Gates Foundation resists pressure to pull private prison investment

A guard at the Northwest Detention Center, a private facility owned and operated by the GEO Group, on contract from Immigration and Customs Enforcement. (Photo by Alex Stonehill)

Earlier this week detainees at the Northwest Detention Center called an official end to their 56 day hunger strike in protest of conditions at the Tacoma facility. One of their stated victories was that the strike drew international attention to the private prison network operated by Florida-based corrections corporation the GEO Group.

The storm of bad press resulting from the strike also spread locally to the Bill & Melinda Gates Foundation. Gates first caught flack for a $2.2 million investment in the GEO Group (which operates the Northwest Detention Center on contract from Immigration and Customs Enforcement) following an article in Mother Jones late last year.

In early April, Latino advocacy group Presente.org organized an action outside the Gate’s Foundation’s South Lake Union offices, demanding that the asset trust (the foundation’s fundraising arm) divest from GEO.

At the time, the Gates foundation sent a representative out to hear the concerns of the group. One of the activists, Maru Mora Villalpando of Not1More and Latino Advocacy, says they never heard back from the foundation after that meeting.

But the Seattle Globalist did:

“We understand the passion of people standing up for injustice. That is what motivates us all at the foundation every day,” the Gates Foundation’s Media Relations Team wrote in response to our email asking about the investment.

Their response went on to say that:

  • The $2.2 million invested with GEO Group pales in comparison to the $25 billion the foundation has spent helping people over the last 15 years
  • The foundation doesn’t actually control its own investments. A separate body known as the Bill & Melinda Gates Foundation Asset Trust does (but they don’t have their own media team to respond to public inquiries).
  • The asset trust is “actively managed so the foundation has the most money possible to support the great work the foundation does with partners around the world.”

Presente is also circulating an online petition demanding that Gates Foundation get their money out of the GEO Group. So far the petition has over 20,000 signatures.

“We really want to make sure Gates divests,” says Mariana Ruiz, Managing Director at Presente.org. “We have many people working on this and we will keep working until they divest.”

Detainees work in the laundry at the Northwest Detention Center. Hunger strikers complained that they're paid as little as $1/day for these jobs. (Photo by Alex Stonehill)
Detainees work in the laundry at the Northwest Detention Center. Hunger strikers complained that they’re paid as little as $1/day for these jobs. (Photo by Alex Stonehill)

Of course, the Gates Foundation isn’t the only one with a financial stake in GEO Group. Up and down Wall Street investors have taken notice of the private prisons as a big money industry that has offered excellent returns in recent years.

Still, some investors have started jumping ship recently on ethical grounds. GEO Group has 225 institutional investment holders (organizations like pensions that pool large sums of money) and is increasingly considered to be a politically toxic investment. Last week, following action by the civil rights group Color of Change, major investors Scopia Capital Management, Amica Mutual Insurance and DSM North America, all divested from GEO and Corrections Corporation of America (CCA) to the tune of $60 million.

Ruiz says Presente and various other groups also sent an open letter to Bill Gates alerting him to GEO Group’s human rights abuses and aggressive political lobbying in favor of harsher laws and longer prison sentences. In the letter they invited Gates to attend a vigil Saturday outside the Tacoma detention center.

So will the Gates Foundation stick to their guns, or get on the divestment bandwagon?

Eventually, it may turn out that the private prison industry isn’t such a great long-term investment after all.

In their most recent annual report, the GEO Group warned investors that their industry might be “adversely affected by changes in existing criminal or immigration laws.” The report went on to say that “any changes with respect to the decriminalization of drugs and controlled substances could affect the number of persons arrested, convicted, sentenced and incarcerated, thereby potentially reducing demand for correctional facilities to house them. Immigration reform laws… also could materially adversely impact us.”

GEO Group’s business model is, by their own admission, fundamentally at odds with a decrease in crime and mounting pressure for immigration reform. If crime rates go down, GEO will lose money. Likewise, amnesty for immigrants would greatly reduce the pool of potential detainees available to be housed in GEO facilities via ICE.

Last week Walla Walla, Thurston and Kitsap counties followed in the footsteps of other Washington, Oregon and Colorado counties, and stopped cooperating with ICE to hold immigrants in local jails past their scheduled release date. The policy change followed a court decision saying that county jails are not legally required to honor the ICE detention orders.

The result will be fewer detainees flowing into GEO Group’s facilities through local jails.

The GEO Group's headquarters in Boca Raton, Florida. (Photo from Wikipedia)
The GEO Group’s headquarters in Boca Raton, Florida. (Photo from Wikipedia)

GEO has has a track record of lobbying for increased prison time in the past, presumably with an eye to boosting revenue. With the help of the American Legislative Exchange Council (ALEC), both CCA and GEO Group have worked with legislators around the nation to draft and propose “tough on crime” legislation like three strikes laws and limits on parole opportunities.

In a scathing report titled “Gaming the System,” the Justice Policy Institute, a Washington D.C. based think-tank, discussed the many pitfalls of the increasingly hefty and many-tentacled private prison industry and its political lobby.

But lawmakers are starting to push back as well. This afternoon, Rep. Adam Smith introduced a bill that would improve oversight and conditions at detention facilities like the Northwest Detention Center.

Part of the problem, Smith told KUOW, is the close relationship between ICE and the private contractors like GEO that operate the facilities.

Case in point, longtime ICE Assistant Director for Enforcement and Removal David Venturella recently left to take a position as GEO Group’s Senior Vice President of Business Development.

But, as Smith pointed out, taking detention operations out of the hands of private corporations would be costly and logistically difficult because it would mean the government would have to build it’s own facilities to replace them.

And after all, having these prisons and detention centers run by the private sector is saving taxpayers money, right?

The private prison industry thinks so: “No one has yet devised a better pencil sharpener than the private sector in open competition,” GEO Group assures skeptics on the FAQ page of their web site.

But studies conducted by independent and government researchers, including a 2004 report from the US Bureau of Justice Statistics, have been less conclusive. Apparently, the anticipated cost savings of privatizing prisons “have simply not materialized.”

It may only be a matter of time before elected officials put all these problems together — from human rights abuses to high costs — and decide not to renew their contracts with these private prison contractors.

The GEO Group’s contract to operate the Northwest Detention Center is up for renewal in October of this year. I guess we’ll find out then.

Correction 5/13/14: The Corrections Corporation of America (CCA) was a non-voting member of ALEC until 2010, and thus didn’t directly contribute to any draft legislation during the period of its membership.

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Lael Henterly
Lael Henterly is a journalist working at the intersection of law and policy to redefine justice.

9 COMMENTS

  1. Great reporting and connecting the dots: GEO, ALEC, tough on crime policies, and profit. Good to see Rep. Smith introducing this bill and advocates gearing up to challenge GEO on a business model that drives suffering and separating families.

  2. finally, a place to come for real information on this ‘buried story’ that would turn many people against mr. & Mars. gates, even with all the good they’ve done. they’re not saying no!

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