Future looks bright for private prisons company

The United States’s largest operator of private prisons expects to benefit from the Bush administration’s expansion of federal police and thinks prison overcrowding could lead to more business.

Corrections Corporation of America, which houses about 63 000 inmates in 20 states and the District of Columbia, also told investors that the demographic producing many prisoners—males between 18 to 24 years old—is growing and should create more demand for its services.

“Successfully exploiting these opportunities should result in strong earnings and cash flow growth,” CCA is telling investors as part of presentations it is giving this week.

The company is working to persuade investors that its prospects are bright and its jails secure after a summer in which it saw two riots within a week at prisons in Colorado and Mississippi, and a female inmate died of a skull fracture at a CCA detention centre in Nashville after an incident with guards.

The company’s share price has tumbled about 20% from about $40 in July since the inmate uprisings, coupled with a drop in second quarter earnings. The company has said the 24% drop in earnings was caused by an accounting change for taxes. CCA shares gained 80 cents to close at $33,69 on Monday on the New York Stock Exchange.

But critics contend that what is good for a private prison generally spells trouble for society.

“These people are making money off the hope we keep locking people up and there’s more crime, which is a sorry state of affairs to say something like that,” said Ken Kopczynski, with the Private Corrections Institute, an advocacy group opposing private prisons.

The company cited an escape rate better than that of publicly run prisons from 1999 to 2001.
In the most recent year data was available, CCA said its escape rate was less than one per 10 000 inmates—compared with an escape rate at government prisons of more than four per 10 000 inmates.

The Nashville-based company said the low escape rate reflects good overall security at its prisons.

Kopczynski said he’s not sure the statistic provided by the company proves anything.

“There’s lies, damn lies and statistics,” he said. “They’ve just had problems with riots, is all.”

CCA, which owns roughly half of the private prison market, was organised in the early 1980s just as the United States’s incarceration rate started soaring to record highs. For 50 years, America had locked up less than 100 out of 100 000 citizens. Since 1975 the lockup rate has increased dramatically to more than 400 out of every 100& 000 citizens, CCA said.

The federal Bureau of Prisons is running at more than 130% of capacity, CCA said, as prisons nationwide battle overcrowding. And government authorities are turning to private companies such as CCA to help rather than spend money on new


The company told investors that President George Bush’s post-September 11 proposals have funneled more money into the United States Marshals Service and Immigrations and Customs Enforcement. CCA said the Bush administration is also reducing prison construction in favour of contracting with private companies and local governments.

The Bureau of Prisons is CCA’s single biggest customer, accounting for 16% of the company’s revenue, according to a presentation prepared for CCA executives on a road tour this week with investors.

Bureau spokesperson Dan Dunne said the agency uses private prisons for only low security inmates. But with about 180 000 inmates under its control, there is room to add to the 27 000 already under private management.

To handle more prisoners, CCA said it wants to add inmates to facilities in Georgia, Oklahoma, Ohio and Minnesota—while expanding capacity in Montana, Colorado, Kansas, Arizona and Texas.

It also hopes to build some new facilities in Arizona and Texas. A 1 500-bed jail near Phoenix would be used to house inmates from Alaska. - Sapa-AP

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