On February 15, 2017, the Human Rights Defense Center (HRDC), PLN’s parent organization, condemned CoreCivic, the nation’s largest for-profit prison operator – formerly known as Corrections Corporation of America – for rejecting a shareholder resolution seeking independent audits of the company’s detention facilities.

CoreCivic’s objection to the audits was despite a report by the U.S. Department of Justice’s Office of the Inspector General (OIG) that found the company’s federal prisons had higher average rates of prisoner-on-prisoner assaults, sexual assaults on staff, fights and suicide attempts in comparison with other privately-operated federal prisons. [See: PLN, Oct. 2016, p.22]. Since the report was released, CoreCivic has faced multiple shareholder lawsuits.

Following the OIG report, the U.S. Department of Justice announced plans to phase out the Bureau of Prisons’ use of for-profit prisons. On August 18, 2016, then-Deputy Attorney General Sally Q. Yates wrote in a memo that for-profit prisons “simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and ... they do not maintain the same level of safety and security.” [See: PLN, Sept. 2016, p.28].

The call for independent audits of CoreCivic facilities was included in a shareholder resolution filed by HRDC associate director and PLN managing editor Alex Friedmann, who owns a small amount of CoreCivic stock that allows him to attend the company’s shareholder meetings and file resolutions. On February 13, 2017, however, the Securities and Exchange Commission (SEC) granted CoreCivic’s request to reject the resolution seeking independent audits.

“CoreCivic, better known as CCA, has a long and sordid history of abuses and problems at its privately-operated prisons, jails and immigration detention centers,” said HRDC executive director Paul Wright. “This company is a poster child for the need for independent audits to ensure humane and safe conditions of confinement in its for-profit facilities, and CoreCivic’s opposition to the resolution requiring such audits makes one wonder what they have to hide.”

The resolution called for all CoreCivic facilities to undergo independent third-party audits beginning in 2018. “Such audits shall examine operational benchmarks at the Company’s correctional and detention facilities that include, but are not limited to, those examined in the August 2016 OIG report – including rates of violence and use of force incidents, disciplinary and grievance systems, contraband, lockdowns and positive drug tests.”

In its objection filed with the SEC, CoreCivic argued that Friedmann’s resolution should be excluded because it concerned the company’s “ordinary business operations,” claiming that it intruded upon issues “fundamental to management’s ability to run a company on a day-to-day basis.”

The corporation also argued the resolution was vague or misleading, and noted that audits of its facilities already were being conducted – though such audits are not independent based on the requirements set forth in the shareholder resolution.

“Following the negative findings by the Office of the Inspector General, CoreCivic should welcome independent audits of its facilities. That is the responsible thing to do not only for its business operations and contracting government partners, but also for prisoners, CoreCivic employees and shareholders,” Friedmann stated. “Apparently, however, the company does not share those goals, nor has it offered a solution other than independent operational audits.”

Friedmann was represented before the SEC by attorneys Jeffrey Lowenthal, Joel T. Dodge and Daniel N. Park with the New York law firm of Stroock & Stroock & Lavan LLP.

On February 23, 2017, newly-appointed U.S. Attorney General Jeff Sessions, in a terse memo, rescinded the Obama administration’s decision to phase out private prisons, resulting in a substantial jump in the stock price for CoreCivic and its main competitor, The GEO Group, both of which trade on the New York Stock Exchange.

Sessions’ memo is an indication that the government anticipates an increase in the federal prison population under President Trump. Or perhaps it’s simply political payback for CoreCivic and GEO Group, both of which made significant donations to Trump’s election campaign and/or inauguration fund. 

Sources: HRDC press release (Feb. 15, 2017); Forbes; www.foxnews.com