The oldest and largest for-profit prison company is not what it would have you believe, at least according to Anonymous. A faction of the hacktivist group released a report this morning concluding that the publicly traded prison operator Corrections Corporation of America (CCA) is not an efficient, profitable free-market solution — but a bad investment for shareholders.
Companies like CCA currently profit from America’s addiction to incarceration – converting a bloody trail of prison riots, deaths, and general human misery into black balance sheets. The conventional financial wisdom is that CCA will be reliably profitable in the future because of its strong history of growth over the past thirty years. But this growth has been fueled by an historical anomaly. Between 1970 and 2005, the U.S. prison population grew by 700 percent, far outpacing both population growth and crime. As a result, our country now has 5% of the world’s population but 25% of the world’s prisoners.
CCA did not exist before this massive expansion of incarceration – and the company depends on it to survive. But Anonymous’ report shows us that as America weans itself from that addiction, CCA’s ledgers will quickly turn red.
This is not Anonymous’ first foray into corporate issues. Since 2011, it has published four reports digging into the financials and governance of publicly traded Chinese companies. Each report has seriously rattled the target company; in one case, the Financial Times reported that the company responded by suspending trading of its shares on the Hong Kong stock exchange. Today’s report on CCA marks the first time, however, that Anonymous has trained its sights on a U.S. company. They have certainly found a deserving target.
Anonymous points outs that state governments are increasingly enacting policy reforms designed to reduce their reliance on incarceration – including top CCA “customers” like California and Colorado. Based on a state-by-state examination of these reforms, combined with a close look at CCA’s falling occupancy rates and decreased spending on new construction, Anonymous identifies ongoing criminal justice reforms as posing a far more serious risk to CCA’s business model than CCA’s management is willing to admit. It concludes that CCA’s management “has been caught up in its own hype” and that “winter is coming” for the company.
Recent events lend support to Anonymous’ conclusions. In just the last few months, four state governments have announced the cancellation of five prison contracts with CCA: Idaho, Kentucky, Texas, and Mississippi. While the Idaho and Mississippi cancellations seem to have arisen from dissatisfaction with CCA’s performance (the Mississippi prison was rocked by two riots in just twelve months, and CCA employees at the Idaho prison recently falsified nearly 4,800 hours of staffing records), the Texas and Kentucky cancellations were driven by falling state prison populations that rendered the CCA contracts unnecessary.
Of course, continuing this momentum requires the political will to further reduce the flow of people into prisons. The ACLU is working on a number of fronts to make this happen, and an increasing number of state legislators are realizing that current incarceration rates are unsustainable. And we will continue to emphasize that handing control of prisons over to for-profit prisons are a bad public investment: one that fails to offer a real solution to state or local fiscal problems, lets those companies engage in sharp tactics to garner more government contracts and avoid public accountability, and has resulted in a truly horrifying track record of abuse, neglect, and misconduct.