How Serco pulled the wool over Corrections and Mt Eden was rated as 'exceptional'

Wednesday 19 August 2015, 7:58AM

In 2012, the Corrections Department began comparing the effectiveness of its 17 prisons. Since then each prison has been ranked under one of four categories: ‘Needs Improvement’, ‘Effective’, ‘Exceeding’ or ‘Exceptional’ and the results are published every three months in the Prison Performance Tables.

Reports about fight clubs in Mt Eden prison, run by Serco, also go back to 2012. In September that year, TV3 reported on a former inmate who claimed that prisoners were running a ‘fight club’.  At the time, the Corrections Department said complaints about violence were “easy to make but difficult to investigate”.  So they didn’t bother – even though section 199F(2) of the Corrections Act was amended to enable  the Department to appoint monitors in contracted prisons who shall have...“free and unfettered access at all times to every part of the contract prison managed by that contractor; and all prisoners in that prison.”

Then in June this year, prisoners themselves confirmed on-going violence by posting video clips of fight clubs on social media. Labour MP, Kelvin Davis, joined in claiming that prisoners were being ‘dropped’ off balconies and had died from their injuries. In July it was reported that a prisoner committed suicide after being subjected to violent bullying.

Mt Eden rises to the top

Unbelievably, while all this mayhem was going on, the Mt Eden prison managed by Serco was climbing up the prison performance tables. It hit the number one spot in December 2013 and in that quarter, Serco’s performance was rated as ‘exceeding’.  Three months later, it was bumped up to ‘exceptional’ and has maintained this rating ever since.

In response to the violent video clips, Corrections claimed it had no idea that prisoners were routinely taking drugs and fighting.  The monitors must have been asleep. But there’s more to this cover-up. Under the contract, Serco is responsible for providing the Department with regular statistics on a variety of key performance indicators including ‘serious assaults’.  During all of 2014, Serco reported that these were all within acceptable limits; because the monitors never raised any concerns, chief executive Ray Smith just accepted whatever Serco said.

Serco operates at a loss

Serco is also responsible for advising Corrections how much it should be fined if it breaches performance standards in the contract. Every time Serco reports a prisoner has been seriously assaulted, it is supposed to penalise itself $35,000. Expecting a multi-national corporation like Serco to fine itself is a ludicrous contractual concept.  It’s just not going to happen.

These reporting clauses simply incentivise Serco to fiddle the figures - a practice for which the company has a well-established history. In 2013 the Guardian reported Serco and G4S were investigated by the Serious Fraud Office after they were found to have been overcharging the British Government  since 2005 for the monitoring of offenders in the community. The two companies had to pay back $180 million after charging for the monitoring of offenders who were subsequently found to be dead, back in prison or overseas. In Britain, Serco is now operating at a loss.

It does not want to lose money in New Zealand as well. To avoid doing so, Serco is able to hide the serious assault statistics at Mt Eden using loopholes in its contract with Corrections.  The contract defines a ‘serious assault’ as one involving.. ‘overnight hospitalisation in a medical facility’ or ‘bodily harm requiring extended periods of ongoing medical  intervention’.

On this issue, Kelvin Davis said: “There's one way to keep those statistics down and that's not send people to hospital."

Fiddling the figures at Mt Eden

Serco can avoid reporting serious assaults because the contract does not define ‘extended periods’.  So if an inmate is kept in prison for a week (or even a month) after an assault, Serco can avoid reporting this as a serious assault by pretending that one week (or one month) does not constitute ‘extended’ treatment. Occasionally, Serco has also transferred seriously injured prisoners to another prison – leaving the other prison to ensure the prisoner was hospitalised.

The monitors appointed by Corrections seem to have little incentive to bring this fraud (and inadequate medical treatment) to the attention of the chief executive, Ray Smith.  There are a couple of reasons for this. First, although the monitors are supposed to have ‘free and unfettered access to all parts of the prison’, section 199F(3) of the Corrections Act provides an ‘out’.

It says: “a monitor must not be given access to the medical records of any person unless that person consents to that access.”

Unless the monitors know which prisoner has been injured, they can't even ask for consent - making it next to impossible to ascertain the severity of any prisoner’s injuries. And it seems the monitors are incentivised to look the other way. According to Lisa Owen who interviewed Corrections Minister, Peseta Sam Lotu-Iiga, on TV3’s the Nation on 2 May, the monitors are actually employed and paid by Serco not by the Corrections Department to whom they are theoretically responsible. Can that really be true? If so it would be truly disturbing. That would give Serco total say over what the monitors actually monitored – as well as what they reported.

The inquiry

As a result of the furore caused by video clips from the smuggled cell phones, the Corrections Minister is to conduct an inquiry.  It will examine whether violent incidents have been "under-reported".  Hopefully it will also examine whether Serco has enough staff on duty to intervene when fights occur – to counter reports that understaffing leaves officers afraid to intervene.

You can bet there’s one thing the inquiry won’t examine – whether private companies like Serco, whose sole incentive is to make a profit, should be running prisons at all. And it won’t examine why the Government agreed to use a company like Serco with such a dubious track record overseas.