To be profitable, private prison firms must ensure that prisons are not only built but also filled. Industry experts say a 90-95 per cent capacity rate is needed to guarantee the hefty rates of return needed to lure investors. Prudential Securities issued a wildly bullish report on CCA a few years ago but cautioned, “It takes time to bring inmate population levels up to where they cover costs. Low occupancy is a drag on profits.” Still, said the report, company earnings would be strong if CCA succeeded in ramp(ing) up population levels in its new facilities at an acceptable rate”.
“(There is a) basic philosophical problem when you begin turning over administration of prisons to people who have an interest in keeping people locked up” notes Jenni Gainsborough of the ACLU’s National Prison Project.
Private prison companies have also begun to push, even if discreetly, for the type of get-tough policies needed to ensure their continued growth. All the major firms in the field have hired big-time lobbyists. When it was seeking a contract to run a halfway house in New York City, Esmor hired a onetime aide to State Representative Edolphus Towns to lobby on its behalf. The aide succeeded in winning the contract and also the vote of his former boss, who had been an opponent of the project. In 1995, Wackenhut Chairman Tim Cole testified before the Senate Judiciary Committee to urge support for amendments to the Violent Crime Control Act — which subsequently passed — that authorized the expenditure of $10 billion to construct and repair state prisons.
CCA has been especially adept at expansion via political payoffs. The first prison the company managed was the Silverdale Workhouse in Hamilton County, Tennessee. After commissioner Bob Long voted to accept CCA’s bid for the project, the company awarded Long’s pest control firm a lucrative contract. When Long decided the time was right to quit public life, CCA hired him to lobby on its behalf. CCA has been a major financial supporter of Lamar Alexander, the former Tennessee governor and failed presidential candidate. In one of a number of sweetheart deals, Lamar’s wife, Honey Alexander, made more than $130,000 on a $5,000 investment in CCA. Tennessee Governor Ned McWherter is another CCA stockholder and is quoted in the company’s 1995 annual report as saying that “the federal government would be well served to privatize all of their corrections.”
In another ominous development, the revolving door between the public and private sector has led to the type of company boards that are typical of those found in the military-industrial complex. CCA co-founders were T. Don Hutto, an ex-corrections commissioner in Virginia, and Tom Beasley, a former chairman of the Tennessee Republican Party. A top company official is Michael Quinlan, once director of the Federal Bureau of Prisons. The board of Wackenhut is graced by a former Marine Corps commander, two retired Air Force generals and a former under secretary of the Air Force, as well as James Thompson, ex-governer of Illinois, Stuart Gerson, a former assistant US attorney general and Richard Staley, who previously worked with the INS.