Corporate Prison Leaders Tell the Truth About Themselves

FORM 10-K IS A TREASURE TROVE OF INFORMATION

Maggie Hassan made it pretty clear during her successful campaign for governor that she has no interest in turning over control of New Hampshire’s prisons to for-profit corporations. The majority of Executive Councilors elected in November feel the same. While the State is still formally reviewing proposals from four private companies to build and operate its prisons, the chance that a contract for prison operation would be drawn up in the next two years is about as close to zero as it can get. So why did at least two of the companies (CCA and MTC) bother to invest in lobbying services to defeat HB 443, a bill which would ban private prisons in New Hampshire?

For insight into this and other questions, the companies’ Form 10-Ks, filed annually with the Securities and Exchange Commission (SEC), are worth a read.

According to the SEC, “the 10-K offers a detailed picture of a company’s business, the risks it faces, and the operating and financial results for the fiscal year. Company management also discusses its perspective on the business results and what is driving them.”

Unlike the glossy Annual Reports for stockholders, Form 10-K comes without photos and with a more straightforward writing style. The SEC says, “Laws and regulations prohibit companies from making materially false or misleading statements in their 10-Ks. Likewise, companies are prohibited from omitting material information that is needed to make the disclosure not misleading.” In other words, they have to tell the truth, including reporting on what the SEC calls “risk factors.”

Efforts to ban private prisons, even in states that don’t have them and aren’t about to get them, are a risk to the business model of private prison companies.


Corrections Corporation of America

The Form 10-K for the Corrections Corporation of America says, “We are the nation’s largest owner of privatized correctional and detention facilities and one of the largest prison operators in the United States behind only the federal government and three states,” but acknowledges, “As the owner and operator of correctional and detention facilities, we are subject to certain risks and uncertainties associated with, among other things, the corrections and detention industry and pending or threatened litigation in which we are involved.”


Among the risks they face: “The operation of correctional and detention facilities by private entities has not achieved complete acceptance by either governments or the public.”

How’s that for understatement?

In fact, CCA states, “the movement toward privatization of correctional and detention facilities has also encountered resistance from certain groups, such as labor unions and others that believe that correctional and detention facilities should only be operated by governmental agencies.”


The GEO Group

The GEO Group, the industry’s #2, agrees. In its Form 10-K, GEO says, “Public resistance to privatization of correctional, detention, mental health and residential facilities could result in our inability to obtain new contracts or the loss of existing contracts, which could have a material adverse effect on our business, financial condition and results of operations.”

“The movement toward privatization of such facilities has encountered resistance from groups, such as labor unions, that believe that correctional, detention, mental health, and residential facilities should only be operated by governmental agencies… Increased public resistance to the privatization of correctional, detention, mental health and residential facilities in any of the markets in which we operate, as a result of these or other factors, could have a material adverse effect on our business, financial condition and results of operations,” GEO adds.

“Immigration reform laws are currently a focus for legislators”

CCA gets pretty specific about the “factors we cannot control” which consitute risks to their business:

“The demand for our facilities and services could be adversely affected by the relaxation of enforcement efforts, leniency in conviction or parole standards and sentencing practices or through the decriminalization of certain activities that are currently proscribed by criminal laws. For instance, any changes with respect to drugs and controlled substances or illegal immigration could affect the number of persons arrested, convicted, and sentenced, thereby potentially reducing demand for correctional facilities to house them. Immigration reform laws are currently a focus for legislators and politicians at the federal, state, and local level. 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. Also, sentencing alternatives under consideration could put some offenders on probation with electronic monitoring who would otherwise be incarcerated. Similarly, reductions in crime rates or resources dedicated to prevent and enforce crime could lead to reductions in arrests, convictions and sentences requiring incarceration at correctional facilities.”

This interest in a continued and growing supply of prisoners explains the industry’s interest in immigration reform. CNN reports, “Big tech firms and private prisons represent two industries vigorously lobbying to influence the scope of legislation aimed at overhauling U.S. immigration policy, a political priority in Washington.”

While CCA’s 10-K states, “Our policy prohibits us from engaging in lobbying or advocacy efforts that would influence enforcement efforts, parole standards, criminal laws, and sentencing policies,” CNN notes “Corrections Corporation of America, which builds detention facilities to house illegal immigrants, [has] contributed heavily to the campaigns of lawmakers who take tough stances on the issue.”

CNN also reports, “Sen. John McCain has changed his views on immigration over the years. For instance, the Arizona Republican first supported and later opposed a path to citizenship for illegal immigrants. He is also the fourth-highest recipient of campaign donations from Corrections Corporation of America.” Maybe it’s just a coincidence. Maybe not.

If corporate persons can be said to have a corporate conscience and a corporate mind, we can say that private prison companies are morally flawed. But we shouldn’t discredit their brains. They know how their bread is buttered, and they are acutely aware that we can cut off the butter by changing immigration laws, reducing sentences, and de-criminalizing offenses like possession of marijuana. We can take away the whole loaf by banning private prisons, as HB 443 proposes to do in New Hampshire.

HB 443 states that incarceration is an “inherently governmental” function and cannot be outsourced to for-profit companies like CCA, GEO, and the Management & Training Corporation (MTC). An amendment approved by the House Criminal Justice and Public Safety Committee would allow the Commissioner of Corrections to transfer prisoners to privately operated prisons on a temporary basis in the event of an emergency, such as a fire. With that amendment and a bi-partisan 13 to 5 “ought to pass as amended” recommendation from the committee, the bill is heading for a vote by the full House this week. Illinois and New York already have similar laws on their books. Since passage of HB 443 would have an “adverse effect” on their business model, we can expect the private prison companies to step up lobbying efforts in the Senate if the measure clears the House.

GEO makes another interesting point in its 10-K (page 31 if you want to look it up): “State budgetary constraints may have a material adverse impact on us,” they say. This is a curious observation given the fact that the private prison companies insist they save money for taxpayers. Yet, GEO says, “budgetary constraints in states that are not our current customers could prevent those states from outsourcing correctional, detention or community based service opportunities that we otherwise coul