The Real Cost of Prisons Weblog

Profiting UTIMCO, according to its last quarterly report, invests over $430 million in a hedge fund named Farallon. Farallon, an organization that has a bit of a sordid past itself, has recently, with the University of Texas and other universities' money, become one of the largest investors in Corrections Corporation of America, the biggest private prison company in the United States.
Because of SEC rules governing firms like Farallon, they are not obliged to reveal information pertaining to individual investors, such as the University of Texas, what exactly they are investing their money in.

What is certain, however, is that Farallon, with investors' funds, has bought 1.77 million shares of CCA and, with the amount of money that the UT System invests with the hedge fund, it's very likely that Farallon has invested a substantial amount of UT's money in this corporation.
Known by prison advocates as the most notorious of private prison
corporations, CCA has been documented in wide-scale abuses of their
inmate population. Human rights organization Amnesty International has been very critical of the for-profit prison corporation.

In a briefing in front of the United Nations Committee on Torture,
Amnesty detailed the ill-treatment of prisoners under CCA's care. These included inmates suffering electro-shock punishment by guards, being given severe beatings and even being sexually assaulted by shampoo bottles.

Because it is a for-profit corporation, CCA looks to cut costs where it can. This has led to inexperienced guards and a high turnover rate among its prison staff, almost three times that of guards in publicly run prisons, according to a 2006 report published by Grassroots Leadership.

One such consequence of this inexperience, revealed in study on CCA by criminologist James Austin, is that CCA prisons have 65-percent higher rates of prisoner assaults on other prisoners and even documented sales of drugs to inmates and assistance in escapes by CCA staff.

All this has led many at other universities to call on their
institutions to divest from Farallon, so long as it invests its clients' money in CCA. Students at Yale, another big university investor, have lobbied university officials to divest from the hedge fund, and many students at UT-Austin are planning to do the same.

The privatization of prisons across the country has quietly become one of the biggest moral issues facing many state legislators.

CCA has fast become the fourth-largest prison system in the country,
behind only the federal government and two states. They have used the
influence their size has brought them to their advantage. CCA and other private prison companies have extensively lobbied state legislators around the country - Texas state legislators are some of their favorite targets. Texas Rep. Ray Allen even co-chaired a meeting, as part of the conservative American Legislative Exchange Council, which wrote model legislation for state legislatures to introduce a greater role for
private prisons.

Not surprisingly, this and other legislation these corporations have
helped influence and even written has included harsher penalties for
most crimes and fewer opportunities for rehabilitation instead of
incarceration.

Because of the danger that private prisons pose, many faith communities, including the Presbyterian Church and the Southern Catholic Bishops, have called for an end to the for-profit prison industry. The UTIMCO should heed their call and see that its funds are invested in more responsible businesses, not ones that profit from human suffering and abuse. With divestment from Farallon, the University of Texas has the opportunity to take the lead among academic institutions with more responsible money management and to act more like a publicly accountable institution and less like faceless investment firm.

If it neglects to do so, however, UT risks jeopardizing its moral
credibility.

O'Keefe Cowles is a government and Latin American studies senior.
http://www.dailytexanonline.com/media/paper410/news/2006/02/10/Opinion/Profiting.
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