Privatization Watch

CCA Merges with Affiliate

Corrections Corporation of America (CCA), the biggest manager of private prisons in the United States, merged January 4 with its affiliate, CCA Prison Realty Trust, for about $2 billion in stock and debt, forming a REIT called Prison Realty Corp.

A REIT is a real estate mutual fund, allowed by federal law to avoid corporate income tax. According to the National Association of Real Estate Investments Trusts Inc. in Washington, D.C., most states honor this federal treatment and do not require REITs to pay state income tax either.

CCA must apply to the IRS for the federal exemption. It won’t know about its qualification until later this year. By not paying income taxes, it may be profitable for CCA to privatize existing prisons, thereby increasing the threat of AFSCME members losing their jobs.

AFSCME is active in ensuring government officials take a good look at the tax matter. AFSCME believes that CCA should pay taxes and opposes IRS approval of the CCA application. The following letter sent in January to Richard Abrahamson, AFSCME Council 82 president, explains how the New York Common Retirement Fund divested its last holdings in CCA and is now 100 percent CCA-free.

Federal, state and local governments have hired CCA to build and manage 80 facilities in the United States, Puerto Rico, Australia and the United Kingdom. Within the United States, CCA has contracts in 25 states and the District of Columbia.

If you have questions about this merger call AFSCME International’s labor economists Joshua Miller or Mark Murphy at (202) 429-1215.

Alaska Military Base May Become Private Prison

Cornell Corrections, a Houston-based firm which operates 52 private prisons nationwide, may open a private prison in a small Alaska community. After a close vote by the townspeople, the state Department of Corrections will now be permitted to enter into a 20-year contract with the city of Delta Junction to convert part of Fort Greely military base to an 800-bed medium-security private prison.

Fort Greely, scheduled to close in 2001, has been an Army base of 750 to 3,500 soldiers since World War II. It has been the economic engine of Delta Junction, a small town with a civilian population of 500. The light-infantry military base provided more than half the jobs in the area.

“The substantial money [needed] for conversion hasn’t been appropriated yet and AFSCME will fight it,” says Chuck O’Connell, business manager for AFSCME Local 52 in Alaska. Even though Local 152 no longer represents the state corrections officers, “We believe that incarcerating criminals is inherently a government function that cannot be lightly turned over to a business for profit.” O’Connell explains further that private prisons haven’t proved they reduce recidivism. Besides, he argues, “Private facilities don’t play a role to reduce recidivism and enhance rehabilitation because repeat offenders mean more money to private prisons.”

Escapes from CCA-run Prisons

Dressed as a corrections officer — and escorted from the facility during a shift change by a female accomplice — David Britt, a 25-year-old convicted murderer, escaped from a Tennessee prison in late January. His is the fifth escape since October from the CCA-run South Central Correctional Center (SCCC) in Clifton, 100 miles from Nashville.

Britt was captured 15 miles from the prison. His accomplice was caught too and held without bond.

Tennessee legislators have been critical of CCA for months over issues of privatization and security. In October four inmates escaped from SCCC by squeezing through a small opening they cut in a fence during their recreation period. All were later recaptured.

In other recent escapes from CCA-run facilities:

• A Cuban convicted felon escaped Feb. 27 from a Houston prison by overpowering a private guard. Two weeks later federal agents apprehended Joaquin Aguila Echenique 15 miles from the prison.
  
  
• In mid-March a convicted killer confined to a wheelchair died in a dramatic escape from the 820-inmate Correctional Treatment Facility in Washington, D.C. The bedsheets he had tied together to lower himself from the eighth floor unraveled, plunging him to the pavement. Donnell Reed died in a hospital more than an hour after he was reported missing.
  
  Not only had he braided the sheets together and rolled to the window in his wheelchair without being detected, he also hacked away the metal bars covering the window without being noticed. No one observed, either, the unidentified woman who drove him to the hospital.
  
  CCA guards did not discover anything amiss until they felt a brisk draft coming from the television room at 12:35 a.m. The window’s glass had been smashed and Reed’s wheelchair was parked beside the window.