Ex-Con Shareholder Goes After World's Biggest Prison Corporations Favorite 



May 10 2012


From Mother JonesBy James RidgewayTomorrow, at the annual meeting of Corrections
Corporation of America, the nation's largest private prison company,
shareholder activist Alex Friedmann will have exactly two minutes to
speak about the unconventional resolution he introduced earlier this
year to the chagrin of CCA's board.
The resolution is unconventional because it concerns not corporate
profits or dividends, but the well-being of the roughly 81,000 inmates
in CCA's care. Friedmann, too, is unconventional, for although he holds
just $2,000 or so worth of CCA stock, he has inside knowledge of the
company's practices—because he served time at one of its prisons.
Indeed, Friedmann spent six years at CCA's South Central Correctional
Facility in Clifton, Tennessee—part of his 10-year sentence for
attempted murder, armed robbery, and attempted aggravated robbery. Since
getting out in 1999, he has been an advocate for prisoners' rights and
criminal-justice reform. Now he's an editor with Prison Legal News [1] and head of Private Corrections Institute [2], a nonprofit watchdog.

Friedmann's controversial resolution [3]
addresses the long-standing problem of rape in US prisons and jails.
If it passes, CCA's board will have to submit twice-a-year reports to
stockholders detailing the board's oversight of company efforts to curb
rape and sexual abuse, and include detailed statistics on any such
incidents. "If CCA has to report this information they will have a
greater incentive to reduce rape and sexual abuse because it will make
the company look bad if they have very high numbers," he says. "And if
they have to report this, the public, i.e., CCA shareholders, will be
able to judge the effectiveness."
Although Friedman was neither a victim of rape nor a personal witness
to it during his CCA stint, he believes that private prisons are among
those least attentive to the sexual victimization of inmates by guards
and other inmates. For instance, in a 2007 survey of local jails [4]
by the Bureau of Justice Statistics, a CCA facility in Torrance
County, New Mexico, clocked in with the highest rate of sexual
victimization (13.4 percent), more than four times the national
average. It also had the highest rate of staff-on-inmate sexual
victimization—7 percent, as compared with a national average of around 2
CCA can certainly afford to address the issue. The longtime industry
leader in prisons and immigrant detention, it owns or operates 67 facilities [5]
(see table of its customers below) and boasts about $1.7 billion in
annual revenues—more than 40 percent of which come from the federal
government and most of the rest from the states and localities. The
company reportedly employs 35 lobbyists [6] on Capitol Hill, with hundreds more [7] working in 33 states over the past eight years.

While many people view prison rape with "shoulder-shrugging acceptance [8],"
Friedmann is hardly alone in declaring it a national disgrace. His bid
has gained the support of advocacy groups including the National
Organization for Women, the National Lawyers Guild, and the Justice
Policy Institute. Back in 2003, moreover, Congress passed the Prison
Rape Elimination Act by a unanimous vote, and President George W. Bush
signed it. The law mandated the first comprehensive collection of data
on prison rape—and the results were eye-opening: In 2008 alone, there
were an estimated 216,000 sexual assaults [9] on men, women, and children in American detention facilities—that's 600 a day, notes the group Just Detention International [10], or 25 an hour.
The federal law also required detention facilities to adopt a "zero
tolerance policy" toward rape and sexual assault. CCA-run institutions
have fallen short, argues Friedmann, whose supporting materials [11]
contain additional examples of poor oversight and detail four lawsuits
alleging that its employees abused inmates. (Last December, for
instance, the ACLU filed a suit alleging that a guard at the company's
Eloy Detention Center in Arizona had masturbated into a cup and then
demanded that a transgender prisoner drink the result.) But Friedmann's
resolution hinges on language investors can relate to: "A failure by
the Company to adequately address this issue, and the negative
publicity, loss of business and litigation that results, constitutes a
risk to the Company and a threat to shareholder value."
CCA was none too happy with Friedmann's resolution. He filed it, as
required, with the Securities and Exchange Commission, which must verify
that corporate resolutions are relevant before the documents are
attached to proxy materials and sent to shareholders for a vote.
CCA's board—which includes former Clinton/Gore official Thurgood
Marshall Jr. and Dennis Deconcini, the former GOP senator from
Arizona—responded with a letter to the SEC [12],
urging commissioners to kill the resolution. The letter argues that
the company already intends to start posting such reports on its
website annually and further implies that Friedmann is a disgruntled
ex-con with a bone to pick. The SEC (surprisingly, given its
reputation) sided with Friedmann [13]—whereupon CCA amended the proxy package with a lengthy rebuttal to his resolution, asking shareholders to vote it down.
But Friedmann could win this one yet. Institutional investors—which,
along with banks, control the majority of CCA stock—often hire proxy
firms to analyze shareholder resolutions and vote on their clients'
behalf. In this case, Friedmann says two of the three proxy companies
involved told him they planned to vote his way. The result will be
announced at tomorrow's meeting in Nashville, where, no matter what the
outcome, Friedmann will have his two minutes at the podium.

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