No. 41   June 2001                                                                      ISSN 1363-9552

Prison Privatisation Report International

Published in London by the Prison Reform Trust

 

IN THIS ISSUE

Netherlands Antilles

Lesotho

Australia

United States

Recent publications

 

Netherlands Antilles: Wackckenhut has informant network in place; 23 escape

    Faced with recommendations by the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment (CPT) to improve prison infrastructure and develop practices in line with UN standards, the Government of the Netherlands Antilles turned to private sector expertise to provide solutions (see PPRI # 37 and 30).

     In 1999, the CPT recommended:“Whatever technique is used, a strict but realistic timetable should be drawn up for the implementation of the building programme and appropriate monitoring be put in place to ensure compliance, backed up by suitable contractual provisions (eg, penalty clauses).”

    In 2000, the government  awarded a contract to Wackenhut Corrections Corporation (WCC) to renovate the existing Koraal Specht prison in Curacao and to construct new prisoner accommodation and support service buildings.

    WCC had also wanted to privately finance the project but the government opted for finance offered by the Dutch government.

    WCC then persuaded the government to enter into an Employment and Services Agreement with the company to provide a senior management team to administer the daily operations of the prison, as well as a second team to develop policies and procedures, training and staffing plans and other operational structures for the prison system.

    With the correctional officers still employed by the government, the company took on the massive task of implementing the CPT’s recommendations.

     These contracts are the first of their kind. But As the reports revealed in this issue of PPRI show, there is a steep learning curve to be overcome before the private sector can deliver the improvements required in circumstances such as those that exist in the Netherlands Antilles.

 

    The escape of 23 prisoners from Curacao’s Koraal Specht prison since Wackenhut Corrections Corporation (WCC) started its management contracts has led to a Commission of Inquiry into corruption amongst the state employed prison officers.

    There have also been calls for the minister of justice, Dr R Martha, to resign.

    Six prisoners escaped on 24 March 2001from a  new housing unit; on 9 April another five prisoners escaped by sawing through the ventilation shutters of the cell blocks they had been housed in; then on 9 May a further 12 prisoners escaped.

    This led Dr Martha to announce a “thorough investigation at all levels.”

    PPRI has seen a report, Correctional Facility Koraal  Specht: Special Report on Security Issues, dated 12 April 2000, prepared after the first escapes on 24 March. The report is by Atelier Lobo and Raymann, a Curacao firm of architects and consulting engineers.

     The firm alleges that, Wackenhut Corrections Corporation failed on important security issues both as the designer and the main contractor of the extension and renovation of the facility as well as in the function of Interim Manager of the facility. The architects continued: the fact that the escape of six inmates [on 24 March 2001] could happen and in such an easy way proves that the facility is not secure enough to be considered a safe prison.

According to the contract between the Public Entity of the Netherlands Antilles and WCC, this company bears the portion of the design risk associated with the suitability of  the approved design and the quality of the materials for their intended purposes , as described and approved by the Government ... as such, WCC can be held responsible if the facility as a whole or its components in particular prove not to be reasonably failsafe.

    The Contract Management repeatedly requested that the security of the facility during construction was guaranteed on the same level as in the final situation. Therefore severe security measures have to be taken and maintained for the building site to control possible risks. The firm also stated that the report is not intended to be an in depth study of all security matters of the facility, but only to highlight some concerns of the Contract Management  and to indicate directions for improvements.

 The firms remarks included:

1. Perimeter fencing.

The fact was mentioned that the perimeter fence consisted of only one chain link fence. The standard in Dutch prisons is a 5m high concrete wall on the outside perimeter with taut wire detection and cameras on top and a chain link fence between the building and the concrete wall. Also, concerns were expressed about the complete lack of a continuous perimeter fence at the east side of the facility.

2. Patrol road.

Concerns were expressed about the discontinuity of the patrol road at the north side of the facility and about the effectiveness of the patrol road. Item 03.04 of the minutes of project meeting number eight of 27 March 2000 reads as follows: The patrol road should be continuous along barracks of H.01. According to [WCCs] Brian Curley the patrol road is very important in prisons of WCC. Every few minutes a control vehicle will pass around the facility. Sometimes control vehicles will be stationed at every corner of the facility.

3. Cell fronts.

Many discussions took place about the quality of the cell fronts, like corrosion resistance, the necessity of galvanisation, the welding of galvanised parts, the anti -corrosion treatment of the welds and the bolting to the walls. Additional safety measures had to be taken on Housing Unit 1 on request of the Contract Management at the substantial completion.

4. Cell louvres.

Many discussions took place about the corrosion resistance of the louvre windows in cells, the strength of the louvres, the addition of extra bars and the bolting to the walls with spikes. Additional concerns are that prohibited  items can be passed through the louvres from the outside and that visual contact exists from the cells with the area outside of the facility.

5. Emergency exits.

The design and control of the emergency exits was a continuous concern of the Contract Management in relation to fire safety and risks of breakouts or intrusions from the outside.

6. Control of personnel on the construction site..

The control of construction personnel appears to be insufficient. Even after the escape of six inmates, construction workers were working next to the fencing with cutting equipment without any surveillance.

The escape of six prisoners

    Regarding the escape itself, the firm states: although the Contract Management does not dispose of an official report of the escape ... the following could be deducted (sic) from given information by the prison officials:

     In the night of 23 to 24 March supposedly intruders from the outside went up on the slope of the terrain behind Housing Unit 2 using temporary stairs that were used during construction and were not removed.

     Housing Unit 2 had just been taken into use 10 days before. The intruders cut an opening in the west fence, forced the door frame of the emergency exit with a crow bar and broke the deadbolt of the lock, thus opening the door.

     They held the door in closed position with concrete blocks found on the building site. Six inmates who were just released from the cells during the next shift in the early morning escaped through the door. The guards did not discover the fact that the door was unlocked before releasing the inmates.

     The door frame appeared to be unfilled with concrete around the deadbolt of the lock. The pusher of the deadbolt was broken inside the lock.

     In the minutes of Project Meeting No. 9 of 31 March 2001 it was stated under item 05.05: emergency exits of the Housing Units will be locked and unlocked. The locks will be checked at each shift; guards on shift will be responsible for these locks.

     It is therefore not understandable how the door lock could have been forced without being noticed by a guard before releasing the inmates from the cells.

    It is also not understandable or acceptable that all work by the intruders could have been done without being noticed by guards. This indicates that, in any case, the area outside the prison is not being patrolled.

 Improvements of design

     Without some major improvements of the design, in the opinion of the Contract Management unacceptable security risks remain for escapes from the facility and intrusions from outside and also for the entry of prohibited items into the facility.

    In the facility several risk areas can be identified:

1. Perimeter fence.

One chain link perimeter fence is not suitable for this correctional facility, especially not without a very strict and regular surveillance and patrolling of the site. The building of a closed concrete wall around the perimeter with detection wires on top, monitored from the central control room seems unavoidable.

2. Emergency exits.

The emergency exits in the corner of the housing units cannot remain as is. As was explained by WCC during the design stage these doors are also intended as a second entrance for assistance in case of riots in a certain unit. If the doors are to remain for functional reasons they have to be replaced by doors with a much higher level of security protection and electronically controlled.

     The emergency exits at the end of the corridors of the vocational and administration buildings are considered necessary in case of fire. In project meeting No. 9 of 31 March 2001 these exits were discussed and it was explained by the Project Architect, Mr Shelwyn  Shakir, that the doors will have key locks (see minutes item 04.01). He further explained: as inmates will probably clean the [administrative] building the door cannot have a standard panic bar. In the US a difference is made by the  fire department for prisons.

     But for these doors to function as fire escape doors also used by inmates they have to open up in a safe outdoor area with the same security level as the housing units. A simple fenced off area is not enough for this purpose.

3/4. Sally port of the kitchen and at the vocational building.

    These sally ports should be controlled by cameras monitored from the central control room in the administration building. Security electronics (monitoring/cameras) are explicitly excluded from the contract with the exception of four electric locks at the central control entry area.

    5. Porters lodge.

From the start of the project the government representatives expressed their concerns about the distance between the porters lodge and the main entrance for the facility. These concerns remain.

    6. Locks of cell fronts.

The throw of the dead bolts of the locks of the cells does not appear sufficient, considering the possibility of forcing  the cell doors from the fixed steel frame.

    7. Security louvres in cells.

The attachment of the security louvres in the cells with spikes was intensively discussed in the project meetings. The Contract Management still has concerns about the security of the attachment, the water tightness of the louvres and the visual contact that exists from the cells with the area outside the facility.

    Conclusions

1. To request Wackenhut Corrections Corporation to give detailed accounts of the incident of the escape of six inmates from the facility on 24 March 2001, both in relation to the building design and operations.

2. To request from WCC a detailed report on security and safety issues of the facility, describing the suitability of the facility as a whole and the components in particular. This report eventually should contain recommendations on how to improve the building and its operations.

3. To have an independent security expert on correctional facilities screen the total facility on security issues and advise on extra measures to be taken to improve these. The Rijksgeebouwendienst from Holland could advise on the expert to hire.

4. To take temporary measures to control the facility with extra surveillance until final measures have been taken to improve the security of the facility.


Wackenhut’s quarterly reports

    PPRI has also seen copies of the WCC Interim Service Teams (IST) Quarterly Reports to the minister of justice. The first covers the period  1 October 2000 to 31 December 2000.

     It states: the first quarter of the IST project has been one of discovery, understanding and planning,  effectively laying a foundation for what is to follow. The second quarter will see the planning bear fruit and being further developed in readiness for implementation later.

     The report was based upon the CPTs recommendations of 1997 and 1999 and covered issues such as: staff training; incident reporting; prisoner programmes and classification; staff deployment; management; and  the fabric of the prison

    It noted that, to date, a total of approximately 160 officer/hours training has taken place on ... cell searching, prisoners supervision, non-violent crisis intervention, fire safety and coping with stress. Training will continue to feature as a high priority ...

     Serious incidents during the quarter included:

n three escapes from the half open barracks;

none suicide;

ntwo mass refusals to go to cells for lock up;

nan attempted escape by five prisoners;

nan attempted escape by two prisoners and subsequent discovery of cuts in cell bars in two further cells;

nsix instances of prisoners receiving injuries which required the attention of Health Care Services;

nfive incidents involving discovery of marijuana.

    The company also noted that: it is a matter of record that middle and senior managers have not operated effectively for some time.

 There has been a great deal of mutual learning which has subscribed to a range of marginal but important improvements in the prison ...

 

Network of informants developed

The companys second IST report covered the period 1 January to 31 March 2001. Wackenhuts director, John Hunter, stated that:

   During the past five months but particularly during the past three months, a rudimentary network of prisoner informants has been developed. Individual members of staff have contact with individual prisoners from whom they obtain information about what is taking place in the prison sub-culture. It has been as a result of this information that the full searches of cell units have taken place. In January we were provided with information sufficiently detailed to allow us to make the first find of firearms. During recent weeks the nature of this information has changed slightly to include allegations of corruption by named members of staff. It was this development which prompted us to seek to involve the police in investigating, which in turn led to the investigations by the Prosecutor Generals staff. We were delighted and gratified when the Minister decided to appoint a Commission of Inquiry into corrupt practice in  the prison. We shall provide them with our full support and co-operation.

    The report also noted  that:

nthe construction and renovation dates provided by Hensel Phelps International and quoted in the previous quarterly report have not been met;

nprisoners were able to occupy Houseblock One on 6 February and Houseblock Two on 15 March.;

nit seems inevitable that the first three dates [forecast  for the remaining new buildings, Houseblock Three, the kitchen, vocational building and administration building] will not be met;

ntraining courses on 15 different subjects have been attended by 319 employees

nthe quarter has seen a number of serious incidents. February in particular was turbulent;

 

Serious incidents reported included:

nnine full scale searches of prisoners living units with the detection of much contraband, including drugs, tools, prison-made weapons, factory manufactured hand guns, zip-guns and ammunition;

nfive incidents of cell bars being cut;

none incident when it is believed a shot was fired;

none incident of a prisoner firing two shots at another prisoner;

nseven incidents of prisoner violence against prisoner;

none incident of mass disorder involving a prisoner taking an officers keys and releasing other prisoners who then proceeded to damage the fabric of the building. Force, including chemical agents and the presence of a dog was necessary to bring the incident under control. No serious injuries were sustained by staff or prisoners.

none incident during which a visitor was detained in possession of marijuana. He was handed over to police;

none incident of a prisoner escaping from an outside hospital;

none incident of six prisoners escaping from the prison;

none incident of the uniformed staff walking out of the prison for five hours;

none incident of an officer being suspended as a result of an accumulation of information that he was bringing contraband into the prison;

none incident of disorder during which prisoners broke furniture and burned some clothing and other linen.

     Mr Hunter added : I cannot state definitively what has prompted the recent increase in dangerous behaviour. However, I believe that prisoners are unsettled by impending and implemented changes. I believe they perceive their chances of carrying out illegal acts greatly reduced as they move to new and more easily managed accommodation. Finally, I believe they resent the manner in which their unacceptable behaviour is being confronted. There is no acceptable way forward which does not deal promptly and effectively with prisoner resistance to, or as a result of, these matters.

nThe CPT’s 1999 report on the Koraal Specht prison is on the internet: www.cpt.coe.int/en/reports/inf2000-ogen.htm#APPENDIXII

 

LESOTHO

 

    The Government of Lesotho is due to consider a proposal to build a 3,500 bed private prison complex. If implemented, it would become the world’s largest facility, ahead of the two 3,024 bed prisons currently under construction in South Africa (see PPRI #38, 36, 34, 30, 23, etc).

     PPRI has seen a copy of Report On The Proposed New Central Prison Complex for the Government of Lesotho dated March 2001.

     The 12 page report is by a consortium comprising Group 4 Correction Services SA (Pty) Ltd and the South African construction firm Murray and Roberts. Group 4 operates prisons in the UK and Australia and will soon open a new prison in South Africa.

    For observers of the prison privatisation process the report is helpful on several fronts:

nit offers an insight into the private sector’s marketing efforts in Africa;

nit reveals how the companies’ operations are presented in their best light;

nand it also indicates how both private prisons and private financing for the provision of new infrastructure are argued for: traditional public procurement methods are dealt with in two paragraphs while the private finance initiative warrants two pages.

    But the report also shows how fast such negotiations can take place and set the political agenda. This, in turn, can  make it difficult for a locally based alternative criminal justice strategy - particularly crucial in emerging economies - to be considered.

Extracts from the report are set out below.

 

Background

    On 25 August 2000, officials from the Department of Justice, Human Rights and Rehabilitation in Lesotho visited the [Group 4] prison currently being built for the South African government in Bloemfontein.

    Following this visit we received a formal request ... to put forward draft proposals for a 1,000 place facility to house sentenced prisoners and awaiting trial prisoners to be  be located in Maseru. These proposals were informed by a short outline brief supplied by the Director of Prisons.

    On 5 October representatives from this organisation visited Government offices ... and met with the Hon. Minister for Justice, Human Rights and Rehabilitation together with the Director for Prisons and other state officials. ... we gave a presentation on the proposed new facility ... these were left with the Hon. Minister and his colleagues for further consideration. We were asked by the Hon. Minister to continue the dialogue with officials in order to develop the proposals to the point at which they might be presented for Cabinet consideration.

    Since then, work to progress the proposals has continued apace and we have made a number of visits to Maseru. During these visits we have visited land that has been set aside for the prison.

 ... on 12 December 2000 we were asked to prepare a report addressing the following:

l general background and progress to date;

l design philosophy and operating procedures;

l funding and procurement options;

l next steps.

General background and progress to date

    In common with most other countries in Africa and, indeed, countries around the world, Lesotho is experiencing a severe problem of overcrowding in its prison system. This problem brings many challenges and difficulties ...arguably ... prisoners who in theory are innocent should experience better treatment, not worse, than those who have been convicted of breaking the law but the realities of the situation make this difficult, if not impossible, to achieve in a system currently under siege.

    Perhaps the most testing of this dichotomy is the external pressure brought to bear on governments by reference to, comparison with and criticism in respect of internationally agreed standards on human rights ... this pressure does not derive from the effects of overcrowding  on the treatment of prisoners per se but becomes intensified in the context of prison buildings no longer suited to the reasonable expectations of the day with many of them being crumbling relics, well in excess of 100 years old.

    This somewhat depressing scenario does not impact solely on the prison system itself ... the courts are also affected by the high number of prisoners remanded for hearings and trials.

... the most underestimated area of importance is the cost of imprisonment vis-a-vis its achievements in directing prisoners away from further offending when released ... the cost of imprisonment to the taxpayer is only fully  repaid in circumstances where the released offender refrains from further offending on his return to the community. In this respect, efforts to assist the prisoner to change his ways whilst in prison are an economic imperative which may be foolish to ignore...

l capacity:

the prison should be capable of holding up to 1,000 prisoners ...this figure was later revised following discussions around centralising all of Lesotho’s prison population within one prison complex ... in Maseru .... all existing facilities would either be closed, offered for alternative use, or, if commercially viable, sold off to private interests.

l accommodation:

prisoner housing would seek to improve upon existing conditions, would meet the legitimate concerns of international standards for the treatment of prisoners but would be consistent with society’s justified disapproval of criminal behaviour. Prison cells would not be overcrowded but would be sufficient in size to accommodate 10 prisoners each sleeping in a separate bunk bed...

l security:

security arrangements would be consistent with the type and category of prisoner; would not be over reliant on the extensive use of technology but rather would strike a balance between good staffing practices and proven systems ...

l regime:

facilities were to be provided for: education, the development of vocational skills; horticulture; domestic and industrial work for prisoners; programmes which address and correct the prisoners’ offending behaviour; adequate healthcare; catering; visitation; both contact and non-contact recreation; and sport.

l management and administration;

facilities would need to be provided for the effective and efficient administration of the prison complex ...

More precise details and consultation are needed to convert the above outline brief into a viable project.

Design philosophy and operating principles

    The prison complex will be designed to combine maximum operating efficiency with cost effective construction and running costs. The latest techniques and operating standards will place the prison on equal standing with the best examples of prison design and management in countries around the world. High levels of security and personal safety will be matched by the latest programmes in prisoner development. The achievement of internationally adopted standards in human rights will be central to the operating objectives. Existing prison staff will be re-trained by highly skilled and experienced prison trainers. Experienced management will approach its work with total commitment and professionalism. Staff development will be an ongoing feature of day-to-day operations.

    The current design brief for the prison complex is now at the stage where it can be presented for the consideration of officials ... their observations and general input will be important in bringing existing design development to the point of finalisation.

Funding and procurement options

 ... it must be acknowledged from the outset that procurement of a new prison system capable of housing some 3,500 prisoners of differing category presents significant spending decisions for any government. In this respect, two important considerations must be made. The first is the increasing costs, year on year, of maintaining existing prison facilities as they grow ever older and less in keeping with modern requirements. This applies not only to the physical upkeep, but also to the staffing of those establishments as prison officials find increasing difficulty in responding to new demands for improvements in prison treatment and regimes in general. The second is the economy of scale that can be achieved by the amalgamation of a number of smaller prisons into one larger and more economically managed facility. Further, if this rationalisation of the prison estate brings with it the possibility of disposing of the land on which the smaller prisons stand, then even better economy and financial benefit results.

    In looking to the government’s central spending budget, ministers must take account of many competing  demands as they address the needs of the people. Not everything can be afforded at the same time, no matter how desirable this might be. On the other hand, things which are important both to sustaining public confidence on the one hand and to meeting the pressures of international opinion on the other, cannot be put off continually.

    In this respect governments around the world are turning increasingly to the private sector in their efforts to meet as many of their service delivery and infra structural needs as possible. These procurement strategies are called by many different terms although essentially they all come down to the same thing: that of using private sector money to procure state assets the payment for which is then linked to long term service contracts.

    In the United Kingdom for example, this process - known as the Private Finance Initiative - has been used to procure billions of pounds worth of infrastructure, buildings and services ... perhaps the most successful example of this has been new prisons....other related services are also contracted to the private sector including  the transportation of prisoners to and from courts, the management of prisoners at court throughout their trials and the electronic monitoring of offenders in the community.

 ... to summarise, the purchasing of assets and services in areas traditionally restricted solely to government is increasingly being replaced by recourse to private sector skills, finance and resources and is rapidly becoming the procurement method of choice.

Procurement Options

    Three main funding routes are available:

... the traditional route through which the respective government department lets a tender for the construction of a new prison. Typically this tendering process will require the private contractor to give a price and programme for the construction of the prison based on a design supplied by the government ... almost without exception, this process results in out-turn costs being significantly higher than estimated costs.

    The second route is by means of a design/build contract. This route includes a requirement for the contractor to submit the design of the prison and part of his proposals. The outcome remains broadly the same with out-turn costs significantly higher than estimated costs.

    Both of the above examples require the government  to meet the entire burden of capital costs upfront from its annual budget. Moreover, once the defects liability period expires (usually after one year) the continuing costs of maintaining the buildings remain with the government forever.

    The third route is that of the public/private partnership. PPP is based on the following three principles:

l the decision to procure a service based on an asset owned by the private sector;

l the transfer of risk from government to the private sector;

l  the need to achieve ‘value for money’.

... with the prisons in the UK, Australia and South Africa, the private sector consortium actually meets all capital and financing costs for the design and construction of the prison. Rather than paying for the prison building itself, the government pays a daily fee for each prisoner place that the contractor makes available. If the place is not available for any reason then the government does not pay for that place.

... the daily fee takes account of the need for the contractor to repay the capital it has needed to borrow ... and also for the costs of the day-to-day operation and maintenance of the prison. In order to reduce the annual burden on the government, these fees are spread over a period of 15 to 25 years at the end of which term the prison becomes the property of the government.

    In order to rid itself of the traditional costs of procurement, under the PPP route the government looks to transfer as many of the risks as possible to the private contractor.

 ... the government is further protected in respect of this route of procurement in that these risks carry significant financial penalties if they are not met ...

... for the government to be able to justify this, or indeed, any route of procurement, it needs to be able to demonstrate that it is achieving true value for money. In respect of this particular route the following assessment criteria will be useful:

l comparison of the net present value of the project with traditional public sector benchmarks for similar projects;

l calculation of the added value in terms of improvements in the quality and delivery of the services it is looking to secure;

l  the value attached to the level of urgency for the speedy delivery of the new asset/service;

l the value it places on being able to divert capital to other priority areas.

 Next Steps

The consortium believes that ... the project could be started very soon and should be completed in a period of around 18-20 months.

 ... further meetings with officials will be necessary in order to determine the preferred procurement route. Should the government decide to adopt the third option, the consortium is confident that it can raise the required finance.

     We are pleased to have been given the opportunity to prepare this report for the Government of Lesotho and look forward to progressing this exciting project further.

 

 

AUSTRALIA

 

Tender for immigration contracts

    Australia’s department of immigration is developing a tendering process for Australasian Correctional Management’s (ACM) contract to run the nation’s six immigration detention centres (see PPRI # 40-36).

    The government is claiming that the competition is  to  ensure best value for money and not because of the series of riots, escapes, allegations of mistreatment and other problems that have plagued some of the centres.

    The company’s contract is not due to expire until December 2008 and the government has turned down ACM’s offer to  continue for a further three years.

    On 25 May 2001, the Australian Labor Party’s shadow immigration minister said on the PM radio programme  that, if the party wins the next election, taking the centres back into public operation “could well be an option.”

n Corrections Corporation of Australia Pty Ltd (now AIMS, see PPRI # 38) has lost its legal challenge to the department of immigration and multicultural affairs’ (DIMA) 1997 tendering process that resulted in ACM being awarded the contract to run immigration detention centres and provide escort services (see PPRI #39).

    CCA had claimed that ACM’s bid did not comply with the criteria set out in the government’s request for proposals.

    The company also alleged that DIMA had made a number of false representations to induce CCA to participate in  the tendering process.

 But the Federal Court of Australia denied CCA’s claims and ordered the company to pay the government’s undisclosed costs.

Corrections Corporation of Australia Pty Ltd v Commonwealth of Australia, Court citation [2000]FCA 1280, reported in Australian Trade Practices Reports ¶41-787

 

ACM ‘losing money’ on contract

    Within weeks of Australasian Correctional Management (ACM) retaining its contract to operate the Junee Correctional Centre in New South Wales, staff took industrial action over the introduction of 12 hour shift arrangements in May (see PPRI # 40, 38 and 35).

     ABC News reported on 24 May 2001 that, at an Industrial Relations Commission hearing, the company claimed that it was losing money on a new contract to run the facility.

    The commissioner was said to be “very disappointed” that ACM did not adhere to her recommendations for roster changes and she has ordered an arbitration hearing for the end of June to resolve the dispute.

 

Death #12 at Arthur Gorrie

    Twelve prisoners have died from unnatural causes at the Australasian Correctional Management-run Arthur Gorrie Correctional Centre  in Brisbane, Queensland since it opened in 1993. Most of the deaths have been by hanging. State corrective service department figures show that, over  the same period, there have been 46 deaths in the state’s 12 publicly run prisons.

    Following prisoner Dennis Fountain’s suicide at Arthur Gorrie  in May 2001, Karen Fletcher, the co-ordinator of Prisoners Legal Services, urged the state government to hold a full and open inquest.

    She told the Brisbane Courier 18 May 2001 that she had to use the Freedom of Information Act to obtain a copy of a report into the 1993 suicide of prisoner Brendan Law at Arthur Gorrie. That process took seven years.

 

 

ACT: public ownership but...

    The Australian Capital Territory Government (ACT) has opted for public financing and ownership of a new 480 bed prison complex (see PPRI # 38, 35, 30 and 25). The government’s preferred site, at Symonstown, south west of Canberra, has not yet been approved.

    A government media release of 30 May 2001 states that “the analysis carried out for the government shows that contracted operations, rather than public sector management, will give better outcomes at lower cost. However, a decision on the operating model is still being considered” ... “the ACT government will use its healthy financial position to borrow funds for the capital  works.”

    The estimated capital cost is A$110m with the running costs likely to be between A$16m and A$18m.

The facility will be privately built and  should open in 2004. It will then no longer be necessary for ACT prisoners to be sent to prisons in New South Wales.

n Consultants Rengain P/L were commissioned to advise the government on its prison procurement strategy. Rengain’s report is on the internet at: www.cs.act.gov.au

 

UNITED STATES

 

Sodexho sells stake in CCA

    Sodexho SA announced on 30 May 2001 that it is selling its eight per cent stake in Corrections Corporation of America (see PPRI #40 and 37). So far, the buyer’s identity has not been revealed.

     Sodexho also stated that it has established a corporate policy with regard to providing services to prisons. The company:

nwill provide services to prisons only in those countries which are established democracies, where the death penalty is illegal and which have rehabilitative policies for inmates;

nwill not own any prison or jail facility;

nwill not provide services requiring our employees to carry firearms.

    According to the company, the services it provides to 17 prisons in Europe and Australia represent less than one per cent of the company’s consolidated revenues.

 

A stock analyst’s view

    “We believe troubled economic times favour the  industry,” notes James MacDonald in his latest report on what he calls the ‘offender management’ industry in the United States.

    His views include:

nWhile the industry is experiencing a profits squeeze, looking ahead we see slackening labour markets and a profit margin recovery. While state prisoner growth has slowed and we expect federal opportunities to provide the bulk of new bed wins in 2001, in the intermediate term we also expect to see at least a modest acceleration of state prisoner growth rates due to economic conditions.

nWe believe many stock valuations can recover an additional 20 per cent to 30 per cent on current earnings power, assuming a modest amount of positive news. Company valuations in 2000 reached lows that clearly questioned whether they would remain viable. We believe this was a market overreaction to the specific problems of industry leader Corrections Corporation of America.

nWe expect two major developments to improve the capital shortage problem... first, the federal government has issued new guidelines allowing the Federal Bureau of Prisons to enter into long term contracts. Second, we think we may finally see a completed sale-leaseback transaction which could provide a blueprint for industry financing. In the longer term, over the next several years we expect the financing pendulum to swing away from private finance and back towards municipal finance of state facilities.

nWe believe the industry has been overlooked by institutional investors because no industry player currently has an equity market capitalisation above $500m. Over the  next several years we are looking for a leader to break the ... barrier and bring interest back to the industry.

Offender Management: 2001, James R. Macdonald, First Analysis Securities Corporation, Sears Tower, Suite 9500, 233 South Wacker Drive, Chicago, Illinois, 60606. www.firstanalysis.com

 

 

RECENT PUBLICATIONS

 

What future for Public Services? Private Finance Initiative and Public Private Partnerships, published by the Centre for Public Services. The full report is only available on the CPS website: www.centre.public.org.uk/briefings

Centre for Public Services, 1 Sidney Street, Sheffield S1 4RG, England. Tel: +44 114 272 6683. Fax: +44 114 272 7066  Email: ctr.public.serv@mcr1.poptel.org.uk

This new report investigates the impact of the growing trend of using Private Finance Initiatives (PFI) and Public Private Partnerships (PPP) to fund public services both in the UK and abroad. The report explains the claimed rationale behind these initiatives and highlights 25 reasons to oppose PFI.

 

The General Agreement on Trade in Services: Report of a Seminar held by the World Development Movement on the  World Trade Organisation’s General Agreement on Trade in Services (GATS) on 29 March 2001. WDM 25 Beehive Place, London, SW9, England, SW9 7QR. Tel:++ 44 20 7737 6215.

www.wdm.org.uk

This report explains the broad coverage of GATS and the potential threat to public services. It discusses key issues and also lists online resources.