It’s Fear of Crime That Pays for Security Firm : Services: Wackenhut Corp. profits in picking up where the authorities leave off. It manages 12 prisons and patrols downtown streets and interstate highway rest stops.
Crime and punishment are creating new opportunities for Wackenhut Corp., a private security firm that provides police and prison services once monopolized by local governments.
After a British tourist was shot to death by robbers at a north Florida highway rest stop in the fall of 1993, Wackenhut won a $6.7-million contract to provide security at rest stops throughout Florida’s 1,500-mile interstate highway system.
When fear of crime threatened to keep shoppers out of downtown Miami, merchants banded together to hire a squad of Wackenhut guards to patrol the area at night.
“There just aren’t enough police to handle all the problems, so the answer is the private sector. It’s expanding faster than I could possibly imagine,” said Chairman George Wackenhut, who retired from the FBI in 1952 to found the company.
As a result of a public outcry for more protection, the United States now has three private security guards for every public police officer, according to experts.
Crime means brisk business for Wackenhut. Wall Street analysts estimate the company’s annual operating income will soar to 85 cents per share for 1994 from 47 cents per share last year.
In 1993, Wackenhut had operating income of $4.4 million on sales of $664.2 million. The figures came before a $1.4 million charge, or 19 cents a share, from debt retirement.
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Miami-based Wackenhut operates in 54 countries, providing security for everything from embassies and nuclear plants.
Its guards patrol on foot and in marked cars to keep robbers, vandals and assorted other miscreants at bay. Some guards are former members of elite U.S. military units such as the Army’s Green Berets and Navy Seals.
About half of the $664 million revenues for 1993 came from Wackenhut’s U.S. unit, which operates prisons and supplies guards for business, neighborhoods and housing projects.
“This is a relatively new area providing services that were almost a monopoly of public government. Now we have the private sector moving in, saying, ‘We can do a better job more cheaply,”’ said Frederick Shenkman, who teaches law enforcement at the University of Florida and is a consultant for police departments.
Experts say the private security boom is partly the result of unrealistic expectations by the public.
“People want to see a cop on every stoop,” Shenkman said. “The only way you can get that is if a neighborhood or a store owner can pay somebody to do it.”
The United States has 2.4 police officers for every 1,000 people, but only about 60% are patrol officers, Shenkman said. “At any given time, there’s maybe one cop available for every 5,000 or 6,000 people,” he said.
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Figures released this week by the FBI show the rate of U.S. violent crime dropped by 3% from last year, the second year the rate has fallen. But the decreases have failed to offset the surge in overall crime since the 1960s.
Wackenhut and its competitors are also banking on growth in managing prisons. The nation incarcerates roughly three times as many people as it did 30 years ago.
Several studies, including one by the National Institute of Justice, suggest private companies can run those prisons for 10% to 20% less than governments.
Wackenhut already manages 12 prisons in the United States and Australia and is under contract to manage five more under construction in Texas, Florida and Britain. It provides everything from guards and meals to drug counseling.
“Before the year is over we’ll be the No. 1 private manager of public prisons,” Wackenhut said.
The trend toward privatization has generated controversy, particularly when it comes to private guards opening fire on a suspected criminal.
Private security guards can make citizen’s arrests, but generally have no police powers. However, those hired by public agencies operate in an official capacity and must do such things as read suspects their rights when arrested.
