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The Prison Industrial Complex: Biased, Predatory and Growing

In this exposé of America’s prison system, DiversityInc examines the rapid growth of privately run prison operators and what is fast becoming the next dark chapter in the ever-expanding prison industrial complex: immigrant detention. What are the racial implications? And why has anti-immigration sentiment helped private prisons make a fortune?

The fastest growing form of incarceration in the United States is immigration detention. And the biggest benefactor of this increased enforcement of border and immigration laws is the very profitable and politically connected private-prison industry.

This story examines the dramatic growth of privately run prison operators and the next dark chapter in America’s prison industrial complex: immigrant detention. As the federal government increasingly turns to corporate America to punish and hold its detainees, we examine the racial and ethnic disparities produced by the boom in the U.S. prison population and the role the industry plays in exerting political pressure on lawmakers to encourage not only a shift to privatization but harsher and longer sentencing guidelines.

Between 2003 and 2010, Nashville, Tenn.–based Corrections Corporation of America (CCA), the giant of the industry that controls roughly half of all private-prison beds in the nation, spent $14.5 million lobbying the Department of Homeland Security, U.S. Immigration and Customs Enforcement (ICE), the Department of Justice, the Office of Budget Management, the Federal Bureau of Prisons, and both houses of Congress.

Andrea Black, coordinator for Detention Watch Network (DWN), which represents immigrant-advocacy groups, says, “DWN has questions about the role of the private-prison industry and its lobbyists in shaping current immigration detention policies.”

In less than a decade, the country’s punitive crackdown on undocumented immigrants and the unprecedented demand for bed space by federal immigration authorities has been nothing short of a bonanza for private-prison operators such as CCA and its chief competitors GEO Group and Cornell Companies, which are merging. (Click here to see a chart of these industry leaders.)

How did this come about? In 2001, Steve Logan, then-CEO of Cornell, fielded a question from a Wall Street analyst during an investor conference call wondering what impact the Sept. 11, 2001, terrorist attacks would have on his company’s bottom line.

“I think it’s clear that with the events of Sept. 11, there’s a heightened focus on detention, both on the borders and within the U.S. [and] more people get caught,” Logan told the audience. “So that’s a positive for our business. The federal business is the best business for us. It’s the most consistent business for us, and the events of Sept. 11 are increasing that level of business.”

His response was prophetic. Strip away the emotions, the questions of justice, the callous and racial political wrangling, and Arizona’s tough new immigration law—SB1070, which gives police broad authority to arrest and detain anyone they suspect of being undocumented—means one thing for private-prison operators: more demand for immigration detention beds and a steady flow of inmates to fill them.

On July 6, 2010, the U.S. Department of Justice filed a lawsuit to block the state of Arizona—a border state that’s a major gateway for undocumented immigrants from Mexico—from using police-state tactics to crack down on undocumented immigrants crossing the border. But the fractious debate is spreading: Oklahoma, Texas, Utah, Maryland and Colorado are now considering tough immigration laws of their own on the heels of Arizona’s efforts.

And in the topsy-turvy world of the private-prison industry—where societal ills, like recidivism, crime and recessions are touted as “good for business”—this kind of news makes shareholders and investors very happy.

Booming Detainee Population

In 2009, ICE—a division within the Department of Homeland Security (DHS) responsible for enforcing immigration law—had 387,790 immigrant detainees in custody or supervised, more than twice the number in 2003 when ICE was created and the crackdown on immigrants began in earnest.

All told, the number of immigrants in detention has climbed from around 5,000 in 1994 to more than 30,000 last year.

A Detention Watch Network briefing to the U.N. Special Rapporteur on human rights notes that “at an average cost of $95 per person/per day, immigration detention costs the U.S. government $1.2 billion per year.”

ICE officials say it costs about $175 a day to detain someone at Elizabeth Detention Facility in New Jersey. They refused to say how much ICE pays CCA.

For private-prison corporations, which provide most of the prison beds that house this booming detainee population, all this new business since Sept. 11 has translated into record revenue and stock prices. Since 2000, the number of federal inmates held in privately run prisons has climbed 114 percent, while the number of state inmates held in private facilities has increased by 33 percent.

Six states house at least 25 percent of their prison population in private facilities. They are New Mexico (46 percent), Montana (36 percent), Hawaii (35 percent), Vermont (34 percent), Alaska (29 percent) and Idaho (29 percent), according to CCA’s 2009 annual report.

“Between 2007 and 2009, when earnings for the S&P 500 dropped by 28 percent, ours grew by 18 percent,” said Damon Hininger, the chief executive officer of CCA, during an investor conference call in May.

Federal Government to the Rescue

In the late 1990s, the private-prison industry was on the verge of bankruptcy. Speculative over-building had left many of these companies over-leveraged, debt-ridden and bloated with thousands of empty beds. A series of highly publicized scandals, lawsuits and fines over human-rights violations, including the use of attack dogs, physical and sexual abuse and poor healthcare at a number of facilities, prompted many states to pull the plug on their private-prison contracts. Investors on Wall Street sold their shares en masse.

In its 10-Q annual filing back in late 2000, CCA’s stock was trading at a low of $1.15 and its accountants expressed “substantial doubt” about the company’s ability to continue.

But today, business is back on track, thanks largely to immigrant detention: In the first quarter of 2010, it earned $1.7 billion in revenues, 40 percent of it from contracts with ICE, U.S. Marshals Service and Federal Bureau of Prisons.

Today, almost 9 percent of inmates are housed in private facilities, and private-prison operators say they are capturing an increasingly larger share of the incremental prison-population growth every year.

During a recent investor conference call, Hininger noted that in 2002, only 6.8 percent of the incremental growth in the prison population was being funneled into the private prison system. In 2008, they are capturing 72.4 percent.

A Growing Backlash

As the industry grows, so too does a backlash—from critics who argue that private prisons are morally wrong, mismanaged and unsafe. Critics say that human-rights violations and physical and sexual abuse of inmates flourish in privately run prisons and detention centers because they are closed to outside scrutiny, allowing guards and officials to act with impunity. Immigration detainees are particularly vulnerable because of language barriers and fear of deportation.

“The condition and terms of immigration detention in the U.S. are equivalent to prison where freedom of movement is restricted, detainees wear prison uniforms and are kept in a punitive setting,” according to the Detention Watch Network briefing to the U.N. Special Rapporteur.

This is the case even though under U.S. law an immigration violation is a civil offense—akin to a traffic violation.  The companies counter that they are living up to their contractual obligations and continue to win new contracts because they run their prisons well and treat prisoners fairly.

Several weeks after DiversityInc submitted questions in writing to CCA officials, the company responded in writing. Steve Owen, a spokesperson for the corporation, wrote that CCA operates “safe and humane detention facilities in a manner that respects the dignity of the detainees and adheres to federal ICE detention standards.”

“In addition to strong oversight from government officials—who have full access to our prisons and detention centers—our facilities are also audited and inspected regularly by independent teams of professional experts,” he wrote.

A similar request from DiversityInc to GEO Group was rejected. Because of its merger with Cornell, Pablo Paez, GEO’s director of corporate relations, says neither firm could “comment beyond the information that is available through our public filings and statements.”

8 Comments

  • Anonymous

    Thank you so very much for bringing attention to this growing problem. I have submitted many posts to CNN ireport regarding the prison moneymaking-profiteering from misery situation in America’s prisons as well as the punitive nature of American Justice which falls mainly to minorities. Kentucky, adjacent to my current home in Cincinnati, had 30% black prison population with only 9% of the population being black. I’ve witnessed the discrimination throughout the courts and jails over the past 5 years and someone really needs to highlight this and continue hammering on it until change comes. It is as if no one is challenging them. Minorities are more likely to be stopped, more likely to be charged and with high charges than whites in the same set of circumstances, more likely to be convicted, more likely to receive harsher sentences, and less likely to be paroled. The statistics prove it. ICE is an even darker version as you say than the prison systems. The human rights violations are being reported outside the U.S. Lack of food and water, etc. Pls continue reporting and thanks very much for bringing attention to this.

  • Anonymous

    Oversight should be done a Commission of private citizens with no ties to the industry.

  • Thank you for a most enlightening article. I had no idea the private prison industry was so huge.

  • Anonymous

    I wasn’t awared of the extent of privately owned and run prisons. You just think of “prison” and only hear about the state and federal facilities. Big brother has many siblings/

  • Anonymous

    So, like Chrysler and some others, the private prison companies are now on welfare. We are not safer and crime is not reduced, but millions is being made from the suffering of minority populations with no one toadvocate or assist their pathology. Perhaps I am being harsh – but it sounds like slavery again for African-American males, forced farm work for Hispanics, forced railroad building for the Asians and as American as cherry pie. The police and courts help feed the beast so it also smacks of ethnic cleansing. What is sad is that culturally, as during slavery, the communities cooperate with their own destruction by building cultural support around the actitivies that feed it, i.e. gangs and gang warfare. However, until those same communities stand up and protest and fight against the system of it, and, until the people that work in the system, many of whom are people of color themselves, stand up and demand right doing – it will continue. What is the saying? “Evil triumphs when good men do nothing.” Sad. It is nothing but genocide for profit – it started in the 70′s with disparate sentencing for “urban” type crimes to make sure Black males would not rebel again and form groups like the Panthers and in true capitalist fashion, someone has discovered a way to profit from our pathology. It’s the American way.

  • Thank God someone has read my mind and started to bring to light these Edwardian tactics that Prison Officials have been using for quite sometime. The big businesses are found in due time belonging to many of Americas most elevated beautiful people living behind dirty money profiteered by misery. The immigrant detention schemes are geared to profit share and gain momentum for the stock holders at the helm. Most of the minorities that are detained are in the small percentage of people that have no one to stand up for them and their rights have already been taken. I have spent many years working in and around the Correction & Criminal Justice System and there is no ‘JUSTICE’ in the words ‘Just Us’ they are there for only one thing an that is to make money and to harm and emasculate as many males and raping and pillaging of women in there ranks. Hopefully this article fulfills some of the injustices that are being done to People in the name of America!

  • the US incarceration industry is deliberately maintained in violation of the Human Rights, to perpetuate the injustice, inequality, slavery and genocide,
    that catering to completely corrupt and criminal judicial system and ongoing gualg economy, for unfair and illegal capitalization from slave labor of defenceless hostages of the prison system….

  • i appreciate you sharing this incredibly important work.
    the only thing left to be put in place is broad and publicly accepted use of the prisoners as a cheap labor force … THEN we’ll be right back to what Douglas A. Blackmon explored in… his book _Slavery by Another Name: The Re-Enslavement of Black Americans from the Civil War to World War II_

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