UPDATE, Dec. 22, 9:30 a.m.: On Wednesday, Dec. 21, Portland City Council voted to halt all city investments in corporate bonds until the incoming City Council revisits the issue in 2017. While Commissioner Steve Novick initially planned to propose that council add Nestlé Holdings and Credit Suisse to the city's Do-Not-Buy List, he instead introduced a resolution to add Wells Fargo and Caterpillar, two companies that have strong public support for divestment. But then, Commissioner Amanda Fritz added an amendment to temporarily cease all investments in all corporate bonds, which council then voted to approve. This allowed the city to avoid naming specific companies and delay making a concrete decision until after Ted Wheeler and Chloe Eudaly take office in January.
UPDATE, Dec. 15, 3:39 p.m.: City Council today extended the vote on adding new companies to the city's Do-Not-Buy List due to losing quorum, with the matter now scheduled for 2:30 p.m. on Dec. 31.
UPDATE, Dec. 15, 11 a.m.: Novick's office extended a vote to 3:30 p.m. on Dec. 15, when City Council is expected to vote on whether or not to keep Wal-Mart and fossil fuel companies – which it is not yet fully divested from yet – on the Do-Not-Buy List. It will also likely vote on whether or not to add Nestlé Holdings and Credit Suisse. Proponents of divesting from companies that support private prisons and those who demand divestment from Caterpillar for human rights issues are expected to be at the meeting in full force once again. City Council, however, is expected to extend voting on those companies until next year, when the incoming members will be in place. According to the City Council's online agenda, however, the vote is being extended to Dec. 31.
In the wake of a presidential election that spurred an overnight upsurge in private prison stock value, Portland City Council is being asked to rid the city’s investment portfolio of financial institutions that profit from private prisons.
The timing is purely coincidental.
The opportunity comes in the form of a list of recommendations submitted to City Council in late September from the city’s Socially Responsible Investments Committee.
It’s asking council to add nine companies to the city’s Corporate Securities Do-Not-Buy List, and four of them are major financial supporters of private prisons – Wells Fargo, Bank of New York Mellon Corp., JPMorgan Chase Bank N.A. and HSBC Bank USA.
Since the release of the list, a broad coalition of two dozen unions, civil rights organizations, churches and other local community groups, calling itself the Portland Prison Divestment Coalition, is pushing City Council to approve the committee’s recommendations.
Specifically, the coalition wants the city to divest from the Wall Street banks known to bankroll the private prison industry and Caterpillar, which manufactures equipment custom designed to bulldoze Palestinians’ homes and is a key contractor in the construction of the Dakota Access Pipeline.
While the city sold its remaining HSBC holdings in January 2015 and owns no Caterpillar bonds, it currently owns bonds worth $96.3 million in the other three banks, representing 7.2 percent of its total investment portfolio, which as of Sept. 30 was worth $1.3 billion.
The committee estimated that potential losses in revenue from investments in these three banks, if no equivalently yielding investments are found, could be between $4 million and $5.1 million over a three-year term.
City Council has set aside three hours for public testimony on the committee’s proposed recommendations from 2 p.m. to 5 p.m. during its Nov. 30 meeting and is expected to vote on what companies it will add to the Do-Not-Buy list on Dec. 7.
The list is currently occupied only by Wal-Mart.
The seven-member advisory committee, championed by Commissioner Steve Novick in 2014, also named Amazon.com, Nestlé Holdings, Credit Suisse and Société Générale among the “the worst of the worst” corporate issuers eligible for city investments on its first and long-awaited list of recommendations. Of those, the city is invested only in Credit Suisse, with $16.9 million in holdings.
The Socially Responsible Investments Committee is charged with identifying corporate issuers that don’t align with pre-established values and ethics.
Among reasons for blacklisting the nine corporate issuers listed, the committee noted multiple examples of fraud, worker abuses, corruption and tax evasion among the companies.
It was concerned about Nestle’s possible connection to “serious child labor abuses including forced child labor in the cocoa supply chain,” Credit Suisse’s criminal activity and alleged funding of terrorism, and Amazon.com’s questionable labor practices, investigations into tax evasion in the U.K. and France, and concerns about corrupt corporate ethics.
The banks listed not only fund private prisons but profited from the subprime mortgage crisis that led to the Great Recession, and they have other concerning practices.
The pressure being applied to City Council by the local coalition is part of a national movement pushing governmental bodies to divest from private-prison profiteers.
In California, student members of Afrikan Black Coalition succeeded in pressuring the University of California system into selling its $30 million worth of holdings in private prison companies in 2015.
Berkeley City Council followed suit, becoming the first city to adopt a resolution to divest from private prisons in July; however, actual divestment is pending a financial impact analysis.
In spring, the Oregon Education Association, which represents 45,000 public education employees across the state, passed a resolution to lobby the Oregon Investment Council and state treasurer to divest the Public Employee Retirement System from holdings related to private prisons, including investors.
It’s also asking Portland City Council to divest, stating that its 4,000 members in Portland would like to see the council approve all of the committee’s recommendations.
“As educators, we see the impacts that the prison and detention system has on our youth and families,” OEA told council in a public comment it submitted. “We believe that for-profit prison corporations and the financial institutions that back them are some of the most disturbing drivers of mass incarceration.”
Private-prison stock fell following the Department of Justice’s announcement earlier this year that it was scaling back its contracts with private prison companies.
But prison-industry giants CoreCivic (formerly Corrections Corporation of America) and GEO Group saw their stock shoot up drastically after Donald Trump’s victory was announced on Election Day. Trump supports prison privatization, and he’s campaigned on deporting more immigrants, who are typically held for long periods of time in privately run immigrant detention centers.
He told MSNBC earlier this year: “I do think we can do a lot of privatizations and private prisons. … It seems to work better.”
Evidence, however, shows the opposite, with multiple studies indicating private prisons’ cost-cutting measures lead to violence and overcrowding, and create barriers to visitation. These factors all lead to higher rates of recidivism among inmates who’ve been housed in private prisons.
The Portland Prison Divestment Coalition sent a letter to members of City Council on Oct. 31, urging them to use their votes to “add heat to what is becoming unstoppable momentum to end the prison industry, and mass incarceration.”
But a Trump presidency will likely slow, if not reverse, that momentum.
“With the outcome of the Tuesday election, it’s even more urgent that our local leaders step up on behalf the communities of color and immigrant communities that Trump seeks to throw away,” said Amanda Aguilar Shank, deputy director of Enlace, which plays a lead role in the coalition. “The strategy of prison divestment has always been about a strategy to economically weaken the prison industry, and Portland is still perfectly positioned to be a national leader in doing so.”
Enlace also convened the national Prison Divestment Campaign that launched in 2011.
COMMENTARY: It's time for Portland to cut ties to the prison industry
Sankofa Collective Northwest co-director Leila Haile submitted written testimony, telling City Council that Sankofa recently turned down a $2,000 grant from Wells Fargo for Portland Black Pride.
“If we can make a stand for our values, and cut our ties with Wells Fargo, we think that the City can as well,” Haile wrote.
Ashlee Albies, on behalf of the National Lawyer Guild’s Portland chapter, also submitted written comment. She stated, “Although there are no private prisons in the state of Oregon, we feel the impacts of draconian immigration policies lobbied for by and profiting the private prison industry.”
But not having private prisons within its borders doesn’t mean Oregon isn’t sending people to them.
In 2015, nearly 1,000 people were transferred from Portland District Office Holding Facility to immigrant detention centers, according to a data research group at Syracuse University known as TRAC.
Most were sent to GEO Group’s Northwest Detention Center in Tacoma, Wash., one of the largest immigration prisons in the country.
One man who’d spent time at the facility also submitted testimony to City Council, claiming he was subjected to physical and verbal abuse and long stints in solitary confinement while he was there. He described the rooms as being overcrowded with people sleeping on the floors, and he said the food lacked basic nutritional value.
His complaints are consistent with the groundbreaking report from Mother Jones earlier this year. The magazine sent reporter Shane Bauer to work undercover as a guard in a private prison owned by CoreCivic for four months, giving the world a rare look inside.
FURTHER READING: The multibillion-dollar immigrant detention idustry
Bauer revealed the company’s cost-cutting measures were resulting in human rights abuses. He witnessed how understaffing and high staff turnover were fostering a very dangerous and violent environment within the prison’s walls, and he reported that inmates were living in squalor and frequently denied medical treatment, even for serious illness.
The Socially Responsible Investments Committee considered, but did not recommend, divesting from U.S. Bancorp, which also plays a significant role in financing private prisons.
According to notes from the committee’s April meeting, it was decided that while U.S. Bancorp has “some controversial issues … the bank has far fewer controversial governance issues than its peers” and has taken some positive steps.
A report released Nov. 17 by a Washington D.C.-based research center, In the Public Interest, found U.S. Bancorp was one of the six banks primarily responsible for bankrolling private prisons.
The city has holdings worth $45.1 million in U.S. Bancorp subsidiary U.S. Bank.
The report, “The Banks That Finance Private Prison Companies,” detailed how six financial institutions are propping up the private prison industry by extending revolving credit, providing astronomical loans and underwriting bonds for CoreCivic and GEO Group.
Because the private prison companies rely on revolving credit and massive debt, these banks are instrumental in their operations. The report indicated that at the end of June 2016, CoreCivic was $1.5 billion in debt and GEO Group was $1.9 billion in debt.
But big banks continue to lend CoreCivic and GEO Group more money – money that’s allowing them to expand their reach into other sectors of the criminal justice system.
On Oct. 28, Damon Hininger, Corrections Corporation of America president and CEO, announced, “Rebranding as CoreCivic is the culmination of a multi-year strategy to transform our business from largely corrections and detention services to a wider range of government solutions.”
This expansion included converting to a Real Estate Investment Trust, and therefore being able to rake in millions in tax-free revenue, and investing $250 million to acquire and build a network of residential re-entry and community corrections facilities.
“By providing loans to (CoreCivic) and GEO Group to purchase companies that provide residential re-entry and electronic monitoring services, the banks have helped position the private prison companies to receive new business as states and the federal government replace ‘tough on crime’ with ‘community corrections’ policies and replace immigration detention policies with immigration surveillance policies,” argued the report on banks behind the prison industry.
Critics with a national campaign launched against this expansion say rebranding efforts by the private prison industry have birthed the “Treatment Industrial Complex.”
One of the groups behind the campaign, Quaker nonprofit American Friends of Service Committee, released a report in August examining the privatization of electronic monitoring, day reporting centers, re-entry centers and intermediate sanction facilities.
It found that not only is privatization of these post-prison and alternative-to-prison programs expanding under the lure of lucrative government contracts, but the very pursuit of profit undermines national goals of shrinking the criminal punishment system and poses a threat to reform efforts by lobbying to expand the use of supervision and surveillance.
CoreCivic and GEO Group have spent tens of millions on lobbying, indirectly supporting policies that lock up more Americans, such as California’s three-strikes rule and Arizona’s anti-immigration laws, by donating to politicians that support them, The Washington Post reported in 2015.
Activists with the Portland Prison Divestment Coalition would like to see City Council make the divestment from private prisons complete by officially divesting from all industry investors and implementing a screening mechanism that would flag other issuers should they move to finance private prisons in the future, Enlace’s Aguilar Shank said.
A spokesperson for the city’s Office of Management and Finance, Jen Clodius, said that if city councilors vote to approve the list, the city’s treasurer would likely sell all existing bonds in the listed companies “as quickly as possible.”
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