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US: Profiting from Incarceration

by Jenni GainsboroughAlterNet
December 15th, 2003

Corrections Corporation of America (CCA), the nation's largest operator of prisons for profit, is celebrating its 20th anniversary throughout this year "at both the company's corporate Nashville office and at all of the more than 60 prisons, jails and detention centers under CCA ownership and/or management."

No word on whether the prisoners will be celebrating with them. However, a new report from Grassroots Leadership sticks a pin in their birthday balloon with a very critical look at the company's management of both its financial affairs and its contract prisons.

It is no secret that CCA has had its financial problems over the years. It came close to insolvency in the late 1990s after it accumulated heavy debt building expensive speculative prisons and restructuring itself as a real estate investment trust. After restructuring again, shaking up its upper management and spending $120 million to settle investor lawsuits, the company now claims to be in better financial shape. The report concedes that there has been some improvement but remains unconvinced about the company's long-term viability especially as many states are trying to reduce the size of their prison populations.

For those who are more concerned about the public policy implications of the CCA story than the ups and downs of its investors, the company's failures as a prison operator and its successes in influencing penal policy at the state and federal level are the most worrying areas of the report.

For-profit prison companies like CCA have always presented themselves as both cheaper and better than the traditional publicly owned prisons, staffed by state employees. However, from the mayhem and murders at the prison in Youngstown, Ohio, which eventually led to the company paying $1.6 million to prisoners to settle a lawsuit, to a series of wrongful death civil suits, and numerous disturbances and escapes, the authors document in detail a staggering range of failures of prison management.

failure to provide adequate medical care to prisoners;

failure to control violence in its prisons;

substandard conditions that have resulted in prisoner protests and uprisings;

criminal activity on the part of some CCA employees, including the sale of illegal drugs to prisoners; and

escapes, which in the case of at least two facilities include inadvertent releases of prisoners who were supposed to remain in custody.

Many of the company's problems are blamed on its labor policies. Because prisons are very labor intensive institutions, the only way a company like CCA can sell itself to government as a cheaper option than public prisons while still making a profit, is by using as few staff as possible, paying them as little as possible, and not spending much on training.

From the beginning, CCA has sought to depress its labor costs by keeping wages low and by denying its employees traditional (defined-benefit) pension plans. One predictable result of these policies had been understaffing and high rates of turnover at some of its facilities. For example, annual turnover rates at several CCA facilities in Tennessee have been more than 60 percent. Another, equally predictable, has been the opposition of public service unions to the spread of prison privatization. Criminal justice reformers, trying to reduce the use of incarceration in the U.S., don't normally find themselves allying with prison guard unions but in this fight they are all on the same side.

Despite this opposition, CCA has been quite successful in recent years in influencing the public debate and winning the support of legislators. Of course, it is not hard to win legislators when you back up your arguments with hard cash. The company spends hundreds of thousands of dollars during each state election cycle to try to gain access and build support for its projects. At the federal level, CCA has given more than $100,000 in soft money to the Republican Party since 1997 as well as political action committee contributions to individual members of key Congressional committees.

The presence of J. Michael Quinlan, the former head of the Federal Bureau of Prisons, among CCA's senior executives has surely helped the growth in its contracts with the Federal Bureau of Prisons, and the expectation of further expansion as more prisons for immigrants are planned. In its home state of Tennessee, CCA has enjoyed close relationships with many powerful public figures, including governors. And the for-profit prison companies have their own trade association lobbying for them on Capital Hill the Association of Private Correctional and Treatment Organizations (APCTO).

While all of that might be dismissed as no more than the typical business-building efforts of any company looking to make a profit for its shareholders, there are other more troubling aspects to CCA's behavior.

One has been its use of research from dubious sources to push its claims of superiority and cost-savings for the private sector. Much of it is produced by researchers who are either funded by the industry or are ideologically predisposed in favor of privatization. For example, Charles Thomas, director of the supposedly neutral Private Prison Project of the University of Florida who was widely quoted as an expert on prison privatization throughout the 90s, served on the board of CCA and received several millions of dollars in consulting fees from them.

More recently, a study published in the Harvard Law Review was touted as an independent academic study of privatization. None of its boosters, however, mentioned that the author, in addition to being a graduate student at Harvard, is associated with the Reason Public Policy Institute, a division of the Reason Foundation whose purpose is to promote the privatization of public services

.

Perhaps most controversial is CCA's close ties to the American Legislative Exchange Council (ALEC). ALEC is a powerful force in the promotion of the conservative policy agenda among state legislators. One of its major functions is writing model bills that advance conservative principles and working with its members to have these bills introduced. CCA has been a corporate member and a major contributor to ALEC and a member of its Criminal Justice Task Force. CCA executives have co-chaired the Task Force over many years. As a result of the model bills developed by the Task Force, ALEC claims credit for the widespread adoption of Truth in Sentencing and Three Strikes/Habitual Offender legislation. Through its support of ALEC, CCA is helping to create greater demand for its services as a result of changes in state policies that keep more people behind bars for longer periods.

Although this aspect of its work is not given a major emphasis in the report, it surely represents the most troubling impact of for-profit prison companies. With more than two million people behind bars and the highest rate of incarceration in the world, the U.S. certainly does not need companies with a vested financial interest in further growth influencing our justice policies.

As Grassroots Leadership's report so fully documents, CCA has little to be proud of in its 20-year-history. Unfortunately, the problems that have dogged it are unlikely to stand in the way of its growth, particularly at the federal level where its pro-privatization, pro-incarceration policies are mirrored by the current administration. Even at the state level, where the report optimistically suggests that declining prison populations will hurt the company, there are signs that cash-strapped state governments are again turning to the private sector to solve short-term problems without any consideration to the long-term impacts.

And even though CCA itself has pulled back from the international area after a number of well publicized problems, the model of prison privatization it developed is still being sold to nations in transition that can ill-afford either the social or economic costs associated with profit-driven prison growth.

CCA may believe it has much to celebrate. The rest of us have good reason to hold our applause.

Jenni Gainsborough is director of the Washington office of Penal Reform International.





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