The GEO Group -the nation’s second largest for-profit, private prison firm – recently announced its intention to gift $6 million over a 12-year period to Florida Atlantic University (FAU), a public institution situated less than 5 miles from GEO’s corporate headquarters in Boca Raton. In return, FAU has agreed to emblazon the words “GEO Group Stadium” on its 29,419-seat open-air football facility, a decision that blurs the boundaries between recreation and retribution and challenges the parameters of so-called “corporate citizenship,” a popular practice that attempts to displace the systematic contradictions of modern capitalism with singular moments of charity. In the end, GEO’s construct of “corporate citizenship” trips over itself by feeding the very conditions it claims to starve. The company’s existence is nothing short of an exercise in contradiction.
George Zoley, CEO of the GEO Group and alumnus of Florida Atlantic University, said of the nascent partnership, “We’re delighted with the opportunity to enter into this groundbreaking partnership with Florida Atlantic University. Our company has always been committed to making a positive contribution to the communities in which we serve. This new partnership between The GEO Group Foundation and the FAU Foundation will allow the University to support its scholarship and academic program priorities and will serve as a catalyst for continued academic and economic growth in South Florida.”
And in an email first publicized by The New York Times, one unidentified GEO spokesperson stated, “We have always adhered to the highest standards in our industry and have shown a commitment to philanthropy and good corporate citizenship, [emphasis added] and we believe this very important gift, which will help thousands of students over the next 12 years, is representative of that commitment.”
GEO’s rhetoric of “corporate citizenship” is particularly troubling in light of the company’s recent IRS classification conversion from a traditional C corporation to a Real Estate Investment Trust (REIT).
Less than two weeks ago the GEO Group announced it had received a favorable private-letter ruling from the IRS in connection with its previously announced intention to convert to a REIT. Here’s what you need to know about REITs: To qualify as a REIT, a company must have the majority of its assets and income tethered to real estate investment. Further, it must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends. In exchange for dividend payments, REITs are exempted from state and federal corporate income taxes; they pass along tax burdens directly to individual investors, who pay ordinary income tax on capital gains and dividends.
In a recent investor report GEO estimated that a REIT conversion would save the company $50 million annually in taxes.
Despite lauding its commitment to “corporate citizenship” and community partnerships, GEO’s recent REIT conversion – one that reduces its corporate tax liability to zero and thereby deprives public agencies of much-needed revenue -demonstrates the bankruptcy of GEO and of “corporate citizenship,” a rhetorical sleight-of-hand intended to “re-create” the image of monopolistic, private prison companies through the imagery of recreation and competition.
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