"Pay to Play" for Private Prisons?

Today’s post picks up from a previous post, Crony Capitalism; Private Prison Stocks Have Doubled Since the Election. 

We all remember the “Pay to Play” rhetoric from Donald Trump during the campaign. However, the Trump administration made a controversial decision last week to award their first federal contract for an immigration detention center to the GEO Group. As mentioned in the previous post, a $100,000 donation by the GEO Group to Trump’s Super PAC may have violated federal. Private companies can’t make political donations while their contracts while holding or negotiating a federal contract. Then again, the GEO Group is unlikely to be penalized due to a technicality; one of their subsidiaries, which doesn’t have any federal contracts, made the donation.

Was there a quid-pro-quo for this newly acquired $110 million immigration detention center contract? There’s no evidence at this time, but the optics are horrible. Nonetheless, this type of decision was the exact scenario that Trump adamantly campaigned against. He was supposed to “drain the swamp.” He repeatedly pointed to the “Pay to Play System,” i.e. preferential treatment for Clinton Foundation donors. Now, he can be accused of the same kind of corruption.

Making matters worse, the Inspector General’s Office of the Department of Justice issued a damning report yesterday about another private prison operator. Their office revealed clear corporate negligence at the infamous federal prison, Leavenworth, which is being operated by CoreCivic, formerly Corrections Corporation of America (CCA). CoreCivic compromised inmate and staff safety by understaffing and closing “mandatory” security posts. Remarkably, their company compensated, at times, by placing staff members who were not corrections officers into these security posts. 

CoreCivic also repeatedly placed three beds into cells that were designed for two beds. Furthermore, their company tried to hide that decision from government auditors. There were other details demonstrating that this company prioritized profits over rehabilitation. You can view a condensed video of the Inspector general’s report:

Did this report impact the Trump administration’s decision to award the recent $110 million contract to the GEO Group? Again, there’s no evidence. And this latest report was years in the making. In fact, there’s no evidence suggesting that Jeff Sessions or the Trump administration considers the recommendations of the Inspector General’s Office in any manner. Otherwise, they would have not reversed the decision by the Obama administration to phase out all federal prison contractors, which was based upon a report by the Inspector General.

Crony Capitalism; Private Prison Stocks Have Doubled Since the Election

Update 2-23-2017   
It's official. Jeff  Sessions overruled the Obama administration's ruling to phase out private prison contractors for federal prisons. 

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This is an update from a previous post about the explosive rise of the private prison industry. That article included a call to action for everyone to contact the Senate switchboard and protest Jeff Session’s confirmation. The Senate switchboard was overloaded with calls from like-minded activists, but Sessions was ultimately confirmed by the Senate to be the U.S. Attorney General. With that said, his confirmation was expected as the Republicans have the numbers. However, even the libertarian-leaning Rand Paul (R-KY) voted for Sessions. 

Meanwhile, the stock prices of the top two private prisons, GEO Group and CoreCivic (formerly CCA), have continued rising. Their share prices have increased by 100% and 140% respectively in the three and a half months since Election Day. 

(via Google Finance)

There’s no other way to look this development; it’s crony capitalism. Their industry is entirely dependent upon government contracting, which is influenced by strategic political donations. Both companies donated to Republicans over Democrats at a 9 to 1 ratio. 

For several years, neither company was held accountable for their poor track records. However, in August of last year, the Inspector General (IG) of the Department of Justice issued a comprehensive review of the private prisons that house federal prisoners. The IG report concluded that private prisons don’t offer significant savings to the taxpayers and there were more violent incidents in those facilities. One month later, a DOJ official announced that they planned to no longer issue contracts to private prison companies for federal prisons.

One day after that IG report was issued, a subsidiary of the GEO Group, GEO Corrections Holdings Inc, made a $100,000 donation to Donald Trump’s PAC, Rebuilding America Now. In reaction, a watchdog group, Campaign Legal Center, issued a formal complaint with the Federal Election Committee (FEC). Their group contends that the GEO Group violated a federal law that bars companies from making political donations while holding or negotiating a federal contract. 

A company spokesperson for the GEO Group pointed out that their subsidiary that made the donation, GEO Corrections Holdings Inc, which doesn’t have any federal contracts. The FEC has yet to make a decision. However, in the end, the GEO Group will likely avoid any penalties due to this technicality. Their company may not be guilty according to the letter of the law, but they are clearly guilty of violating the intent of the law. 

We can all agree that crony capitalism is alive and well in America.