09 February, 2007

dollars in the bars - the private prison industry - "the war on drugs has . . . become a war on immigrants"

Deepa Fernandes, "This Alien Life: Privatized Prisons for Immigrants":

As the government invokes national security to sweep up and jail an unprecedented number of immigrants, the private-prison industry is booming. In the aftermath of the September 11th attacks on New York, immigrants have become the fastest growing segment of the prison population in the U.S. today. In fiscal year 2005, more than 350,000 immigrants went through the courts. "A growing share of them committed no crimes while in the United States - 53 percent this year, up from 37 percent in 2001 - even though Bush administration officials repeatedly have said their priority is deporting criminals," the Denver Post reported.
The Clinton-era ushered in a private prison boom. Catherine Austin Fitts, in “Dillon Read & Co. Inc. & the Aristocracy of Prison Profits,” explains:

Paradigms of Republican vs. Democrat or Conservative vs. Progressive have been designed for obfuscation and entertainment. An endless number of philosophies and strains of religious and “holier than thou” moralism are really put on and taken off like fresh make-up in the effort to hide from view a deeper, uglier face. One person who may have described it more frankly during the Clinton years was the former Director of the CIA, William Colby, who writing for an investment newsletter in 1995 said:

“The Latin American drug cartels have stretched their tentacles much deeper into our lives than most people believe. It’s possible they are calling the shots at all levels of government.”

The Clinton Administration took the groundwork laid by Nixon, Reagan and Bush and embraced and blossomed the expansion and promotion of federal support for police, enforcement and the War on Drugs with a passion that was hard to understand unless and until you realized that the American financial system was deeply dependent on attracting an estimated $500 billion-$1 trillion of annual money laundering. Globalizing corporations and deepening deficits and housing bubbles required attracting vast amounts of capital.

Attracting capital also required making the world safe for the reinvestment of the profits of organized crime and the war machine. Without growing organized crime and military activities through government budgets and contracts, the economy would stop centralizing. The Clinton Administration was to govern a doubling of the federal prison population [See page 72, Prison Nation: The Warehousing of America’s Poor, edited by Tara Herivel and Paul Wright.].

The boom of course was bound to bust; it didn't last long. Fernandes continues:

In 2000, the industry was carrying more than $1 billion in debt and was violating its existing credit agreements. CCA [Tennessee-based Corrections Corporation of America, one of the nation's biggest prison companies] saw its stock plummet 93 percent and Business Week noted that the correction “industry’s heyday may already be history.”

At the time, the American Prospect, a national magazine, explained the decline:

“The private-prison industry is in trouble. For close to a decade, its business boomed and its stock prices soared because state legislators across the country thought they could look both tough on crime and fiscally conservative if they contracted with private companies to handle the growing multitudes being sent to prison under the new, more severe sentencing laws. But then reality set in: accumulating press reports about gross deficiencies and abuses at private prisons; lawsuits; million-dollar fines. By last year, not a single state was soliciting new private-prison contracts. Many existing contracts were rolled back or even rescinded. The companies’ stock prices went through the floor.”
Then came the the September 11th attacks on New York in 2001. The government began to target non-citizens with mass arrests during sweeps through immigrant communities, increased prosecutions of undocumented border crossers, and the use of immigration law to hold people while looking for criminal or terrorist charges against them. The INS was subsumed into a new agency named the Department of Homeland Security.
. . .

The DHS-run Special Processing Center is a massive one-stop-shop, where immigrants can be jailed, tried in an immigration court, appealed before an immigration judge, and ordered deported—all without leaving the self-contained complex. While DHS does not refer to its facilities as jails, the Special Processing Center in Florence [AZ] is ringed by concertina wire, surrounded by chain-link fences, with inmates locked into cells. They face zealous prosecution and in many cases are left to languish for weeks and months without trial or sentencing.

The complex in Florence is part of a 300-facility-strong network of immigrant incarceration facilities. The average time an immigrant is detained is 42.5 days from arrest to deportation. At $85 a day per detainee, that adds up to $3,612.50 per person. In 2003, DHS was holding 231,500 detainees, and the budget to cover this was $1.3 billion. Since 2001, the DHS budget for detention bed space has increased each fiscal year as has the number of beds. In 2003 there was more than $50 million slated for the construction of immigrant jails.
Corrections Corporation of America

A 2003 report by the DHS Inspector General forcefully condemned the treatment of immigrants inside various jails in it report, “The September 11 Detainees: A Review of the Treatment of Aliens Held on Immigration Charges in Connection with the Investigation of the September 11 Attacks.” Infractions included routine abuse of basic prisoner rights, mental and physical abuse, denial of health care and medical treatment, prison overcrowding, and a lack of working showers, and toilets.

Despite a long record of problems, CCA continues to promote privatization and win contracts. "The private prison industry, to increase the demand for its services, exerts whatever pressure it can to encourage state legislators to privatize state prisons," wrote Sharon Dolovich in the Duke University Law Journal. "[T]he industry is adept at lobbying legislators and targeting campaign contributions to promote its privatization agenda."

Indeed, some critics charge that the company's success is related to its deep rooted ties to elected officials. In addition to CCA's record of campaign contributions to the Republican Party since 1997, there are significant connections between executives and government officials. J. Michael Quinlan, former head of the Federal Bureau of Prisons, has been an executive at CCA for the past decade. CCA’s chief lobbyist in the state of Tennessee is married to the speaker of the house. And CCA is a member of the American Legislative Exchange Council, a conservative group that writes and pushes bills on policy such as sentencing guidelines.

For the second quarter of 2005, CCA announced that its revenue had increased three percent over last year, for a total of almost $300 million. CCA calculates that it expenditure of $28.89 per inmate, per day allows it to make a daily profit of $50.26 per inmate. Meanwhile, on July 1, 2005, the Bureau of Immigration and Customs Enforcement awarded CCA contracts to continue running the 300-bed Elizabeth Detention Center in New Jersey and the 1,216-bed San Diego Correctional Facility. Both of these contracts are for three years with five three-year renewal options. In 2005 CCA also secured new prison contracts with the Kentucky Department of Corrections, the state of Kansas, and the Florida Department of Management Services.

Business is good for CCA and the more people it stuffs into its prisons the better it becomes. "As you know, the first 100 inmates into a facility, we lose money, and the last 100 inmates into a facility we make a lot of money " CCA Chief Financial Officer Irving Lingo said on a 2006 company conference call.


On February 4, 1994, U.S. Vice President Al Gore announced Operation Safe Home, a new enforcement program at HUD. Gore was a former Senator from Tennessee. His hometown of Nashville was home of the largest private prison company, the Corrections Corporation of America (CCA). . . . Jeff Gerth and Stephen Labaton in the New York Times in November 1995 describe the political appointees in the Clinton Administration who were successful at overcoming the natural intelligence of the career civil service at DOJ:

“In the middle of last year, the White House sent its proposal to privatize prisons to the Justice Department, where it was greeted with a frosty response, according to officials involved in the discussions.

“To help overcome the resistance of senior officials at the Justice Department and the Bureau of Prisons, the plan’s architect at the White House, Christopher Edley Jr., asked Mr. Gore’s office to turn up the heat.

Mr. Edley, an associate director of the Office of Management and Budget, enlisted the aid of Ms. Kamarck, Mr. Gore’s senior policy adviser overseeing his government review. She then called her friend, Ms. Gorelick, the Deputy Attorney General, who oversees the day-to-day operations of the Justice Department.

“I convinced Jamie to do more of it,” Ms. Kamarck recalled.”

. . . Thanks to the successful efforts of the Clinton Administration to pass new crime legislation and ensure DOJ bureaucracy support for outsourcing contracts to run federal prisons to private prison companies—including a gush of contracts to Cornell from the fall of 1995 to the spring of 1996—Dillon Read’s Cornell stock purchased at an average price between $2-3 per share, was now worth $12 a share, a 400-600 percent increase. . . . In nine months, the Clinton Administration’s increase in contracts and acquisition of entities with contracts supporting 1,726 prisoners had literally made the company [Cornell]. The IPO reflected a stock market valuation of $24,241 per prisoner. What that means is that every time HUD’s Operation Safe Home dropped swat teams into a community and rounded up 100 teenagers for arrest, the potential value to the stockholders of the prison companies that managed the juvenile facilities and prisons was $2.4 million.]

Florida-based Wackenhut, a major private security company, has also received a great boost in the years since the September 11th attacks on New York. Its poor record has not undermined its ability to reap lucrative government contracts. Before 2001, Wackenhut, like CCA, had been at the center of all manner of inmate-abuse scandals: Guards were caught having sex with underage inmates, there were routine reports of extreme mistreatment of inmates, and there was even a disproportionately high level of deaths in their facilities.

Wackenhut CEO George Zoley has been flippant about the cases of abuse. After a CBS Television report exposed the repeated rape of a 14-year-old girl at a Wackenhut juvenile jail and two guards were found guilty, Zoley said, “It’s a tough business. The people in prison are not Sunday-school children.” Still more worrying was Wackenhut’s record with inmate-on-inmate killings, which, contrary to public perception, are not very common in America’s prisons. In 1998–99 alone, Wackenhut’s New Mexico facilities had a death rate of one murder for every 400 prisoners. For the same period in all U.S. prisons, the rate was about one in 22,000.

Wackenhut's most visible response was to change its name. Now as the GEO Group, it is still headed by George Zoley, and it continues to run the Wackenhut facilities and get new contracts. In 2005 the State of California Department of Corrections gave GEO the contract for the housing of minimum security adult male inmates at the 224-bed McFarland Community Correctional Facility estimated to generate $4.1 million in annual revenues. On August 8, 2002, Immigration and Customs Enforcement (ICE) awarded GEO a contract for the company's Broward Transitional Center in Miami. The contract has been extended through September 2008.

Under a 2005 ICE contract GEO also manages the Queens Private Correctional Facility, where it expects to reap $10.5 million in annual revenues. The Mississippi Department of Corrections also renewed GEO's contract for the continued management and operation of the 1,000-bed Marshall County Correctional Facility. Meanwhile, also in 2005, GEO announced a merger with Correctional Services Corporation (CSC) that will add approximately $100 million in revenue to GEO’s coffers. GEO is especially excited about the earning potential from CSC’s 1,000-bed expansion of its State Prison in Florence, Arizona.

GEO executives are overjoyed about the boom in business. In 1999, the feds farmed out less than 3 percent of beds; but seven years later, the number had reached almost one in five. "That's a remarkable turnaround," GEO Group CEO George Zoley told his fellow executives."And it's continuing to lead in that direction, that for minimum-security beds by the BOP (Bureau of Prisons) to house criminal aliens and illegal aliens by either the U.S. Marshal Service or the BOP or immigration service, they are turning to private companies.”

“I think we're in a new era that I could never predicted, really, this scale of acceptance by the federal government. We talked about it for many, many years, but we're finally on the verge of it... ." added Zoley.
Fitts describes how as the 1994Omnibus Crime Bill (which "implemented mandatory sentencing, authorized $10.5 billion to fund prison construction that mandatory sentencing would help require, loosened the rules on allowing federal asset forfeiture teams to keep and spend the money their operations made from seizing assets, and provided federal monies for local police") was pending, some investors realized that:

[t]he potential impact on the private prison industry was significant. With the bill only through the house, former Attorney General Benjamin Civiletti joined the board of Wackenhut Corrections, which went public in July 1994 with an initial public offering of 2.2 million shares. By the end of 1998, Wackenhut’s stock market value had increased almost ten times. When I visited their website at that time it offered a feature that flashed the number of beds they owned and managed. The number increased as I was watching it -- the prison business was growing that fast.
. . .

If you want to see a bi-partisan system at work, follow the money. In the middle of a Presidential election, a Democratic administration engineered significant equity value into a Republican firm’s back pocket. If you step back and take the longer view, however, what you realize is that many of the players involved appear to have connections to Iran Contra and money laundering networks. A surprising number of them went to Harvard and other universities whose endowments are significant players in the investment world. And as it turned out, while the U.S. prison population was soaring from 1 million to 2 million people and US government and consumer debt was skyrocketing, Harvard Endowment was also growing --from $4 billion to $19 billion during the Clinton Administration. Harvard and Harvard graduates seemed to be in the thick of many things profitable.
Prison companies . . . are able to save large amounts of money on labor practices that would illegal under any other circumstances. Inmate jobs in all prisons pay a pittance, but immigrant prisons are even worse. Because DHS guidelines mandate that non-citizen prisoners cannot earn more than $1 per day, the company gets janitors, maintenance workers, cleaners, launderers, kitchen staff, sewers and grounds keepers at almost no cost.

With the increase in prison beds for immigrants comes the pressure to fill them-- a scenario that has immigrant advocates extremely worried. Isabel García, attorney and human rights activist in Tucson, sees the drive to jail immigrants as fueling the same prison-industrial complex that first flourished with the war on drugs.

“The war on drugs has conveniently become a war on immigrants,” says García, “and there is a lot of money to be made in detaining immigrants.” The growing industry of incarcerating immigrants is facilitated by the tight connections between the private-prison industry and the federal government and the extent of the industry's powerful and well-funded lobby. García worries that the profit motive behind detaining immigrants will promote the criminalization of immigrants.
"Will" really should read has. Always has been. And of course, capital demands growth. Fitts:

Cornell Corrections [based in Houston] was created to take advantage of plans to privatize the government’s prison operations. The War on Drugs and its related mandatory sentencing were fueling an explosion in the U.S. prison population. The construction and management of new prison facilities was potentially big business for the construction industry -- firms like Brown & Root [now Halliburton's notorious subsidiary KBR, who constructed the detention facilities at Guantanamo Bay, prisoner of war camps in Iraq and has received contracts to build immigration detention facilities for DHS] who Cornell used to build their first detention center—and those who financed them -- like Dillon Read.
. . .

Prison stocks also are valued on a “per bed” basis—which is based on the number of beds provided and the profit per bed. “Per bed” is really a euphemism for people who are sentenced to be housed in their prison.

. . . for every contract Cornell got to house one prisoner, at that time, their stock went up in value by an average of $24,261. According to prevailing business school philosophy, this is the stock market’s current present value of the future flow of profit flows generated through the management of each prisoner. This, for example, is why longer mandatory sentences are worth so much to private prison stocks. A prisoner in jail for twenty years has a twenty-year cash flow associated with his incarceration, as opposed to one with a shorter sentence or one eligible for an early parole. This means that we have created a significant number of private interests—investment firms, banks, attorneys, auditors, architects, construction firms, real estate developers, bankers, academics, investors among them -- who have a vested interest in increasing the prison population and keeping people behind bars as long as possible.
It's a numbers game. So what's the projected worth of a war on immigrants?



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