Arizona Attorney General's Office, PhoenixOctober 2010
More on the private-prison system
Arizona prison businesses are big political contributors
Corrections Corp. of America, the country's largest private-prison operator, says it thrives by offering better service at a lower cost than state-run prisons. It's an argument echoed by the three smaller rivals bidding on a 5,000-bed private-prison contract with the state of Arizona.
But when it comes to other ways of winning business, such as employing platoons of lobbyists, doling out campaign contributions and working through political connections, CCA stands head and shoulders above its competitors, in Arizona and across the country.
It isn't easy to disentangle the complicated political and financial connections between a company and the public officials whose policy decisions can help or harm its business. But critics accuse CCA of using its financial might and political connections to influence decision makers and muscle its way to multimillion-dollar deals behind closed doors."They spend a lot of money, and clearly, they spend it because it benefits their interest, which is winning contracts," said Bob Libal, a senior organizer at Grassroots Leadership, a Texas group that opposes prison privatization.
The company says its lobbying activities are meant only to educate lawmakers. Critics who argue that putting prisons in private hands creates a perverse incentive for companies to push for tougher prison terms level similar charges against competitors Geo Group Inc., Management and Training Corp., and, to a lesser extent, LaSalle Corrections, the other companies bidding for new Arizona contracts.
Arizona's Department of Corrections plans to award one or more contracts after Sept. 16 for an expansion of private prisons ordered by state lawmakers and signed by Gov. Jan Brewer last year. This follows a failed effort in 2009 that would have allowed privatization of all but one of Arizona's 10 state-run prisons.
Just before a series of recent community hearings to assess competing bids, Geo and MTC hired additional lobbying and public-relations firms in Arizona. But both are playing catch-up to the efforts of Nashville-based CCA, which has outspent its rivals in campaign contributions and has cultivated more political connections.
Political footprint
The nation's largest and oldest corrections company, CCA runs more than 60 prisons and immigrant-detention centers across 19 states and the District of Columbia. It has by far the largest political footprint of the dozen or so companies that operate private prisons in the U.S.
CCA has spent about $17.6 million lobbying Congress and federal agencies over the past decade, according to records compiled by the Center for Responsive Politics, a nonpartisan organization that tracks the effect of money on U.S. politics. The agencies include the Department of Homeland Security and its Immigration and Customs Enforcement division, which contract with private operators such as CCA for immigration-detention centers.
Thirty of CCA's 35 lobbyists on Capitol Hill previously worked for members of Congress or for federal agencies. Two CCA senior executives are former directors of the Federal Bureau of Prisons, including Harley Lappin, whom CCA hired in June as chief corrections officer a week after his retirement from the bureau. CCA is a major bureau contractor. Another CCA vice president, Bart VerHulst, previously worked as chief of staff for then-Senate Majority Leader Bill Frist of Tennessee.
Since 2000, the company has won $3.84 billion in federal contracts, including just under $546 million for federal contracts in Arizona, according to government records. CCA's six prisons in Arizona hold inmates from other states, federal prisoners and immigration detainees. Its bid calls for moving out prisoners from Hawaii and California at its existing Red Rock and La Palma prisons in Eloy and moving in Arizona prisoners.
CCA lobbies heavily on the state level, employing 178 lobbyists in 32 states over the past eight years, according to the National Institute on Money in State Politics, a nonpartisan group that gathers lobbying and campaign-finance data.
In Arizona, the company has cultivated high-level connections. Former U.S. Sen. Dennis DeConcini sits on CCA's board of directors. Perhaps the highest profile among CCA's 22 registered lobbyists in Arizona belongs to Chuck Coughlin, president of HighGround Public Affairs Consultants and a senior political adviser to Gov. Jan Brewer. Besides CCA, HighGround's 23 lobbying clients include Maricopa County and Salt River Project.
Coughlin served as chairman of Brewer's transition team when she took office in 2009 and as her campaign manager in 2010. He also has managed election campaigns for Senate President Russell Pearce.
Other heavy hitters with ties to CCA include Paul Senseman, a lobbyist with Policy Development Group, who served until last fall as Brewer's spokesman and whose wife, Kathryn Senseman, lobbied for that group while he worked for Brewer; and Bradley Regens, who joined CCA in 2007 after nine years as an Arizona legislative staffer, including two years as director of fiscal policy for the state House of Representatives.
Brewer has advocated for privatizing Arizona prisons. But even other privatization supporters say her CCA connections raise red flags.
"I've questioned Brewer's choice of staff in the past for the same reason; she has a lot of contract lobbyists, and I have a problem with that," said Sen. Ron Gould, R-Lake Havasu City. "At the very least it gives the public the appearance that these companies have too much influence, and you have to wonder what's going on when they leave Brewer's office and go right back into lobbying."
Brewer's office did not respond to repeated requests for comment.
Since 2003, CCA employees and affiliates have given nearly $2 million in campaign contributions to state-level candidates and ballot issues across the U.S.
In Arizona, CCA associates and its political-action committee have reported giving about $35,000 in political donations over the past decade to Brewer, Pearce, former House Speaker Kirk Adams, House Speaker Andy Tobin and many others. A big chunk of that, $11,520, was given for last year's election campaigns.
Arizona lobbying firms that represent CCA made about $35,000 in political contributions in the 2010 election cycle. Whatever influence contributions may bring, they are wielded on behalf of many clients.
CCA has spent far more in other states as has its nearest rival, Geo Group.
"They don't have to spend the money here," said Rep. John Kavanagh. "They don't really have to convince us."
In his view, a majority of the state legislators philosophically support the notion of privatizing government services when it makes economic sense. Kavanagh said he believes that Corrections Department studies in recent years showing private-prison beds cost more than state-run prisons "don't properly take into account secondary expenses," such as pensions for state corrections officers and differences in insurance rates. However, several academics who study corrections said Arizona conducts the most thorough cost comparisons of any state.
Corporate ties
CCA has other connections with legislators in Arizona and elsewhere, most notably as a longstanding corporate member of the American Legislative Exchange Council.
The council describes itself as a nonpartisan national association of state legislators; in fact, it is a partisan vehicle that brings together about 300 large corporations and 2,000 predominantly Republican legislators on task forces that produce model bills that lawmakers can introduce in their state legislatures.
Recent ALEC policy initiatives focused on an anti-regulatory, anti-union, anti-Obama health-care, pro-free-trade agenda.
The council doesn't release corporate or legislative membership lists. But a May 12 e-mail from Rep. Debbie Lesko, ALEC's public-sector Arizona chairwoman, lists 51 current Arizona legislative members, more than half of both the state Senate and state House. There are 50 Republicans and one Democrat, Rep. Richard Miranda of Tolleson. Lesko's e-mail, inviting lawmakers to the council's annual meeting in New Orleans, was leaked and posted online by a Tucson blogger; Lesko confirmed its contents.
Corporations, from Walmart and Exxon Mobil to Koch Cos. and Salt River Project, provided 98 percent of the council's funding last year, according to a tax filing obtained through a Freedom of Information Act request. Lawmakers pay $50 a year to join; corporations pay from $7,000 to $25,000 a year for membership, plus more to sit on task forces, or to sponsor events hosting legislators and, often, their families. Corporations also fund ALEC "scholarships" that pay for lawmakers' travel and lodging.
CCA spokesman Steve Owen said his company left ALEC last year. But for the past two decades, a CCA executive has been a member of the council's Public Safety and Education Task Force as it produced more than 85 model bills and resolutions that required tougher criminal sentencing, expanded immigration enforcement and promoted prison privatization. Laurie Shanblum, CCA's senior director of business development, was the private-sector chair of the task force in the mid- to late '90s, when it produced a series of model bills promoting tough-on-crime measures that would send more people to prison for a longer time.
They included a "Truth in Sentencing Act" requiring that convicts serve at least 85 percent of any sentence, and 100 percent of a sentence for violent crimes; a "Mandatory Minimum Sentencing Act," imposing longer, mandatory sentences for all drug offenses; a "Third Strike" law mandating a life sentence for a third violent felony conviction; and dozens of other bills that called for violent juveniles to be tried and sentenced as adults, and for longer sentences for child-porn crimes, drunken driving, repeated retail theft and many other crimes.
Critics, many with ties to public-union or human-rights groups, have charged that such bills, by sending more people to prison longer, drove up demand for the prison space and services CCA sells.
Starting in the 1990s, the ALEC task force also produced model bills directly promoting prison privatization. These included bills to let private prisons house inmates from other states without permission of local governments, require privatization of prisons and correctional services and encourage contracting for prison labor.
Council members from Arizona, including Pearce, and a long list of former legislators going back to the early 1990s including Wes Marsh, John Verkamp, Jay Tibshraeny and Thayer Verschoor, subsequently introduced bills here that were near-duplicates of the ALEC model bills.
Lobbying costs
Geo Group Inc. of Boca Raton, Fla., the country's second-largest private-prison firm, has spent freely in recent years on lobbying and political contributions as it has tried to compete with CCA.
Geo, which is in the running for the new contract, operates 53 correctional and immigration-detention facilities in 17 states, plus an immigration facility at Guantanamo Bay, Cuba. In Arizona, Geo operates three contract state prisons: the Central Arizona Correctional Facility and Florence West, in Florence, and Phoenix West.
Geo has spent $2.4 million since 2004 lobbying Congress and federal agencies including Homeland Security and Immigration and Customs Enforcement, according to the Center for Responsive Politics. Two of Geo's four federal lobbyists formerly worked on Capitol Hill.
Geo has won $2.69 billion in federal contracts over the last decade, according to government records.
On the state level, Geo Group has used 68 lobbyists in 16 states over the past eight years, according to the National Institute for Money in State Politics. Over that time, Geo employees and affiliates spent more than $2.6 million in campaign contributions at the state level across the country.
In Arizona, Geo has seven registered lobbyists, including three at KRB Consulting Inc., a firm it hired in early July in advance of Department of Corrections hearings on the pending private-prison contract. KRB's Kristen Boilini worked for the Mofford and Symington administrations from 1989 to 1994; the firm's Nick Simonetta is a former state Senate staffer. Geo also recently hired the Arizona publicity firm of Leibowitz Solo. The firm's principal, David Leibowitz, is a former Republic columnist. Another Geo lobbyist is former legislator John Kaites, at Public Policy Partners.
In the 2010 election cycle, Geo Group's lobbyists made about $39,000 in campaign contributions to Brewer, Pearce, Adams, Kavanagh and others. Most of those firms also represented many other clients.
Geo associates and its political-action committee have given more than $28,000 in campaign contributions over the last decade, including at least $7,960 before last year's election. Geo employees focused their 2010 contributions on then-House Speaker Adams and Majority Whip Tobin.
The two leaders, along with Pearce, co-sponsored a bill signed by Brewer in September 2009 that mandated the 5,000 private-prison-bed expansion, the privatization of the Department of Corrections' health-care services, and ordered Corrections to seek potential bidders to take over up to nine of Arizona's 10 state-run prisons.
That last provision was intended to raise at least $100 million, but it failed to attract a qualified bidder and was repealed in March 2010 after some lawmakers had second thoughts when Corrections Director Charles Ryan raised security concerns.
Smaller competitors
In contrast to CCA and Geo, the much smaller and privately held Management and Training Corp. of Centerville, Utah, and LaSalle Corrections of Ruston, La., have spent just under $350,000 combined on federal lobbying over the past decade.
LaSalle, the smallest of the bidders, operates 12 prisons in Louisiana and Texas. It is the only company that doesn't hold any Arizona or federal contracts; and there is no record that it has registered lobbyists or made political contributions in this state. LaSalle's managing partner, Billy McConnell, and his family have given just under $59,000 in political contributions in Louisiana since 2000.
MTC's prison operations are a little more than a third the size of Geo's or CCA's. It runs 20 facilities in seven states, including two prisons under contract with Arizona's Department of Corrections, at Kingman and Marana. However, the company, which also runs Job Corps job-training centers for the U.S. Department of Labor, has amassed $3.26 billion in federal contracts since 2000. About $466 million of that amount is corrections-related.
MTC also has spent less than its larger rivals on lobbying and campaign contributions in recent years, though it recently ramped up its efforts. On Aug. 10, MTC hired the Dunn Stewart Group as lobbyists. Terry Stewart, a former Arizona Department of Corrections director under whom current director Ryan served as deputy, represented MTC at recent public hearings in San Luis and Coolidge. MTC also employs former Corrections assistant director Carl Nink.
MTC won the bid in 1993 for Arizona's first private contract prison, at Marana. The idea was championed by then-Rep. Bob Burns, an ALEC leader in the state. The debate over prison privatization in Arizona dates from at least the mid-1980s, when Govs. Bruce Babbitt and Rose Mofford three times vetoed proposals. Throughout the 1990s, privatization supporters in the Arizona Legislature consistently have been affiliated with ALEC.
"You can follow the money and connect the dots and there are a lot of troubling connections," said Rep. Chad Campbell, D-Phoenix, the House minority leader.
Campbell has asked Brewer to delay any new contracts until the Department of Corrections completes a study, due in January, to provide a comprehensive comparison of private and public prisons. Such biennial studies are required by state law but have not been conducted to date.
"I don't see the governor or legislative leadership complying with the law. . . . I don't see any evidence they're doing the due diligence to make sure this is a good deal for the taxpayers," Campbell said.
