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GEO Group Under Pressure from Shareholders on Human Rights Policy

by David M. Reutter and Kevin Bliss

An activist investor organization has forced Boca Raton, Florida-based GEO Group, which operates or manages almost 75,000 for-profit detention facility beds across the U.S., to adopt a shareholder resolution requiring the company to issue a report on implementation of its human rights policy.

Under pressure from the Interfaith Center on Corporate Responsibility (ICCR), GEO Group adopted its first human rights policy in 2013 after reports surfaced in the news media – including in PLN – of deaths and poor conditions in the company’s facilities due to understaffing and cost-cutting. ICCR began buying small amounts of stock in GEO with the intent of guiding it toward a more responsible position regarding human rights for prisoners and detainees.

Originally founded to force businesses to divest from South Africa during apartheid, ICCR is a coalition of asset managers, unions, pensions, non-governmental organizations (NGOs) and faith organizations with over $400 billion in managed assets that invests in corporations to influence their practices and increase accountability.

Citing ICCR’s “ongoing engagements with GEO around human rights concerns for seven years,” Father Bryan Pham, S.J., of Jesuits West – one of the ICCR coalition members – said the group was “appreciative that, given the enormous risks inherent in its business, the company saw the importance of adopting a human rights policy in 2013 to prevent any lapses.” 

However, he added that “an increase in recent contracts with U.S. Immigration and Customs Enforcement (ICE) and disturbing reports related to detainee safety seem to have exacerbated GEO’s exposure to these human rights risks.”

That was an apparent reference to a 2018 report by the U.S. Department of Homeland Security’s Office of the Inspector General, which found that a GEO-Group detention center in Adelanto, California had “serious issues relating to safety, detainee riots, and medical care.” After a suicide and seven suicide attempts at the facility in 2017, the inspectors found nooses made from twisted bed sheets in 15 of the 20 cells they inspected. They also found that all 14 detainees in administrative segregation had been placed there improperly.

Three more immigrant detainees died at the Adelanto detention center in 2018. Another death, that of 27-year-old José Ibarra Bucio, followed in March 2019.

We now need to better understand how [GEO Group’s human rights] policy is being operationalized to mitigate [these risks],” Father Pham insisted.

Activists with Labor Spring Organization pointed out that GEO Group faces lawsuits in California, Washington and Colorado that accuse it of forcing immigrant detainees to perform menial tasks for $1.00 per day so they can afford supplemental food, phone calls and basic toiletries. [See: PLN, Dec. 2018, p.20; June 2018, p.38].

“We’re not experts in running their business, and we’re not trying to be,” said Pat Zerega, an investor with a religious company called Mercy Investment Services, which co-filed the shareholder resolution with GEO. “But we want to be able to make a judgment that the company is moving forward on this stuff.”

Father Pham acknowledged that GEO Group’s board of directors did not have to comply with the resolution, even if a majority of shareholders voted in favor of it, but the idea was to pressure the board by putting it at odds with the company’s stockholders. The board initially opposed the resolution but later reversed course, telling the U.S. Securities and Exchange Commission (SEC) that its “position has evolved.”

The shareholder resolution passed at GEO Group’s annual shareholder meeting in May 2019, requiring the company to issue its first report on implementation of its human rights policy in September 2019 – 35 years after the firm was founded in 1984. Titled “Respect for Our Inmates and Detainees,” the report will be posted on GEO’s website and will detail how its employees are made aware of and apply the firm’s commitment to human rights, the metrics used to assess human rights performance and how the company plans to remedy shortcomings in that performance.

GEO Group has also come under fire for making legally questionable donations in support of Donald Trump in 2016, and for holding its 2017 annual shareholder meeting at the Trump National Doral Miami resort. [See: PLN, Oct. 2018, p.30; Aug. 2018, p.16].

The Florida Democratic Party refused donations from private prison operators in the state’s 2018 elections, along with every major Democratic gubernatorial candidate that year.

“While it’s nice that GEO Group has a human rights policy, it would be even better if that policy was substantive, regularly enforced and overseen by an independent monitor,” said PLN managing editor Alex Friedmann.

Friedmann, who owns a small amount of GEO stock as an activist investor, also filed a shareholder resolution in advance of the company’s May 2019 annual meeting, which would have prohibited the company from housing immigrant children separated from their parents or parents separated from their children. GEO Group successfully challenged the resolution by filing an objection with the SEC, and it did not go before shareholders for a vote. [See: PLN, Jan. 2019, p.44].

While acknowledging that pressure from activists has kept the private prison industry from being fully accepted by “either government agencies or the public,” which “could have a material adverse effect on our business,” GEO Group’s latest annual report does not reveal any impact on its gross revenues, which rose to $2.33 billion in 2018, up from $2.26 billion the previous year.

Founded by former FBI agent George Wackenhut – the company was originally called Wackenhut Corrections – GEO Group is one of the two largest private prison operators in the U.S. and the largest contractor holding detainees for ICE. 

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Sources: miaminewtimes.com, valuewalk.com, newsweek.com, iccr.org, americanmag.org