U.S. firm pioneers prisons industry with global reach
By Tim Lemke
The Washington Times
February 25, 2002
More than a thousand illegal immigrants from Afghanistan, Iran, Iraq, Indonesia and other nations are detained in the blistering desert of the Outback.
Across the ocean, South African prisoners sleep in newly built cells.
Thousands of miles away in Yorkshire, England, 16-year-old violent offenders peer out of small cell windows overlooking the Cheswald River.
All have one thing in common: They are watched over by guards of an American company.
Wackenhut Corrections Corp., a Palm Springs, Fla., company, operates 55 prisons, immigration detention centers, juvenile facilities and psychiatric hospitals, with a significant chunk of its business coming from overseas. In the United States, the company operates 36 facilities, including detention centers for the Immigration and Naturalization Service in Queens, N.Y., and Aurora, Colo., and has plans to operate a 1,000-bed prison in Charlotte County, Va., beginning in the fall.
Outside the United States, the company runs 19 facilities, including a maximum security prison in South Africa and five immigration detention facilities in Australia designed to accommodate the influx of illegal immigrants. More than 2,700 people from 84 nations are detained in Australia.
The company is considered a pioneer in the United States for its efforts to expand globally.
Its presence in Australia is unrivaled by any American company; its Australian subsidiary, Australasian Correctional Management, operates 10 facilities there under exclusive contracts or licensing agreements with the Department of Immigration and Multicultural and Indigenous Affairs (DIMIA), the Australian immigration agency.
The company has exclusive rights to operate three more immigration facilities that are being built as contingencies.
Perhaps most notable of the Wackenhut Corrections facilities is the Woomera Immigration & Processing Centre, located in the desert 300 miles from the South Australia capital, Adelaide. It is Australia's largest detention center for illegal immigrants, with 1,200 detainees, operating under a license agreement with the Commonwealth of Australia and DIMIA. Detainees there reportedly have gone on hunger strikes, going so far as to sew their mouths shut to protest their detention and the government's immigration policies.
The Woomera facility has expanded rapidly since it opened in 1999, as immigrants from oppressive Middle Eastern nations or war-torn nations fled to Australia, most often by boat.
The facility had an original capacity in 1999 of 425 detainees. That increased to 1,000, then 1,400 in 2000 to accommodate an influx of arrivals from Indonesia.
The company has room for growth due to the political stance of Australian Prime Minister John Howard, who was re-elected in November on a strong stand against illegal immigration and support for a policy of indefinite detention for illegal immigrants.
The Woomera facility is not the only detention center growing quickly.
The Curtin Immigration & Processing Centre in Western Australia was built to hold 270 immigrants but expanded in November 1999 to hold 800. It now holds 850 illegal immigrants.
At the Villawood Immigration Detention Center in New South Wales Province, capacity has been expanded from 299 to 390.
Wackenhut Corrections raised some eyebrows this month when it helped open a new maximum security prison in South Africa.
The company entered into a 50-50 partnership with Kensani Corrections Ltd. to build the Kutama-Sinthumule prison under contract from the South African Department of Correctional Services.
The new, 3,024-bed prison is seen as a risk by some because of the volatile and violent history of South Africa.
But analysts said the nation's notoriously high rate of violent crime will ensure the prison will remain full, and therefore profitable.
Furthermore, analysts said South Africa is, at least for the time being, stable enough to conduct business.
" South Africa is all right, for the moment, " said Lincoln Werden, a stock analyst with HG Wellington & Co. in New York. " We have the image, at least now, that it's a safe and stable place. For the moment, it looks like Wackenhut is a pioneer. "
Meanwhile, the company has moved into other countries through partnerships with international companies.
In Britain, its joint venture, called Premiere Prison Services, operates seven facilities, including the 524-bed Prison Lowdham Grange, one of the country's largest prisons, located in Nottinghamshire, England.
Wackenhut Corrections operates all of its facilities under license agreements or contracts with the national and local governments.
Its U.S. competitors include Correctional Corporation of America, a Nashville, Tenn., company with 64 facilities in North America, and Correctional Services Corp. of Sarasota, Fla., which operates 46 facilities. But few American companies have the overseas operations of Wackenhut Corrections, and international security firms have chosen to partner with, rather than compete against, the company.
It faces little competition in the area of immigration detention centers.
The company, which began trading on Nasdaq in 1994 and the New York Stock Exchange in 1996, is a subsidiary of Wackenhut Corp., one of the country's largest outsourcers of private security services.
The parent company, which also has a hefty international arm, owns 57 percent of Wackenhut Corrections' stock. Wackenhut Corrections pulled in $562.1 million in 2001, an increase of $27 million over the previous year.
Net income also grew from $17 million, or 80 cents per share, in 2000 to $19.4 million, or 92 cents per share.
Its shares closed at $16.86 on the New York Stock Exchange Friday. They reached a 52-week high of $17.45 Feb. 1, after bottoming out at $8.55 on March 29, 2001.