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SA Crime Quarterly no 33 •September 2010 33
Chandré Gould (CG): Many people may be
nervous about handing the job of running prisons
over to the private sector. After all, this has been
something that the state has been responsible for
in countries all around the world for hundreds of
years. You would obviously say that there is a
place for the private sector in the running of
prisons. What would you argue is the advantage
of private sector involvement in incarceration?
Frikkie Venter (FV): I think the first thing is that
the concept is not strange in South Africa. In the
1800s the private sector was involved in mine
prisons.
In South Africa one of the main reasons for the
recent private sector involvement in prisons was
that the state needed an asset and didn't have the
capital available for the building of new prisons.
The state wanted an arrangement where they
could pay off a prison, like you pay off a
mortgage. The other reason was that basic rights
were entrenched in the new constitution. The
government wanted to ensure that rights were
protected in new prisons and wanted to draw on
best practices from Europe and abroad. The third
reason was that it was expected that there would
be a transfer of knowledge through this process.
So the state prepared output specs for the
contracts. Included in the contracts were penalties
if the service provider did not deliver as required.
So at these PPP prisons service delivery is
guaranteed through a punitive structure.
Interestingly, there is no benefit for over-
performance, which is strange for these types of
contracts, but that is the way South Africa wanted
to go at that time. The service delivery is
monitored by about five correctional services
officials, called controllers. These are DCS staff
members, based at the PPP prisons, who see when
you default on the contract and can report on that
so that the operator incurs a financial penalty.
Perhaps the question should be: if the private
sector can deliver the same service or outcome
that government wants, cheaper than government
can, using their business skills and efficiency to
manage the process, why would we spend
taxpayers' money on getting less for more?
One needs to understand that the private sector
has to be profitable. But at the same time we need
to ensure the outcomes that government needs in
terms of rehabilitation and so on. I think the
Mangaung prison has shown that it can be done.
CG: If the private sector can do it, why can't the
public service do it? Why can't the Department of
Correctional Services deliver the same kind of
service that you are delivering?
FV: When I was an employee of the Department
of Correctional Services and they started talking
On the record...
Interview with Frikkie Venter, G4S
Managing Director: Care and Justice
Services
The Minister of Correctional Services recently made it known that the department is reviewing its policy
on public-private partnerships (PPPs) for prisons.1Currently there are two private prisons in South
Africa, and the government has decided to build another four. However, for reasons that are not quite
clear, there remains a great deal of controversy surrounding PPP prisons. One thing about which there is
no disagreement, however, is that services at the existing two PPP prisons are of extremely high quality.
Chandré Gould spoke to Frikkie Venter, G4S Managing Director in South Africa, about public-private-
partnerships for prisons.
34 Institute for Security Studies
about a PPP prison, I had exactly the same
thought. 'We can do it ourselves, why do we need
the private sector to do that?' What's quite clear is
that a government is a political animal and you
cannot move as quickly as you want on an
operational level without getting the buy-in of the
whole structure on top. So if you wanted to create
for instance a C-Max prison, that will take ages to
happen. The state can do it if it has the proper
structures in place and if there's clear guidance on
what it wants. But the private sector is more
mindful of cost. It has the ability to be more
innovative, not be bogged down by red tape, and
the private sector can change its systems
overnight to ensure service delivery. Government
doesn't have that flexibility within its systems.
CG: You were in the Department of Correctional
Services for 18 years. You didn't think that PPPs
were necessarily a good idea. What brought about
the change of heart?
FV: Towards the end of my career at corrections I
was given the opportunity to open C-Max.
Because that project was heavily supported by the
Commissioner and the Minister, we were not
bound by all the red tape of a normal project. So I
got a feel for how quickly you can implement
things if red tape is not there. At that time I was
working directly for the Commissioner so could
move quite quickly. Having had the experience of
being able to deliver a project successfully and
quickly (it took six weeks) it was difficult to go
back to the normal state of affairs in Correctional
Services where there was little opportunity to
make an impact. I just couldn't do it anymore,
since I knew I had it in me to make a difference,
but felt restricted in executing what was
necessary. When I was approached by private
sector and given quite an open hand on how to
establish a 3 000-bed facility, I jumped at that
opportunity.
CG: Few of our readers will be fully informed
about the current state of affairs in relation to the
new PPP facilities. Briefly, there are currently two
prisons in South Africa that are public-private
partnerships. There are four more planned. What
is the state of play? Where are we at?
FV: In terms of the two current projects, I think
that status is quite clear. They are contracted to run
the course of the existing 25-year contracts. In May
last year the private sector was invited to submit
bids for the remaining PPPs. We made submissions
that are valid until November 2010. But the
department has not opened the boxes containing
those bids. This is partly due to the fact that the
new Minister came in and she had to apply her
mind to the concept of PPPs. She was followed by a
new Commissioner, who had to have the same
opportunity. So seemingly right now there are
some reservations about the model and they are
talking about a policy review. Whether that is
being undertaken, or was undertaken, or whether
it's in progress or not, we don't know. The fact is
that we expect a briefing note from the department
to tell us what stage we are at, and whether the
DCS wants to change some of the specifications.
This is a concern for us because some companies
were shortlisted on being able to deliver specific
outcomes. If I had been one of the companies that
had not been shortlisted because, say I didn't have
the custodial capability, and now custody is not
part of the new specification, I would want the
whole process to be opened up again. So there is
some dilemma in terms of fair treatment, I think.
CG: So the DCS might have to reopen the tender if
the specifications change significantly?
FV: If it changes significantly, they'll have to
consider whether it can fit into the current process
or not.
CG: So what, in essence, will be the effect of
having a policy review? Quite aside from what the
difference in policy might be ultimately. What is
the impact of the minster's decision to revise the
policy at this particular point?
FV: Any minister should have the opportunity or
the leeway to change his or her mind. But what we
have here is a situation that puts international
investment at risk. The problem is essentially a lack
of consistency that creates an uncertain
environment, and which may result in
international investors being cautious of South
Africa as an investment destination.
SA Crime Quarterly no 33 •September 2010 35
To date the private sector companies, including
my company, have spent between R30 and R40
million on their bids. So when at the end of that
bidding process, after you have spent your money,
government comes back and they say that they
wish to revert to a model that was debated three
or four years ago, it is frustrating, and undermines
investor confidence. What we want as the private
sector is consistency and certainty. Keep in mind
that we did not approach government with the
idea of PPP prisons. The government approached
the private sector and said, 'this is what we want
and you can bid on it', and they provided
specifications for what they wanted. It was on that
basis that we prepared our bids. Now it looks like
they want to change the specification again. If
there are to be major changes to the specifications
that require a redesign of the facilities, who is
going to pay the architect? Can investors take that
additional risk? If there is no solid commitment
from government to move forward with PPPs,
they cannot expect the private sector to continue
making investments in the process. There needs
to be clarity about what government wants and a
long-term commitment to that in order to
advance and create investor confidence.
CG: The principle underlying policy change or
policy development should be that evidence
suggests that a particular policy is the best way to
solve the particular social problem. It seems to me
that in a number of sectors at the moment we are
seeing quite dramatic policy changes. For
example, we've seen radical policy changes in the
police that don't seem to be based on any
evidence of what works or what could improve
policing. Is there anything to suggest that there's
new evidence, new information, new conditions
that should give rise to a shift in policy in relation
to PPP prisons, or is this shift, in your view, a
response to political changes?
FV: I think it's difficult from where we sit to
determine whether this is just a political change
or whether it's a policy change. Nothing has
happened in the last few years, as far as we are
aware, that suggests that there should be a policy
change. There were no changes to the Act
[Correctional Services Act, No 111 of 1998]. The
Act that made provisions for the first PPP is still
unchanged up to now. So clearly, legislative
changes have not influenced this at all. What has
changed is that in 2002 there was a lot of talk
about the private sector being expensive (even
though our calculations suggest that the private
sector can run prisons at a lower cost than the
state). Recent figures published by the
Department of Finance suggest that the PPP
prisons are costing less than correctional centres
run by government, whilst the PPP Centres
deliver higher levels of service. So it seems that
'value for money' or the concerns about cost have
been the main reasons for concern by the state.
Yet there are glowing reports about service
delivery at the private prisons being of a higher
standard and more outcomes-based. One of the
PPPs in fact contributes 40% of the total
departmental targets in terms of key performance
indicators set for rehabilitation programmes. In
other words, centres accommodating 2,7% of the
sentenced population contribute 40% towards
delivering the DCS objectives. So quite clearly we
are supporting them quite heavily to reach their
target and we are doing more than logically would
have been expected. So in terms of service
delivery, in terms of legislation, in terms of
money, there's no reason to doubt this process.
Whether the recidivism rate is lower or higher
after offenders leave our facilities cannot be
determined because currently the offenders stay
with us for a period and then they move back to
correctional services facilities. Whether they
continue with the programmes they were involved
in at our facilities, we don't know. Whether any
programmes are available at the prisons they are
transferred to, we don't know. We can't assess
whether the programmes have a direct result
that's positive, because prisoners have left us.
Having said that, as far as I can see there is no
other reason than politics, that can drive policy
review. Because what you have at the PPPs is cost-
effective, good, value-for-money service. Just look
at the situation in relation to the new Kimberley
prison.
36 Institute for Security Studies
That facility was built by government, and what
was reported to parliament in relation to the
Medium Term Expenditure Framework, is that
the cost of that facility was twice as high as the
cost of prisons built through PPPs. At twice the
price you would expect more services. That's not
evident at this point in time. So it seems to me
that the state is prepared to pay more for less.
CG: There's been concern expressed in the past
about the fact that the PPPs create a situation in
which there are vastly different services offered to
the 2,7% of prisoners housed there as to the
majority of prisoners in state institutions. So, for
example, you have two PPP facilities where
rehabilitation programmes are being offered
because you are contractually required to do so,
and not doing so would result in a financial
penalty to you. However, the fact remains that we
have two facilities housing some 6 000 inmates
receiving the best possible care, Ideally all inmates
in South Africa should be receiving the same
quality of care. And yet the majority of inmates in
South Africa are likely receiving an inferior
quality of care. How do we justify providing these
kinds of services to a small number of inmates
while the rest do not have access to the same
quality services? And how do we address that? Is
there a solution to this?
FV: I think this is a real human rights question.
But I don't think it's a difficult one to answer. To
say that about 95% of the sentenced population,
that's the people that are not in the private sector,
are not receiving services that are conducive to
human rights, or up to scratch with international
standards, and then to argue that the solution is
to reduce all conditions to the lowest common
denominator is the wrong way to go. We have to
look at corrections holistically. We need to define
what our focus is and where money should be
spent. Last year, during the budget vote, we heard
in parliament that most of the money for DCS
goes towards security and less and less is going
towards rehabilitation. We have seen the salary
increases for civil servants. The portfolio
committee has referred to the bloated
management structures of the department. So
there is a need to relook at how the money
allocated to the department is spent. I think that's
where the real answer lies.
The private sector is quite efficient because we run
on business principles. We are there to make a
profit. That means we have to deliver the services
better than our competitors and achieve the
required outcomes. For PPP prisons, not meeting
the contractually specified outcomes can result in
penalties that will reduce profits. We also have to
run our facilities with fewer levels of management
to reduce staff costs, without affecting supervision
and support. The effect is that you run an efficient
service. And if we can take that model and employ
it in the other correctional centres, perhaps we
will have learned effectively from the experience
of PPPs. The point is that if through PPPs service
delivery is optimised at a lower cost than that at
which the state can deliver the same services, we
owe it to taxpayers on the one hand, and to the
person receiving that service, on the other, to do
what's in their best interest.
That does not necessarily mean the private sector
should run all prisons. The UK has an interesting
approach. They had a private sector-run prison,
and when after five years it was time to renew the
contract both government and the private sector
could tender to run the facility. In other words,
the government department could tender to run
their own facility. What happened is that the
prison officers' association (the union) managed
the bid for the department. Like the private sector,
they had to tender to deliver particular outcomes
set by the state. The state could then evaluate the
bids in terms of cost-effectiveness. In that case the
bid by the department was lower than the private
sector. But there was a mechanism to hold the
department to account for delivery of services.
Suddenly there were measurable outcomes that
you could track, that you couldn't before, and
government officials couldn't use the excuse 'I
don't have the budget' because they had set the
price. Apparently the services improved
dramatically in that prison because there were
measurable outcomes. So whether it's government
or the private sector providing the services doesn't
really matter, as long as you have the required
outcomes.
SA Crime Quarterly no 33 •September 2010 37
In South Africa all prisons, private sector and
government, fall under the same regulations, the
same Act. But you see vast differences in service
delivery. In the private sector you will find active
supervision of staff and prisoners, which you
won't always find in state prisons. And that's
because the state is not outcomes-driven. So the
question is how do we ensure outcomes? How do
we manage facilities and monitor outcomes? I
don't think that any government will say, for
instance, outsource even 30% of an important
function like corrections.
I think what we need to do is to say what type of
offenders are we targeting, how we can ensure
maximum impact in terms of rehabilitation. If
the private sector is more effective in doing that,
then let's give it to them to change the face of
crime.
CG: In other words, what you're saying is that
unless we apply the same kind of principles of
accountability to government departments that
we do in public-private partnerships, we're not
going to be able to improve service delivery?
FV: Yes. It's about management.
CG: Do you have any final comments?
FV: I just think that people should understand
why we have PPPs. The government says, 'We
want a service. We can do it ourselves, but can
the private sector do it cheaper and better?' If the
private sector is cheaper and better, then the
benefit goes to the taxpayer. There's more money
available for something else, like improving the
education system. Entering into a PPP is like
buying a house: if you don't have the cash today
to buy a house, you want to be able pay off your
house over a period that means that you have
money available to also feed your children. This
is the rationale behind a PPP. The state wants the
infrastructure, they can't pay for it now without
diverting from other essential services, and
therefore they utilise this mechanism of
procurement to get the service. It's not that
difficult to understand.
NOTES
1Correspondence between Mr ZI Modise, Acting Chief
Deputy Commissioner: Corrections, and Ms C Frank,
Acting Executive Director of the ISS, dated 22 July
2010.