A Family Affair
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.
Similarly, the Wackenhut stewardship of the Doncaster Prison in the United Kingdom was the subject of extensive and hostile local press commentary, which dwelt on two suicides that occurred there. In 1995, more than a year into the term of the company's contract, the UK Independent Prison Reform Trust produced a report on Doncaster that the media dubbed "The Doncatraz File." In the words of the British Observer newspaper, the report "was a stinker. Violence was still common. Doncaster had the worst record of any jail for attempted suicides."
Back in the United States, the picture loomed no brighter, as horror stories poured out of detention centers in the late 1990s with tidal regularity. At the Wackenhut-run Jena Juvenile Justice Center for boys in Louisiana, the company went through five wardens and turned over the entire staff three times in a year. Multiple cases of brutality inflicted by hastily trained, often unqualified guards earning close to minimum wage were condemned by a 2000 U.S. Department of Justice report that alleged inmates had mutilated themselves just to get to the relative safety of the infirmary. Wackenhut was further named in a March 2000 Justice Department lawsuit that sought to protect imprisoned boys from harm at the hands of guards and fellow inmates.
In Texas, Wackenhut Corp.'s $12 million-per-year contract to run a state jail was rescinded in 1999 and the company was fined $625,000 for inadequate performance, while 12 former guards were indicted for having sex with female inmates. In New Mexico four inmates died in Wackenhut prisons in Santa Rosa and Hobbs within two years of the facilities' 1998 opening, while riots claimed the life of a guard and inflicted extensive fire damage.
The company claims it has done everything possible to care for its prisoners. On April 16, 2000, George Foley, Wackenhut Correction Corp.'s CEO, told the Miami Herald: "I think we have adopted all of the progressive policies to impede and stop these kinds of incidents." Meanwhile, George Wackenhut has steadfastly refused to admit any involvement with the CIA, despite the overlapping shadows in the twilit worlds of espionage and security. Still, in more than one interview, he has seemed to relish the suggestion of the tie. Spy magazine, in a 1992 interview with the company founder, pointed out that CIA deputy director Frank Carlucci was a sometime-Wackenhut board member and that Wackenhut senior executive Bruce Berckmans had formerly been assigned to the Mexico City CIA station.
The company has developed expertise not only in keeping people locked in but also in keeping others out. By all accounts, George Wackenhut's homes have been showcases of security techno-wizardry, awash with laser, infrared, microwave, and photocell devices, their occupants tracked by closed-circuit television systems, connected by private radios, and their conversations monitored by George from a station at his desk. His enigmatic mix of ultraconservatism and kitsch, of showmanship and secrecy, never stood in the way of building a billion-dollar business out of other people's fears. His former home in Coral Gables was a neo-medieval fantasy of turrets, battlements, and suits of armor, while the yacht at the dock was called Top Secret, with twin motor launches Cloak and Dagger.
Though George's material desires are sure to be fulfilled by the bonanza from the company's sale, some Wackenhut shareholders are unhappy. This year, Boca Raton attorney Paul Geller filed suit on behalf of two shareholders arguing that the terms of the sale to Group 4 Falck unjustly enrich B stockholders (which includes the bulk of Wackenhut directors, who the suit claims breached their duties) and undercompensates A holders. "We believe that an injustice has occurred," Geller says.
New Times visited Wackenhut Director of Corporate Relations Pat Cannan at the firm's headquarters on Wackenhut Drive in Palm Beach Gardens the day after the sale. George's twice-life-size portrait still hung on the wall. Unremarkable as corporate art, it depicts him standing at trim, ramrod attention in an awkward suit. There's an embalmed glow to the hawkish, thin-lipped features and ironing-board chin. In the center of the cavernous foyer, an ornate-tiered fountain devoid of water lent a desolate touch.
After 40 minutes discussing the company's history, finances, and the consequences of the sale (including 35 jobs lost at HQ), Cannan brought the meeting to a close ("I've got to prepare something for Group 4 in 20 minutes"). So New Times asked to meet with the boss. His office telephoned back that George Wackenhut -- like the showman who knows when to exit and a good secret agent who knows where the exits are -- had just left the building for the last time.
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