Yahoo Finance Barclays pulls out of Alabama prison deal after backlash
Barclays has pulled out of a deal to help fund two new jails in Alabama following a backlash from activists and investors.
The bank has bowed to pressure after they demanded to know why it had decided to underwrite a deal by private prison operator CoreCivic just two years after it swore off America’s for-profit prison sector.
Although Barclays was not lending directly to CoreCivic, its decision to underwrite the deal led to accusations that it was looking for loopholes to still get involved in the controversial private prison sector after vowing to stop financing the industry.
Business advocacy groups the American Sustainable Business Council and Social Venture Circle terminated the bank's corporate memberships and returned $15,000 in fees paid by the bank. They argued that by participating in the deal Barclays was "profiting from the injustice of the US prison system".
MaryAnne Howland, chairman of the council, said: "We abhor the hypocrisy represented here and renounce the continued investment in the broken, unjust system of incarceration of this country."
Barclays had defended its role, arguing that its involvement in the bond sale only went ahead because the prisons would be operated by the state of Alabama rather than a private company. However, on Monday it said it would no longer participate in the deal.
"While our objective was to enable the State [of Alabama] to improve its facilities, we recognise that this a complex and important issue. In light of the feedback that we have heard, we will continue to review our policies," a spokesman said.
Last week Barclays insiders argued that Alabama had an obligation to replace its crumbling prison facilities.
Jeff Dunn, the Alabama corrections commissioner, had vowed to make its jails safer after the Department of Justice said the state had “violated and is continuing to violate the Constitution because its prisons are riddled with prisoner-on-prisoner and guard-on-prisoner violence".
Major banks publicly vowed to stop financing private prisons behind mass incarceration and immigrant detention in 2019. Fitch Ratings downgraded its ratings on CoreCivic at the time, "in part because a string of banks have distanced themselves from prison companies".
