A Family Affair

Wackenhut Corp.'s days as a South Florida firm are over, but its legacy lives on

At 9 o'clock on the morning of May 8, 82-year-old George Wackenhut transferred ownership of the United States' largest security conglomerate to Group 4 Falck of Denmark. The deal confirms Group 4's Jorgen Philip-Sorensen as owner of the second-largest such outfit in the world. Indeed that entire business is now something of a family affair. The world leader is Securitas AB of Sweden, which was founded by Jorgen's brother, Sven.

George Wackenhut will receive nearly $112 million personally from the $573 million sale of his Palm Beach Gardens-based company, as well as $18.9 million from options and restricted stock -- not bad for a former G-man who left J. Edgar Hoover's FBI because of low pay and prospects and in 1955, after his first year in the gumshoe game, posted a net worth of $374.11.

The Wackenhut Corp.'s growth and prosperity during the 48 years that it was one of South Florida's most famous and infamous firms arose from more than George's determination, intuition and, in a favorite phrase of his, "know-how and know-who." It profited from the upswing in crime, overcrowded prisons, and public insecurity about public security.

The dice have tended to roll George's way. When, on April 27, 1954, he sent a letter to Hoover resigning from the FBI to take a private security job in Florida, Hoover replied by offering a raise in pay. George left the FBI anyway, not because the new job paid more but because he had met a Miami-based ex-FBI agent turned private investigator named Ed DuBois who offered him a partnership. Within a year, their company, Special Agent Investigators, included four former FBI men. Then one May night in 1955, personality differences between George and DuBois erupted, and George split open DuBois's chin with a left hook. DuBois resigned the next day, leaving George very much in charge of the fledgling firm. Soon, the other partners were also gone and the company was renamed Wackenhut.

The exponential growth that followed was driven by George's workaholicism, his political and FBI networks, and his showman's savvy. In 1958, he landed the guard contract for the Martin Co. of Orlando (later Martin-Marietta and later still, Lockheed Martin), mainly by showing a Martin executive photos of three of his guards dressed for work in a Wackenhut design of white helmets, gloves, and belts; powder-blue uniforms; and black paratrooper boots.

George's flair for head-turning dress managed to turn some stomachs as well. When the company eventually expanded into the New York City area, George's crack troops sported snappy Nazi storm-trooper caps until widespread outrage in the Jewish community forced a change.

During the 1960s, the company evolved from nickel-and-dime surveillance, eavesdropping assignments, and garbage-can sifting into guarding government installations. Then in 1984 came the mother lode of prison management.

But there were more missteps along the way. In 1979, the Florida Department of State completed an investigation of a Wackenhut guard's fatal shooting of a burglar in Miami. The probe revealed that the employee had a history of violent felony arrests and mental illness. It led to a fine of $15,100. The state also threatened to take away the company's license for 47 violations that included issuing firearms to 33 unlicensed guards. The penalty was the stiffest ever levied against a Florida security firm.

In 1990, another controversy arose after Wackenhut set up a sting operation on behalf of an oil consortium called Alyeska Pipeline Service Co. -- including Arco, Exxon, and British Petroleum -- that had been beset by information leaks and environmental malfeasance. The sting went so wrong that George ended up in front of a congressional committee. The B-movie script of bugging and bogus credentials, of stolen documents and brazen deception, got wide media play, and the Alyeska scandal brought its share of shame to the Wackenhut name.

George managed to avoid prison for his role in the oil-company-spying mess, but according to his official biography, The Quiet American (an 800-page tranquilizer and apologia), in the early days he did spend a night in a Florida jail in contempt of court and had this to say: "Talk about food? What they served was uneatable! We were in a cell with bunk beds, and the mattresses were black! It was not a good experience. I think I threw away my clothes after I got out of there."

Ironically, the company's diversification into running lockups for the government led to liberating profits. While the guard operations ran on wafer-thin margins of around 1 percent, the prison business, with its 8 to 10 percent spreads, provided the cash flow that took Wackenhut global. Today, the company is responsible for some 20,000 prison beds (beds, not heads, are counted) worldwide, mainly concentrated in the United States, Great Britain, South Africa, and Australia. A subsidiary company designs and builds prison and detention facilities.

But this business has also been riven with contention. Wackenhut's forays into Australia in 1999 drew howls of protest from the local press. The Courier-Mail of Brisbane argued that the company, which it claimed was involved in CIA espionage, should not be running Australia's detention centers and many of its private jails. More specifically, during the first 13 months that a Wackenhut subsidiary (Australasian Correction Management) managed the Arthur Gorrie jail in Queensland, four inmates committed suicide there, another died in mysterious circumstances, and still another was set on fire. Gang rape allegedly ran rampant.

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