New York City's pension plans have invested $1 billion in private equity firms that the second-largest U.S. teachers' union says profit from mass incarceration, including a buyout fund that owns the phone provider to the city's jails, despite the retirement system's push to avoid prison-related businesses.
The pension plans have invested in Platinum Equity LLC and American Securities LLC, owners of Securus Technologies Inc. and Global Tel-Link Corp., respectively, according to a review of city investments. The companies dominate the market for phone and video visitation services to prisons and have been sued by inmates and their families for charging exorbitant fees. Securus provides phone service to New York City's 8,000 inmates. The pension plans also invest in Apax Partners, which bought 3M's electronic monitoring business, Attenti, in 2017.
The holdings illustrate how pension plans' investments in private equity firms, whose various partnerships typically hold several companies, can conflict with mandates to pull taxpayer money away from certain industries, such as tobacco or fossil fuels, seen at odds with the public good. For such reasons, New York City's pension plans in 2017 sold $48 million of stocks and bonds from the prison companies GEO Group Inc, CoreCivic Inc. and G4S PLC.
On Tuesday, the American Federation of Teachers released a report with a "watch list" of seven private equity firms invested in areas such as privatized prison health care, commissary services and bail bonds. The union said pension plans should avoid buyout investments in prison service providers or push asset managers to sell them because of the financial and legal risks the companies pose.
"The more people you have incarcerated, the more you profit. The incentives are misaligned," AFT President Randi Weingarten said in an interview. "You have tremendous bipartisan support for limiting the number of people who are incarcerated. That makes it an investment risk."