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Wackenhut's Name To Change, But Politics Remain The Same

The old maxim, "the more things change, the more they stay the same," could
have been tailored to Wackenhut these days. Although Wackenhut Corrections
has spun off from its parent company, Wackenhut Corporation, there's no
indication that the political involvement which brought it this far will
change anytime soon.

Wackenhut Corrections was born as a subsidiary of the Wackenhut Corporation
in 1984 when George Zoley presented the idea of a separate prison
management company to Wackenhut founder George Wackenhut. Although
Wackenhut Corrections began trading its stock separately in 1994, it
remained a subsidiary of Wackenhut Corporation. In May 2002, the Danish
securities firm Group 4 Falck bought Wackenhut Corporation for its security
guard division. The sale included 57 percent of Wackenhut Corrections (43
percent was owned by investors). Group 4 immediately announced it would
sell the corrections division for $170 million [PLN, October 2002].
Since that time, Zoley, who is Wackenhut Corrections' Chairman and CEO',
has focused on buying Corrections back. He succeeded in July 2003,
purchasing Group 4's 57 percent stake (12 million shares) for $132 million.
The move boosted Corrections' bottom line by 70 cents per share.
However, even with the discounted buy back and the sale of its 50 percent
stake in a United Kingdom prison venture (which netted it $52 million after
taxes) Wackenhut Corrections remains $250 million in debt.

As part of the Group 4 deal, Zoley must change the company's name to
something other than Wackenhut within one year. In April 2003, the company
moved its Florida headquarters to stylish Boca Raton, away from the
Wackenhut Corporation's home base of Palm Beach Gardens. Corrections has
also opened three regional headquarters in order to more closely monitor
its interests.

Since its inception, Wackenhut Corrections has become one of the three
largest private prison contractors in the nation, with 49 prisons in 13
states, as well as prisons in Australia, South Africa, New Zealand, and
Canada. But the company cannot attribute its success solely to good
business. Powerful lobbyists and political patronage have played a
significant role in its ascent.

Mississippi Governor Ronnie Muskgrove can attest to the political savvy of
private prison operators. Twice he has battled with Wackenhut and
Corrections Corporation of America (CCA), and twice he has lost [PLN, July

In 2001, as Mississippi struggled with a budget crisis, Muskgrove vetoed
the state's prison budget so that more money could be given to schools.
Wackenhut President Wayne Calabrese and lobbyist Al Sage responded quickly,
wining and dining two key senators, Bunky Huggins and Jack Gordon, before
the session resumed the next day. Not surprisingly, the legislature
overrode Muskgrove's veto.

Muskgrove was again bested in budgetary battle in 2002 when he vetoed $54
million for Wackenhut Corrections and CCA because of a provision that
locked in money for private prisons whether or not the state had prisoners
to fill them. "They have some effective lobbyists," one governor's staffer
wryly noted.

In Florida, where Wackenhut operates two prisons, the state's privatization
initiative has raised ethics concerns. In the late 1980's the Florida
legislature authorized the Department of Corrections (DOC) to explore
privatization as a way to ease overcrowding, according to Ken Kopczynski, a
lobbyist for the Florida Police Benevolent Association which opposes prison
privatization. In 1993 the Florida Legislature snubbed the DOC and created
an independent commission under the Department of Management Services (DMS)
to oversee private prisons. "Florida is the only state in the union with
two departments of correction," Kopczynski observed. "It didn't hurt that
the lobbyist for the DMS was the wife of the lobbyist for Wackenhut."
Other ethics concerns soon arose. University of Florida Professor Charles
Thomas, author of the law creating the privatization commission and
director of the university's Private Corrections Project, was considered an
expert on the subject. However, Thomas' close ties to the private prison
industry prompted the filing of ethics charges against him. in 1997 and
1998. Even though Wackenhut was among, the companies that financed Thomas'
project, Zoley complained to the commission of his "shock" at discovering
Thomas sat on the board of a competitor's real estate investment trust.
Thomas was fined $20,000 and forced to resign. "He knows Charley is a
(disciple) for the prison industry but Zoley only questions his ethics when
he joins a competitor," Kopczynski noted.

It's likely that Wackenhut's handouts have influenced Florida's
privatization initiative. In 1997, Wackenhut paid $11.5 million to purchase
a temporary staffing business from state House Majority Leader Jim King.
More recently, a 2000 study by the National Institute on Money in State
Politics revealed that Wackenhut Corrections shelled out $237,750 to
candidates in six Southern states, including $65,200 in Florida. "They
contributed early in .a campaign, giving to incumbents before there was a
campaign, or at the end when there was a sure winner, stated Ed Bender, who
headed the study. "And they hire top-flight lobbyists."

Zoley, who earned $2 million in 2002, doesn't argue that point. In a
business in which the government is the only client, he says, political
dealings are part of the business.

But Wackenhut's trip to the top hasn't been all glad-handing and
fundraisers. Murders, rioting, and prisoner beatings have plagued
Wackenhut's New Mexico prisons [PLN, January 2003, October 2003]. Prisoner
rapes, sexual harassment, and a prisoner beating at Wackenhut's Austin,
Texas prison forced a state takeover [PLN, October 2003]. And allegations
of abuse by Wackenhut guards at the Jena juvenile prison in Louisiana
prompted a New Orleans judge to remove seven youngsters for their own
safety [PLN, May 2002, October 2003].

Wackenhut Corrections also faces fiscal difficulties. Due to current
economic constraints, many states are reluctant to build new prisons. To
offset the decline, the company has branched out into other prison services
such as healthcare, psychiatric services, and sex offender facilities [PLN,
April 2002]. However, Corrections' best avenue for growth may be the
federal government, which has already announced that it plans to build
7,000 new detention center beds. "Because of homeland security, all the
agencies are expanding," said Zoley.

Source: Palm Beach Post

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