Why Private Prison Company GEO Group Backed Donald Trump

I’ve been worried about corporate political spending since long before Citizens United. As I discuss in my book Corporate Citizen?, corporations have been eager to spend in elections for a long time. And since 2010, corporations, including publicly traded ones, have been flexing their rights under Citizens United to spend in federal and state elections.

Since 2010, the overall biggest spender among publicly traded corporations in the last four federal elections has been Chevron. This has gone largely unnoticed because the company hasn’t actually spent directly for or against presidential candidates. Rather, Chevron tends to kick in a million to two to super PACs supporting congressional Republicans. They did this again in 2016, giving $2 million to the Senate Leadership Fund and $1 million to the Congressional Leadership Fund.

In 2016 publicly traded companies generally gave money in two ways: (1) like Chevron, they spent to support congressional Republican super PACs or (2) they spent on losing G.O.P. presidential candidates like Jeb Bush and Sen. Marco Rubio. For example, Nextera Energy gave a pro-Jeb Bush super PAC $1 million and $100,000 to a pro-Marco Rubio super PAC. Devon Energy gave $750,000 to the Senate Leadership Fund and $500,000 to the Congressional Leadership Fund.

Two public companies bucked these general trends. Masimo Corporation, a medical technology company, gave to the pro-Democratic Senate Majority super PAC instead of giving to Republicans.

But the only publicly traded company to openly throw its support behind one of the general election presidential nominees is the opaque-sounding GEO Group. (I hesitate to claim they are the only publicly traded company to spend in the presidential race because there was more than $175 million in dark money in 2016 which could be masking other corporate spending).

GEO Group’s political spending comes in to focus once one understands a bit about the company. GEO is the nation’s second-largest private prison operator. In 2015, 45 percent of its revenue came from operating 26 prison centers for the federal government. So when the Justice Department announced August 18th that it wanted to end the use of private prisons, GEO’s stock price fell 40 percent. Meanwhile, Democratic nominee Hillary Clinton was also calling for a halt to private prisons.

The day after the Justice Department announcement, GEO gave $100,000 to a pro-Trump Super PAC, Rebuilding America Now. That was a follow-up to a $50,000 contribution earlier in the month. Not only does GEO do work for the Bureau of Prisons, it also operates facilities for Immigrations and Customs Enforcement, garnering $161 million in 2015. Trump’s call to deport millions of undocumented immigrants could be a boon to GEO. (That seems to be what a lot of investors are betting on. GEO’s stock is up 38 percent since the election, while the S&P 500 is up 3.4 percent.)

Contributing to Trump’s super PAC wasn’t GEO’s only federal election spending this year. They gave $200,000 to the Senate Leadership Fund, $100,000 to Bush’s super PAC and $100,000 to Rubio’s super PAC. (It’s probably not coincidental that Boca Raton-based GEO gave to Bush, a former Florida governor, and Rubio, a current Florida senator.)

Given its business, it’s no surprise that GEO also spends in state elections. According to Followthemoney.org which tracks money in state politics, the GEO has given more than $6 million to over 796 entities over the past 16 years. Among the recipients of GEO Group’s largesse include both Republican and Democratic governors, attorneys general, and state legislators.

As I explained in an article in the Rutgers University Law Review, companies can hurt their brands by getting too entangled in political fights. They risk being rejected by customers and shareholders. But at least in GEO’s case, that does not seem to be the case.

So what to make of publicly traded companies’ political spending this cycle? First, the governmental relations shops at publicly companies (who are typically in charge of where companies spend in politics) were no better at picking winners in the presidential primary than pollsters and pundits. They mostly wasted their money betting on losers.

But they did have wild success in Congressional races. When pundits predicted at least one house would flip, publicly traded companies bet on incumbents, helped them win reelection, and thereby contributed to Republicans holding both chambers in 2016. But GEO does stand alone, perhaps because its business had the most to gain from a Trump win. Watch this space. Political quid pro quos are often troubling; but when the beneficiary is a private prison company, it could be downright ugly.