Breaking: CalPERS Engages Private Prison Companies

Via Chief Investment Officer | Randy Diamond

The chairman of the investment committee of the California Public Employees’ Retirement System (CalPERS) says investment officials are engaging management of two private prison companies, CoreCivic and The GEO Group, as well as defense contractor General Dynamics.

Henry Jones’ comments come as a California state legislator, Democratic Assemblyman Rob Bonta, has introduced legislation that would force CalPERS to divest from the two prison companies.

The companies have been the subject of controversy because of their housing of children and their families caught up in the Trump administration immigration crackdown. Other major pension systems, including the California State Teachers’ Retirement System (CalSTRS), The New York State Common Fund, and The New York City pension systems, have divested from CoreCivic and The GEO Group.

General Dynamics, whose holdings have not been sold off by the other pension systems, does not house prisoners but does provide case management services for youth detained under the Trump administration policies. Advocates want CalPERS to pressure General Dynamics to stop its contracts with the federal government, but generally have not called for outright divestment.

Jones made his comments about engaging CoreCivic and The GEO Group at CalPERS’s Dec. 17 investment committee meeting, following speeches by individuals and representatives of several groups supporting divestment.

“We appreciate your concerns,” Jones said, noting that CalPERS staff was engaging the companies on issues raised by the speakers and is continuing to follow up on developments in accordance with fund policy.

Under the rules of the largest US pension plan, CalPERS must engage companies over its policies before the investment committee can take a formal vote on divestment.

One of those speaking on Dec. 17, Emily Claire Godman, the founder and director of Educators for Migrant Justice, said she understood that CalPERS has historically resisted shareholder demands for divestment, arguing that a voice at the table is the best way to change corporate conduct.

“This argument doesn’t hold for companies like CoreCivic and The GEO Group, whose for-profit prison model, where the companies have a financial incentive to incarcerate as many people as possible, is inherently incompatible with the concept of corporate social responsibility,” she said. “No amount of pressure from investors can persuade a company to abandon its business model.”

Goldman presented the investment committee a petition singed by 240 CalPERS members calling for divestment of the two companies.

“This level of divestment makes it more difficult for these migrant abuse companies to underwrite debt, access capital, and lobby for contracts and pro-incarceration anti-immigrant policies,” she said.

Another speaker, Mya Dosch, an assistant professor at Sacramento State University and a CalPERS member, expressed concern about Cibola County Correction Center in New Mexico run by CoreCivic, which has a unit housing transgender women.

Dosch cited the case of a transgender woman, Roxana Hernandez, who died from complications of HIV, pneumonia, and dehydration at a hospital in May after being detained at the correctional facility. Hernandez was at the CoreCivic facility for 12 hours before being transferred to a hospital after her medical condition became known.

 “We take the health and well-being of those entrusted to our care very seriously,” he said.  “Whenever there is a death in custody, CoreCivic immediately notifies our government partners and all appropriate authorities with oversight responsibility. We cooperate fully with those investigations.”

He also said CoreCivic was committed to providing a safe environment for transgender detainees. “Our ICE-contracted facilities are contractually required and held accountable to federal Performance-Based National Detention Standards (PBNDS), which include guidelines for the safe and appropriate accommodation of transgender detainees,” he said.

Hernandez was part of a caravan of migrants from Central America seeking asylum in the US in May. She was detained by US Immigration and Customs Enforcement officials at the San Ysidro Port of Entry between San Diego and Tijuana, Mexico.

New Mexico Sens. Tom Udall and Martin Heinrich, and Sen. Kamala Harris of California, have sent a letter to border and immigration officials asking for an investigation into the circumstances leading to Hernandez’s death. Immigration officials say Hernandez wasn’t abused while in custody.

“I do not want to invest in this,” said Dosch of the two private prison companies. 
 “I do not want my retirement tied to those corporations whose profit from the suffering of women of color and the most vulnerable among us. It is not a sound investment, either.”

Both private prison companies insist they do not make policies regarding the housing of immigrant detainees but provide services under their contracts with the federal government. The private prison companies also contract with state and local authorities, including the state of California, to hold prisoners because of overcapacity issues in state and local prisons.

If CalPERS chooses not to divest from the two private prison companies, officials of the pension system would likely have to make their case in the state legislature at a public hearing.

Bonta’s bill to divest from CoreCivic and The GEO Group will begin to be considered by state lawmakers after the state legislature reconvenes on Jan. 7. The bill came after the Trump administration’s immigration detention policies earlier this year shined the spotlight on CoreCivic and The GEO Group. Each company runs a facility housing adults and children detained in the immigration crackdown, as well as facilities housing adult detainees.

CalPERS has around $12 million in holdings in the two companies, not major for such a large pension plan, but divesture by the biggest US pension system would shine more attention on issues surrounding the private prison corporations and their for-profit model.

Bonta’s bill also calls for CalSTRS to divest from the two private prison companies, but the CalSTRS investment committee already approved divestment in an emotional 6-5 vote last month.

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