Privatization Leads to Fraud, Mismanagement, and Employee Abuse at Wackenhut

The three words that best describe the private security business these days are “racism”, “corruption”, and “profits”. Wackenhut, the largest private security provider to the Federal govt and the military outside of Iraq, would appear to be awash in all three.

Wackenhut, which has ties to the GOP and the Bush Administration that go almost as deep as Halliburton’s, is currently under investigation:

• in Alaska by the GAO for “inadequate training and incomplete background checks that led to employment of officers with criminal records”, “poor” record-keeping that included falsified training records, and a near-total lack of any kind of monitoring or oversight on the program, as well as for illegally obtaining security contracts that were supposed to go to minority businesses;
• in Miami (scroll to bottom) by Dade County for fraud – overbilling, billing for services not provided, falsifying records of guards’ hours, and violations of labor laws for working guards in some cases 20 hrs/day, 7 days/week;
• by the Homeland Security Committee for “problems at Wackenhut-guarded facilities nationwide that lead to high employee turnover, low morale and ineffective security” at US nuclear sites;
• by the House Govt Reform Committee “to examine charges of racism, discrimination and poor performance;
• at a Tennessee Army ammunition plant where inspectors found holes in the perimeter fences, and where “two teenage runaways were found wandering around the 6,000-acre property after getting dangerously close to explosives” after the number of guards had been cut “in response to higher gas prices”;
• by the Nuclear Regulatory Commission for security violations “at Wackenhut-guarded Three Mile Island, Seabrook Station, St. Lucie, and Turkey Point nuclear power plants”;
• and by the Dept of Energy for “shorting the protective force on combat training; excessive overtime; caught cheating during one security drill and involved in a near-friendly fire incident in another” at its Y-12 (Oak Ridge) nuclear weapons plant.

And that’s only a partial list of domestic investigations.

CA Prison System in Receivership?

A San Francisco District Federal Judge is so unhappy with the bargain Ah-nud struck with the guards’ union that he’s threatening to take over the State Prison system altogether.

Henderson said the pact grants the union too much control over prison management and he suggested that Schwarzenegger was not serious about fixing the “systemic problems” in corrections “condoned for many years by the highest level of California officials.”

Peter Siggins, Schwarzenegger’s legal affairs secretary, said the administration was disappointed by the judge’s strong words. “We think nothing that was done in connection with the negotiations … impairs or impedes our obligation or our ability to ensure that state employees meet the highest ethical standards.”

He said Henderson’s comments came as a surprise because the judge had complimented the administration’s actions on July 7. “It seemed at the time that the court was very satisfied with the progress we were making,” Siggins said.

In a reply sent to the judge Tuesday, Siggins said that the governor would be glad to meet with Henderson, but that it was not necessary to ensure that the governor was committed to improving the state’s prisons.

Henderson’s warning marked another chapter in a long-running dispute that began as a civil rights case involving Pelican Bay State Prison, on California’s North Coast. Ruling on that suit in 1995, Henderson found that brutality by guards and poor medical care at the prison had violated the rights of inmates.

To ensure improvements, the judge appointed a special master to oversee progress. In January, the special master, John Hagar, issued a report saying that Pelican Bay and the entire prison system were infected by a “code of silence” that protects rogue guards, corrupts recruits and is condoned by top officials.

In that report and a subsequent one last month, Hagar pointed the finger at the powerful guards union, saying their labor contract with the state, negotiated by former Gov. Gray Davis, allowed them to interfere in disciplinary investigations. That interference, he said, has prevented the department from fairly and impartially punishing employees who did wrong.

Two senators who have led oversight hearings on corrections said the judge’s firm warning should motivate the Legislature to reject the new labor agreement when it comes up for a vote, perhaps as early as today.

“It is puny, it is a policy swindle and I believe it goes backwards in our efforts to restore some sense of integrity to the system,” said Sen. Jackie Speier (D-Hillsborough). “If we don’t act, Judge Henderson is going to start running the Department of Corrections.”

Sen. Gloria Romero (D-Los Angeles) agreed that the union pact was a bad deal, but said it “absolutely does not warrant a federal takeover.”

“I think this threat is an overblown statement by the judge, and I’m disappointed,” Romero said. “When he sits down with the governor, he will see there has been a pattern of progress in corrections.”

Leaders of the guards union, known as the California Correctional Peace Officers Assn., bristled at the judge’s characterization of their new labor pact, saying it represented a good-faith effort to help the state during tough fiscal times. By deferring the full raise that guards were to receive July 1, the deal saves the state $108 million over this fiscal year and next.

Lance Corcoran, the union’s executive vice president, said if legislators rejected the deal and sought to block the raises in total, “some sort of job action” by guards would be likely.

The prison system is a cesspool and not just in CA. It’s a shame to have to say this but prison guards are today what the cops were 50 years ago: primarily head-bangers–they can be brutal, even sadistic; they’re not all that well-trained as a general rule; they’re chosen for their ruthlessness and how tough they are, not how smart they are; and they’re intimately involved with (and making a lot of untaxed money from) the sex rings, drug sales, weapons smuggling, and other illegal activities of the inmates. But since it’s a job few smart people want to do, as being a cop was not a job most people wanted, those who will do it have a stranglehold on the system.

It’s ironic that the same kind of people who used to get paid to break union strikes by force are now being protected from the law by one of the strongest unions in the country.

The law may have the last laugh yet.

(Thanks to eRobin of Fact-esque for the link)

Prison Labor Program in Shambles

By Tim Reiterman and Jenifer Warren, LA Times Staff Writers

SACRAMENTO — Fourteen years ago, California voters put convicts to work for private companies behind prison walls. Businesses were granted cheap rent and other perks, while inmate workers earned real-world wages and shared them with victims.

Created by a statewide ballot measure, the program took off and became a national model. Its director traveled the country, touting her winning formula, and graduates of the program seldom returned to prison.

But now, as Gov. Arnold Schwarzenegger seeks to better prepare inmates for release, the joint venture program is a shambles.

Once dubbed the future of corrections and expected to employ thousands of felons throughout the state, the program has withered to less than half its size several years ago. Today, with fewer than 150 of California’s 163,000 prisoners taking part, it is dwarfed by similar ventures in much smaller states.

The program’s decline, said state Sen. Jackie Speier (D-Hillsborough), represents a squandered opportunity to slow the tide of repeat offenders crowding state prisons at an ever-rising cost.

“Without skills, without jobs, you’ll see these people end up right back in prison,” said Speier, who has held hearings on the troubled correctional system. “This is the kind of program that we should be expanding.”

California Department of Corrections officials blame the program’s woes on a slowing economy, a dearth of industrial space on prison grounds and competition from more business-friendly states, especially those with lower minimum wages.

It’s startling, even for a cynic like me, to think that there are corporations in America who think prison labor is too expensive, and even more startling to think that they would make a decision about where to put their company’s resources based opn whether a state’s minimum wage is $5.15 or $5.20 /hr.

‘If it’s $5.15, we build our factory in your state. But if it’s an outrageous $5.20, we go to Mississippi!’

If that’s really how they think, it’s bizarre.

California’s is one of three dozen federally sanctioned prison joint venture programs run by states. Businesses get an abundant workforce, low rents and other incentives. Inmates with good disciplinary records receive the prevailing wage, far more than the nine cents an hour for most prison jobs.

Society, meanwhile, benefits because most earnings — up to 80% — go to support inmate families, compensate crime victims, pay taxes and reimburse the state for incarceration costs. Joint ventures also help keep jobs from flowing offshore.

Voters approved the program in 1990 over opposition from the California Labor Federation, AFL-CIO, which condemned it as unfair to “free labor and free business.” The joint venture program grew within eight years to involve 15 companies and several hundred inmates. Optimistic leaders hoped to have at least one venture in every prison.

Today, however, there are ventures at only six of the 32 state lockups. Budget cuts have reduced the staff to one full-time position and a consultant. Marketing has virtually ceased. The few convicts lucky enough to land a spot are packaging laboratory supplies, raising alfalfa and making computer circuit boards, display racks and brewery tanks.

What happened? One story is particularly instructive concerning both the kinds of promises the state made and the underhanded tactics one corporation involved tried to use to take advantage of the situation.

Operating inside San Diego’s J.R. Donovan State Prison, the T-shirt factory was growing into a multimillion-dollar enterprise that newspapers would portray as a success story. Then trouble struck.

One of the sweeteners in owner Pierre Sleiman’s state contract was that inmate trainees could work for free so long as they were not producing items for sale. However, the state labor commissioner ruled otherwise.

‘Not producing items for sale’ is an…interesting phrase for inclusion in a labor contract. How would it be defined? If you’re packing items and shipping them, then you’re not technically ‘producing them’. Does that mean the state promised Sleiman an unpaid workforce for every area of his business not directly involved in actually making the garments? Why would it even be included? Maybe because of this:

Then a local television station aired allegations by two inmates that they were required to sew “Made in U.S.A.” labels in shirts from Honduras. The inmates were placed in solitary confinement, accused of sabotaging the venture.

Aha. Now the reason begins to come into focus. Sleiman was ripping off the state for free prison labor in order to defraud consumers by mislabeling a product he purchased overseas as ‘Made in the USA’. If those shirts were ‘produced’ in Honduras, then Sleiman’s prison labor deal could have meant that he wasn’t paying any of the inmates he employed in CA, both sleezy tricks that he couldn’t have gotten away with–or even tried–if he were employing union laborers.

The Bottom Line trumps every other consideration: health, honesty, even–and maybe especially, in Sleiman’s case–the law. Having been caught with his hand in the cash drawer, Sleiman is now suing the state for the damage to his fingers when the drawer got shut.

Though the allegations of phony labeling and sabotage were not proven, the episode led the inmates and the textile workers union to sue the company and the state. The suit alleged retaliation against the two inmates, and failure to pay prevailing wages and to compensate trainees as required.

On the first day of trial in 2002, San Diego County Superior Court Judge William C. Pate ruled that CMT Blues owed more than $840,000 in back wages and penalties, plus attorney fees of $500,000.

The first day? The evidence must have been overwhelming.

After he shut down operations, Sleiman filed for arbitration, claiming that the state’s misrepresentations and negligence cost him his business and at least $7 million. State officials deny the allegations.

Sleiman’s attorney, Robert Shipley, said his client figured that having the state as a partner would spare him from labor grief.

Yeah, the ‘grief’ of having to pay them.

I should add that if you read the article there are a couple of good examples of companies that do NOT appear to have taken advantage of the program, and kudos should go to them. They’re providing a service potentially valuable to society while also making a reasonable profit, so Hats Off, Ladies and Gentlemen!

But the total failure of the program suggests that they were in the minority; when the corporations who began in the program under the impression that it would provide them with a lot of goodies, including ultra-cheap labor, discovered that it wouldn’t, they pulled out. When it became difficult to keep companies in the program without giving away the state store, the program administrators gave up bothering with it.

It’s a sad end to a promising story, but given corporate priorities in today’s culture of unbridled greed and their wholesale rejection of any social value that hurts their profits in any way, I’m not sure it could have ended any differently.