CONTENTS

 

Australia

United States

United Kingdom

Corporate Watch

 

Private prospects for 1997

Prison populations around the world continued to increase in 1996 and that trend is likely to continue in 1997. As governments face the conflicting demands of cutting spending while being seen to be tough on crime, privatisation will continue to be promoted as a solution. In the coming year the debate about whether prison works, whether private or publicly run, will become sharper.

In the short term, the number of prisoners held in private prisons and immigration detention facilities will increase. While it is hard to predict exactly how far the global expansion plans of the leading corrections companies will be accomplished, their immediate future in the US, Australia and the UK is assured. Only dramatic political shifts accompanied by massive compensation payments to operators - both of which are out of the question - would change this situation.

These are the countries which have the most privately run prisons and where contracts for 20 and 25 years have been awarded. New facilities are under construction and will open in 1997 and 1998.  At around 20 per cent, Australia still leads the world for the proportion of prisoners held in private prisons.  In the state of Victoria alone, by the end of 1997 over 45 per cent of prisoners will be in three private prisons, one of which, the Metropolitan Women's Correctional Centre, opened in 1996.

In England and Wales, 1996 saw the award of a third 25 year finance, design, build and manage contract for a prison; the renewal of a 1992 contract to run Wolds (the UK's first privately run prison); and completion of the privatisation of the prisoner escort service. By the end of 1997 over 3,000 prisoners, some five per cent of the total population, could be in privately run prisons. Meanwhile, the market testing of existing prisons was abandoned. The Scottish Prison Service identified a site for its first private prison and the tendering process will commence in 1997.

A general election early in 1997 could have an impact on prison privatisation in the UK. If the Tories win, it will be business as usual. If Labour wins, it has pledged to honour existing prison contracts but not offer any new ones. The fine print of this pledge has not been seen.

US still two per cent

Despite a doubling of its prisoner population in the last ten years, and a significant increase in contracts for private prisons awarded at state, county and municipal level in 1996, the US still has under two per cent of its prisoners held privately. Private facilities for adults exist in 18 states. Texas has the most with 38 of the 124 private jails open or expected to open soon and  23,000 of the 74,000 private places. At 5,900 Florida has the second highest private prisoner  population.

In 1996, the leading US prison operator, Corrections Corporation of America, increased its bed capacity by some 10,000 and won contracts in five new states and the District of Columbia. All three of the largest US companies raised new capital to finance their anticipated new year expansion.

Congress has now  mandated the Federal Bureau of Prisons to embark on privatisation, despite the Bureau's reservations, and the first two privately run Federal prisons will be in California and could open in 1997.

It is expected that in the US the private sector will expand further into provision for juveniles.

In Canada, the Ontario government will open a private boot camp in early 1997 and plans for five 'superjails' will get underway, although the full extent of private involvement has yet to be announced. New Brunswick's Miramichi youth facility, financed and designed by Wackenhut will open. In Nova Scotia, where the planning of a new corrections system has been privatised, a decision is awaited as to how much will eventually  be in privately run.

In New Zealand contracts for a new prison in Auckland could be awarded in 1997. The South African government has embarked on the private finance of new prisons and Panama is expected to launch its private prison programme with the passing of enabling legislation.

In 1996, Brazil’s National Council for Criminal and Penitentiary Policy voted against privatisation. Financial and political obstacles could undermine the potential for private prisons elsewhere in Central and South America.

Within the European Union, notwithstanding programmes for state asset sales, cuts to public services and welfare and the presence of companies such as Group 4, Securicor, Sodexho (which partly owns CCA) and Wackenhut, governments are less likely to privatise prisons in the short term. France's programme of 'prisons hybrides' (state employed prison officers but all other services contracted out) will continue. The contracting out of immigration detention centres, which already exists in England and Germany, could be extended.

Eastern Europe is regarded by prison companies as a huge potential market with criminal justice systems undergoing reforms. But there is concern over political stability and the lack of finance in the region.

Religious organisations in the East and West want to expand from just providing pastoral services to running  entirely  faith-based non-profit prisons.

Other services

        1996 saw an increase in the privatised planning of future correctional needs  and the concept of public/private partnerships. There was also growth in electronic monitoring and the provision of privatised food, health care and prisoner escorting services as well as other corrections department functions. These trends are likely to continue  in 1997. The companies  still regard all aspects of  criminal justice systems as their potential market.

Performance balance sheet

 In 1996, contracts became more sophisticated  and  performance indicators  changed. Commercial  secrecy over contracts and operations was  maintained, but it was still possible to confirm that the general performance pattern of private prisons in England and Australia continued. On opening, there are numerous problems for staff and prisoners which tend to be resolved after a year to 18 months. In England, the validity of official figures about comparative cost savings was disputed.

In the US, scrutiny of  new prisons was not  as close as in England or Australia so  public knowledge was generally limited to media headlines about escapes, disturbances and corrupt officials, both private and public. The General Accounting Office (GAO) report on US prisons found that no conclusions about cost savings or quality of service could be drawn. This became the focus of a heated debate.

Overall, there is still no consensus that  private prisons fully live up to their claimed superiority. Arguments over ethics, legitimacy and accountability will continue, as will the need to monitor developments.

 

 

AUSTRALIA

Row over women’s prison

Allegations  of drug use, violence, inadequate security, low staffing levels and high staff turnover at Victoria's Metropolitan Women's Correctional Centre have been detailed in a report by a former prison officer. The prison, which opened last August, is run by Corrections Corporation of Australia.  The allegations include:

n 11 operational staff as well as administrative and nursing staff had left because of safety concerns and poor working conditions.

n Costs had been cut to the point where security had been compromised, resulting in officers being assaulted.

n Despite the government's intention that the prison would be drug free, up to three quarters of drug tests carried out on prisoners have resulted positive.

n Prisoners are listed as working when they are not, to make it look as if the prison has 100 per cent employment.

n Management has abused prison officers in front of prisoners and junior staff, undermining their authority.

The company has rejected the allegations while the Victoria government has said that, as the prison is run privately, it would not be appropriate to comment on day to day operational issues.

The Justice Department has also refused an application under the Freedom of Information Act for public access to the prison contract. “If disclosed, this material will be likely to expose the agency and the private operators to disadvantage,” it said.

 

Running from Group 4

Following the escape of two prisoners working outside the perimeter fence at Group 4-run Mt. Gambier prison in South Australia, local residents  have demanded that the company should be penalised. It cannot be done. When Group 4 negotiated the contract they argued that  only escapes from within the prison  should carry a penalty and not escapes by prisoners working outside the perimeter fence.

 These escapes have prompted the government to review security measures for all prisoners sent on outside work programmes. It has been testing the feasibility of using electronic tagging to minimise the risk of escape.

 

 Queensland restructures

The state government is restructuring its corrections system. In 1997, the Queensland Corrective Services Commission will continue to deliver government policy but a new agency known as Queensland Corrections will be set up to compete with the private sector in building and running prisons. The Commission's role will be altered so that it also monitors public and private sector operations.    The restructuring came about partly as a result of the 1995 tendering exercise for the design, construction and running of  Woodford prison which resulted in an in-house win for the Commission. A subsequent examination of that process highlighted perceived conflicts of interest where the Commission was both purchaser and provider. The State Public Service Federation believes the restructuring is the first step towards full privatisation.

 

For the record

The Justice Department plans to contract out Victoria's criminal and prison records. Negotiations are currently underway with the Australian subsidiary of the Japanese electronics firm Fujitsu for the management of data, including ministerial correspondence and financial information for prisons, courts and tribunals.  However, the trade unions and the Labor opposition  have expressed their concern  about non-government employees having access to such sensitive information.

 

ACT reports

A new report on the future prison needs of the Australian Capital Territory calls for the existing remand centre to be closed and a combined prison and remand facility be built before the year 2000. Whether the new facility should be publicly or privately run has yet to be decided but the report favours the former, suggesting that there is no proof that the private sector could do the job any cheaper than a reformed public sector.

 

Junee improves

Junee Correctional Centre, New South Wales' only privately managed prison, opened in April 1993. It is managed by Australasian Correctional Management (Wackenhut). In 1994/95, a report by the government's liaison officer appointed to monitor the prison's performance cited a range of deficiencies in the prison's operation. However, the recently published report for July 1995 to June 1996 stated that there had been significant improvements.  Some minor changes  were recommended.

 

 

UNITED STATES

 

DC signs with CCA

    The District of Columbia has signed a contract with Corrections Corporation of America (CCA) for the company to buy and operate the 866 place medium security Correctional Treatment Facility. CCA will  buy the facility for $52m and lease it back to the District for $2.8m per year for 20 years. CCA regards the contract as "one of the most important opportunities in the company's history" and expects that it will generate over $22m in annual management revenues. The 375 existing staff, all members of a trade union, will be offered jobs by CCA.

The District of Columbia now plans to privatise six of the seven remaining components of its corrections system. Ultimately  8,000 of its  prisoners will be in private jails.

n By 1 April  1997, CCA will hold 1,500 DC prisoners in a new jail being built in Youngstown, Ohio. CCA formerly had a contract to hold DC prisoners in a Tennessee jail.

 

Operators to pay

The Texas Board of Criminal Justice is to limit its response to riots at, and escapes from, the 38 privately run jails in the state and charge companies if assistance is required. The Bobby Ross Group was recently charged $1,200 for a dog team used in tracking two escapees. The state of Arizona has also asked CCA  for reimbursement following an escape last October by six prisoners from the Central Arizona Detention Center.   CCA,  which contracts to keep 200 of Alaska’s prisoners at the facility,  may also be ordered to meet a bonding requirement to serve as  financial insurance against future escapes

 

Florida’s needs

The Florida Corrections Commission has estimated that it needs 35,000 new prison beds in the next five years and 72,000 over ten years. It has recommended that new facilities authorised in 1997 should be private.

 

 

UNITED KINGDOM

 

Monitoring progress

    A Home Office report on the electronic tagging trials taking place in three areas of England concludes that more work and many more experimental curfew orders are needed before the scheme can be expanded nationally.  Issues such as the future role of the Probation Service, how electronic tagging is costed and guidance for sentencers all need to be clarified.

 

    Some 236 offenders have been tagged so far, but the report only studied 83 cases. According to the National Association of Probation Officers, the 25 per cent failure rate of curfew orders is double that of probation orders. But the government is still keen to expand tagging  to the level the contractors, Geografix and Securicor, need for the scheme to be profitable.  This figure is thought to be 15,000 offenders at any one time.

 

Prison visitors

    Doncaster prison has attracted much international attention since it opened in 1994. Visitors have  included ministers and/or prison officials from Victoria, South Australia, Queensland, Germany, Czech Republic, Poland, Latvia, Bulgaria and Colombia as well as members of the European Prison Education Association.

CCA in control

   Corrections Corporation of America (CCA) is now the sole owner of UK Detention Services Ltd, the company which runs Blakenhurst prison. Both CCA’s former partners,  British construction firms,  have sold their shares.

 

Agency status warning  

    A new study of  UK government agencies, including the Prison Service, has found the model deeply flawed and warns of the consequences if the US copies it. The Performance of Government  Agencies in Britain: Implications for the USA. Available from: Centre for Public Services, 1 Sidney Street, Sheffield, S1 4RG, England. Tel: ++  44 0114 2726683.

 

CORPORATE WATCH

At the trough

  “While arrests and convictions are steadily on the rise, profits are to be made - profits from crime. Get in on the ground floor of this booming industry now.”

“Leading industry analysts will give expert forecasts on future growth potential for the private prison industry and how to make the most of investments today ... hear from over  50 prominent industry leaders ... as they share their insights on how to capitalize on a new era of opportunities...”

This was the juicy invitation to a three day World Research Group conference in Dallas  in December 1996. More evidence - if any was needed - that the privatisation of prisons and related services is first and foremost about creating new markets for big business.

 The $1,295 fee ($995 for government) drew 130 people from brokerage firms, investment banks,  securities firms, private corrections firms and service providers.

There were  presentations on investment opportunities by executives from Wackenhut, Correctional Services Corp, Avalon Community Services, Cornell Corrections, Youth Services International, Youth Track Inc, Children's Comprehensive Services and Res-Care Inc.

Analysis of the industry's stock market performance was provided by Janney Montgomery Scott, Montgomery Securities, First Dallas Securities, Stephens Inc, Rodman & Renshaw Inc and Oppenheimer & Co Inc.  The evaluation of risk and rewards of investing in correctional facility funding was offered by Wackenhut, Municipal Capital Markets Group, Stephens Inc, Merrill Lynch & Co, Standard & Poor's and MBIA Insurance.

Those present were also given forecasts of the growth potential of privatisation by representatives from the American Correctional Association, Florida Correctional Privatisation Commission, and the Texas, Arizona, Louisiana and Virginia departments of corrections. Giving an Australian perspective was Tony Wilson, head of  Victoria's New Prisons Project who, along with Tim Wilson of the English Prison Service and Fred Honsberger of  Nova Scotia's Correctional Services Division, also spoke about public agency assessments of contracting for facility management.

        Discovering the investment potential of service providers was in the hands of America Service Group Inc and EMSA Correctional Care on health care;  electronic monitoring was covered by Tracking Systems Corp and Intelligent Surveillance Corp; food services by ARAMARK and Correctional Foodservice Management; and telecommunications by Price Waterhouse Inc, Gateway Technologies Inc, Global TeL.Link, BellSouth Communications, AT&T and GTE.

The international corporate view was provided by Group 4, Securicor, Wackenhut, Atlantic Corrections Group and Management & Training Corp.

There were also “hands on correctional facility tours” and the chance to “network” with special guests from firms such as the Bobby Ross Group, Management & Training Corp, Civigenics, Correctional Systems Inc,  Corrections National Corp and Fenton Securities.

As Roy L. Chun of Standard & Poor’s advised: “A contract must be tightly written so inmates can’t be pulled out easily, leaving a prison without revenue. You want to keep it so that there’s not a lot the state can do if there’s a riot or unhappiness with the management.” Prudential  Securities’ James Thayer said: “I think the industry looks very attractive.” Michael Harling of Municipal Capital Markets told the operators to build jails without  contracts. “Build ... and they will come,” he said.

The event was so successful it is being repeated later this year.