Is all that glistens gold?
Before we allow a company's profits to determine how law enforcement arrests the citizens they are sworn to serve and protect, as well as judges sentencing non-violent offenders, let's review adverse factors concerning privatized jails and prisons.
On May 31 of this year, CCA ceased housing Bureau of Prison inmates at its Northeast Ohio Correctional Center in Youngstown after reports of quote, “mismanagement of the facility and mistreatment of prisoners.”
One citizen group concerned about the Youngstown CCA facility stated, “The culture of secrecy at private prisons leads to a lack of transparency and accountability to the public…. the for-profit prison business is bad for prisoners, prison employees, communities, and taxpayers.”
In 1997 CCA formed a REIT (Real Estate Investment Trust) as well as a separate operating company. Due to various factors, including what some describe as poor management decisions, the Prison Realty Trust (owned and operated by CCA) defaulted on its debt and the company’s stock dropped to under $1.00 and nearly delisted from the New York Stock Exchange. CCA shutdown the realty trust but faced shareholder lawsuits that alleged various corporate officers and directors had concealed information and made false and misleading statements. The suits were eventually settled for approximately $104 million in stock and cash. However, CCA is attempting to reenter the realty trust market and formed a new trust in 2013. Time will tell where this leads but CCA's 2014 Annual Report gives significant portion concerning their REIT and its risk factor.
CCA was for many years involved in the American Legislative Exchange Council, an organization of state legislators and corporations that drafted the basis for Arizona’s anti-immigrant bill SB1070 and that has consistently advocated for harsh sentencing and detention laws for illegal immigrants. Obviously, legislation that increases prison and jail populations is an increase in business for CCA. As a corporation, CCA is aware lower crime rates and relaxed sentencing on non-violent crimes are adverse affects on their bottom line. This is demonstrated by CCA’s own 2014 Annual Report to shareholders in which the company stated:
“The demand for our.… services could be adversely affected by the relaxation of enforcement efforts…. or through the decriminalization of certain activities that are currently proscribed by criminal laws…. Legislation has also been proposed in numerous jurisdictions that could lower minimum sentences for some non-violent crimes and make more inmates eligible for early release based on good behavior.”
Again, CCA's 2014 Annual Report goes on to state the safe and humane treatment of women and children being detained under the custody of ICE can hurt their profit. The report states:
“In September 2014, we (CCA) signed an amended agreement to provide safe and humane residential housing, as well as educational opportunities, to women and children under the custody of ICE, who are awaiting their due process before immigration courts. Providing this type of residential service subjects us to new risks and uncertainties that could materially adversely affect our business, financial condition, or results of operations.”
If you are not running a safe and humane facility what type of facility are you running?
Do the citizens of Hamilton County want this mind set to be in charge of running the County Jail?
More troubling is CCA’s own admittance of failure in awarding contracts to small businesses as well as minority businesses. Again, the company's own 2014 Annual Reports states the following:
“Certain jurisdictions also require us to award subcontracts on a competitive basis or to subcontract with certain types of businesses, such as small businesses and businesses owned by members of minority groups. Our facilities are also subject to operational and financial audits by the governmental agencies with which we have contracts. Federal regulations also require federal government contractors like us to self-report evidence of certain forms of misconduct. We may not always successfully comply with these regulations and contract requirements.…”
As a citizen I find that admission very troubling. The company informed their shareholders that compliance with self reporting misconduct, awarding contracts to minority owned businesses and locally small owned business, and passing audits may not occur. Is that a company you would like as your partner?
Further reading the 2014 Annual Report shows that CCA admits to its shareholders improper activities had been committed by the company which resulted in a $1.0 million settlement with the state of Idaho. A 2014 Associated Press article reports, “CCA officials acknowledged it had understaffed the Idaho Correctional Center by thousands of hours in violation of the state contract. CCA also said employees falsified reports to cover up the vacancies.”
CCA states to its shareholders:
“If a government audit asserts improper or illegal activities by us, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeitures of profits, suspension of payments, fines and suspension or disqualification from doing business with certain government entities. In February 2014, we reached an agreement to pay $1.0 million in compensation to the state of Idaho regarding contractual disputes related to staffing at the Idaho Correctional Center stemming in part from an audit by the Idaho Department of Corrections. In addition to the potential civil and criminal penalties and administrative sanctions noted above, any adverse determination with respect to contractual or regulatory violations could negatively impact our ability to bid in response to RFPs in one or more jurisdictions.”
Finally, policing tactics are changing. Recently the Times Free Press published an editorial endorsing the CCA takeover of the County Jail. Yet, they also published an editorial piece concerning Chattanooga Police Chief Fletcher’s first year in office. Chief Fletcher is pushing community policing and less arrests. A move embraced by city officials and community leaders quoted in the article. However, CCA makes its profits on high capacity prisons and jails. For CCA to make money police officers must keep the jail full. That is a stark contrast to Chief Fletcher’s community policing. You can’t hope for fewer arrests and a privatized jail. The two are not only incompatible with one another they are mortal enemies. As stated in CCA’s 2014 Annual Report reductions in crime is a risk factor for their company. CCA contracts normally state a capacity rate ranging from 90 percent to 100 percent for their facilities. But law enforcement and civic leaders are embracing community policing which lowers arrests and therefore jail occupancy.
Housing prisoners will always be an expense. CCA will not run the facility for free. Yet, allowing a company to run this important necessity has shown CCA sacrificing safety and humane conditions in order to increase their bottom line profits. The company's own 2014 Annual Report shows the company admitting it mislead government officials and communities while increasing fees paid by taxpayers. The report shows the company is dependent on law enforcement and judges arresting citizens and sentencing them to long sentences in the CCA prisons and jails even for non-violent crimes.
Our county mayor and Commission are considering expanding Hamilton County's partnership with this company. Who would benefit? Not the citizens of Hamilton County.
Do we need a new jail? Yes. Do we need CCA to run it? No.
All that glistens isn't gold.
George Jackson
International Brotherhood of Police Officers Local 673
Hamilton County President