privatised assaults

 Prison Service figures for the year to 31 March  1996 show that privately-run Doncaster prison had 25.1 assaults per 100 population,  Blakenhurst 13.6 and  Wolds 8.7 compared with the average for all local prisons in England and Wales of 11.2.  Buckley Hall, a category C training prison, had a rate of 8.7 per 100 compared with the average of 4.0.

 

Market testing halted

There are no immediate plans to revive the Prison Service's programme of market testing existing prisons in England and Wales. Giving evidence to the House of Commons Home Affairs Committee in June, Mr Richard Tilt, director general of the Prison Service, said that this was due to pressures on the Service to accommodate record numbers of prisoners. Cuts in spending are also driving costs down, eliminating the need to test against the private sector. Originally, several prisons were to be chosen from a shortlist of 20 but a legal challenge from the Prison Officers Association delayed the programme. So far, only the rebuilt Strangeways at Manchester and the newly-built Buckley Hall near Rochdale (both in north west England), have been market tested. An in-house bid won Strangeways while Group 4 won Buckley Hall.

Costain in trouble

Construction company Costain, which owns 20 per cent of Bridgend Custodial Services Ltd, the developer of a new private prison at Bridgend in Wales, suspended its shares on the UK Stock Exchange on 26 June 1996. The move followed heavy share trading which cut the company's market value to one tenth of its 1994 worth. Costain owes banks £75m and the IBCA European credit rating agency placed the company on "Rating Watch with negative implications". The company is negotiating with a potential south-east Asian investor to secure its future.

n Eight banks have split the financing of the £77m cost of Bridgend. Natwest Markets and Lloyds underwrote the cost.

 

Supermax proposed

Britain's 500 most dangerous and high risk prisoners could be held in one super-secure prison, replacing the current system of keeping them in a number of high security facilities. The prison, costing over £55m, would have to be privately financed and built. It is thought that ministers are concerned about the public's reaction to the private management of such a facility especially as armed guards could be used to patrol the perimeter fence. The  proposal is based on the American so-called supermax model. The Home Secretary is expected to decide later this year on whether the plan will go ahead.

 

Scotland's private prison

 A new 500 place prison is to be privately financed, designed, built and run at Bowhouse, Kilmarnock in the west of Scotland. If the project, under the government's private finance initiative, goes ahead then the earliest  opening date is 1999. Planning permission has to be sought and the tendering process is still a long way off.  The prison is said to be needed to cope with current prison overcrowding in the region.

 

The Scottish prisons minister has also published a White Paper which includes proposals for mandatory life sentences, the abolition of parole and the near-abolition of remission. If implemented, these policies will require more prisons to be built.

 

 

 EUROPE

Belgians reject French style

 A new 400 place prison under construction at Andenne will have all services run by the state. The government has rejected proposals to pilot the French model of employing the custody officers but contracting out all other services. The prison is due to open by April 1997 at the latest.

 

SOUTH AMERICA  

 

Brazilians vote against

        Brazil's National Council for Criminal and Penitentiary Policy, a federal government body, has voted against prison privatisation. After a three hour debate, the Council issued this statement: "The National Council for Criminal and Penitentiary Policy, gathered in Porto Alegre on 23 April 1996, in a first public pronunciation about the issue of privatisation of prisons, though considering the importance of the participation of the community in the execution of penal law, declared itself contrary to the absolute submission of prisoners' custody to the profit-making private sector." The Council also agreed to study the limits and forms of community participation (there is a prison in the state of Sao Paulo run by a religious order).

Brazil's prison system is state-run but penal laws are federal - as are the funds for prisons. States would not be prevented from privatising prisons but, given the government's position, approval would not be forthcoming.

 

 

CANADA

 

New Brunswick confusion

On 20 June 1996, the provincial government announced that a new 112 place youth correctional facility at Miramichi, New Brunswick will be government run  but privately financed, built and maintained. Construction is expected to start in July 1996 and the facility should open in late 1997.

 

The decision follows a year-long community and trade union campaign against the private operation of the facility. Originally, Wackenhut Corrections Corporation was chosen as the preferred bidder for the whole project but the government suspended negotiations last year following allegations about the company's operations elsewhere and the strength of public opinion.

 

The government has entered into partnership agreements with Wackenhut Corrections Corporation and Maxim Construction Inc. However, contract documents also state:”It is the intention of all parties to include nothing in any agreement which will prohibit the province from privatising the operation of the New Brunswick Youth Centre. Nor does it obligate Her Majesty to negotiate with Wackenhut for the privatisation of the operation.”  This appears to contradict the government’s   statement of 20 June.

 

The Canadian Union of Public Employees is now challenging the validity of the government's official statement as well its claim for cost savings from the contracts. There is also concern over how the contract was listed as won in company documents included  in a February 1996 analyst's report on Wackenhut Corrections Corp. but only revealed to the public months later.

 

Private analysis in Nova Scotia

 Atlantic Corrections Group (ACG) has been chosen by the provincial government as the preferred supplier to work with the Department of Justice in defining, developing and implementing a plan for adult correctional facilities (see issue No.1).

 

The government announced on 27 June 1996 that as well as ACG, firms such as architects, a health service provider and consultants KPMG were involved with the project. However, whether the facilities will be privately run “will be decided as the process proceeds and only after a configuration plan has been developed.” Extensive consultation with stakeholders is also promised

 

Management & Training Corporation, one of the partners in ACG, runs four corrections facilities in the US and is also  the largest private operator of training centres for the US Department of Labor.

 

AUSTRALIA

 

 

Union's legal challenge

The Public Service Association has filed papers in the Supreme Court of South Australia claiming that a contract between the government and Group 4 to run Mt. Gambier prison is invalid. The contract was awarded in 1995 and the  union is arguing that the government avoided the proper parliamentary process. However, the Correctional Services Commissioner is sure that the contracting-out process was thorough. The union maintains that if the challenge is successful there could be ramifications for other privatised service contracts in the state.

 

 

New South Wales accountability

The state government is to appoint an inspector-general of prisons with an investigative staff to combat corruption, violence and inefficiency in the prison system. The move has been driven by dissatisfaction with the monitoring of the state's private prison, Junee Correctional Centre run by ACM, and the increasing number of complaints about prisons received by the Ombudsman. The inspector-general will have powers to demand documents, conduct searches and compel people to give evidence. The extra layer of accountability is being modelled on the Dutch system rather than the British, which is considered too rigid. The corrections minister will be able to direct the inspector-general, expected to be a judge or magistrate, to conduct inquiries into aspects of the prison system.

 

 

Escape clause

The company which will eventually transport prisoners in police custody in Victoria will be allowed three escapes before being charged a recapture fee by the police. The Police Association believes that long manhunts for escapees could be expensive for taxpayers and that this clause in the contract would also put the public at risk.

 

UNITED STATES

 

Riot immigration facility reopens

 Corrections Corporation of America (CCA) is to reopen a 300 bed minimum security facility for the Immigration and Naturalization Service (INS) in Elizabeth, New Jersey. The INS has transferred the contract from the previous operator, Esmor Correctional Services Inc, after a riot by 300 prisoners on 18 June 1995 led to the facility's closure. CCA says that all terms and conditions of the original contract remain in effect, although there are to be some modifications to staffing, training and operational procedures. An INS report into events leading up to the 1995 riot detailed cost cutting, low staffing levels, an atmosphere of abuse, and poorly paid and untrained guards who physically and verbally abused detainees who slept on thin mattresses in open dormitories.

CCA is leasing the building, which is a concrete warehouse with few windows, from the owners who are described as local investors. Esmor had a five year $54m contract. CCA says the contract should generate over $8m in annual revenues.

n As at 14 June 1996, CCA claimed to have 33,453 beds in 50 facilities under contract in 14 US states, Puerto Rico, Australia and the UK.

 

 

CORPORATE WATCH

 

 

Wackenhut Corrections Corp.

    Formed in 1984 to exploit the emerging private corrections market, WCC is a subsidiary of  Wackenhut Corporation Inc. (WCI), the third largest security company in the US and the leading American provider of security services outside of the US.

    WCC is now the world’s second largest private prison operator after Corrections Corporation of America. Its income in 1995 was 105 per cent more than in 1994. As at 5 June 1996, it had contracts and awards to manage 30 facilities with a design capacity of 22,132 places in the US,  Canada, Australia and the UK. It also has two prisoner escort contracts in the UK. In the US, where only 10 per cent of correctional food services is privatised, WCC is developing its food services division and recently bought the correctional food  business of Service America Corp.

Outside the US, it has formed joint ventures with Serco plc and Trafalgar House in the UK, Maxim in Canada and Thiess in Australia.  Its first  contract outside of the US was awarded in 1991 in New South Wales. Its most  recent Australian contract was signed in October 1995 in  Victoria.  It is also interested in New Zealand.

The company’s  development depends on  crime rates and sentencing patterns in countries in which it operates along with governmental and public acceptance of the privatisation concept. It intends to  acquire other companies.

Despite its parent operating in some 50 countries making it well placed for foreign expansion, WCC’s business is still  concentrated. In  1995 and the first quarter of 1996, contracts with the state of Texas accounted for 37 and 41 per cent of revenues respectively; the state of Louisiana 11 per cent; the government of New South Wales  13 and 11 per cent and Queensland 13 per cent.

As at 8 May 1996, WCC had 3,359 full time and 140 part time employees. Staff at four facilities are unionised.

Not all of the company’s contracts have run smoothly, with particular problems at the Arthur Gorrie facility and Junee Correctional Centre in Australia, Doncaster prison in England and, in the early periods, at two facilities in Texas. WCC also had to repay $27,764 to the Texas Commission on Alcohol and Drug Abuse in May 1996 for “minor accounting issues relating to contract language ambiguities” in connection with the company’s Kyle facility,  but no impropriety or wrongdoing was suggested following investigations by the Texas Rangers.

Except for a minor hiccup in New Brunswick, none of these, or other problems, have hindered the company’s progress. Nor have some of the more controversial activities of its parent company,  WCI, which was started in the 1950s by a former FBI agent and has close links and/or contracts with US military and intelligence organisations.  Its  specialised emergency response teams are staffed with former intelligence officers and equipped with “sophisticated weaponry” to engage in “aerial assault ... operations.”

WCI  has security and investigative service contracts in Canada, Central and South America, the Caribbean, Asia, Africa, Australia and Europe.  Most recently, it has expanded into Central and Eastern Europe, the former Soviet Union, China and other countries in the Far East “in an attempt to capitalise on recent economic developments and political reforms.”