The ‘egregious’ history of likely new Nauru operator includes allegations of gang rape and murder in its US prisons

The US private prisons operator likely to take over Australia’s offshore processing regime on Nauru has previously been accused of “gross negligence” and “egregious” security failures that allegedly led to the gang-rape of a woman in detention, the murder of two retirees by escaped prisoners, and the months-long solitary confinement of a US citizen wrongfully held in immigration detention.

The Department of Home Affairs is finalising negotiations with the US-based Management and Training Corporation, which the department has announced as its preferred tenderer to provide “facilities, garrison, transferee arrivals and reception services” for Australia’s offshore regime on Nauru from next month. No contracts have yet been signed.

An investigation by the Guardian has uncovered a litany of security breaches and custodial failures within MTC-run places of detention. MTC is the third-largest US operator of private prisons, running 21 corrections and immigration detention centres.

In a 2006 civil case, a woman detained on suspicion of drink-driving was taken to a Santa Fe County jail run by MTC. MTC had been repeatedly warned, including by the Department of Justice, that the prison was dangerously understaffed and its policies for preventing assaults were inadequate.

The woman was left alone in the booking area due to severe understaffing. There should have been a minimum of four staff in the booking space monitoring her and others being brought in to detention.

She heard a cell door click. Confused by the absence of staff, she mistakenly assumed a door had been remotely opened for her, so she walked inside. The cell had several male detainees inside, who allegedly locked the door and raped the woman.

When she reported the assault to prison authorities, the woman was interrogated, then put in an empty cell by herself for two hours before being taken to hospital for a medical examination. Upon her return to the prison, she was allegedly strip-searched by guards, an act described in her civil claim as “utterly useless and unnecessary” which caused her “further humiliation and degradation”.

The case reached a confidential settlement in 2007.

In a 2010 case in Arizona, three convicted murderers escaped from the MTC-run Arizona State Prison, known as Kingman, by scaling a fence with the assistance of an accomplice outside. Two of the fugitives hijacked a camping trailer driven by a retired couple, Gary and Linda Haas. The couple were murdered and their bodies burned inside the trailer.

Court documents in the daughter’s civil case allege the perimeter fence alarm had not been serviced in two years, and regularly issued false alarms, leading staff to ignore it. The control room in charge of security was understaffed and officers inadequately trained, the documents also allege.

Arizona’s corrections department found MTC responsible for the escapes. Documents cited in the civil case show the company conceded it was responsible, saying: “MTC accepts full responsibility for this escape.”

The civil case against MTC, brought by the couple’s daughter, alleged: “Through its egregious failure to meet its duty of care to the general public, defendant MTC consciously and deliberately pursued a course of conduct seeking to increase profits, while knowing that it created a substantial risk of significant harm to others.”

MTC settled the case.

In an ongoing case from 2019, it is alleged a US citizen, Carlos Murillo Vega, was unlawfully held in solitary confinement for almost all of a 14-month incarceration, based on an erroneous belief he could be deported.

The lawsuit, filed in California, describes the company’s actions during his immigration detention as “torture” and describes MTC as a company that “trafficks in human captivity for profit”.

There have been other significant legal actions against MTC.

In 2015, the Arizona governor, Doug Ducey, cancelled MTC’s contract after a riot at Kingman prison, saying the company had “a culture of disorganisation, disengagement and disregard for state policies”.

The detention centre on PNG’s Manus Island was ruled unlawful and ordered to be shut down by the country’s supreme court. Photograph: AFP/Getty Images

And in 2019, MTC paid the state of Mississippi US$5.2m (A$7.5) to settle a bribery case. Mississippi alleged MTC defrauded the state by engaging in “a conspiracy scheme” involving “bribery kickbacks, misrepresentations, fraud, concealment, money laundering and other wrongful conduct”. The scheme allegedly involved paying bribes to state officials in exchange for contracts with the department of corrections.

MTC’s Australian arm is wholly owned by two subsidiaries in Utah, where the company is headquartered.

Guardian Australia put a series of questions to MTC regarding these cases and its security record more broadly. The company referred all queries to the Department of Home Affairs.

A spokesperson for the department said all of those currently held on Nauru were in community accommodation and that the new contract would not involve “detention”, but “if required, closed compound arrangements are implemented for the shortest possible period”.

Under the proposed contract, MTC would be obliged to “treat all transferees with respect and courtesy, and without harassment of any kind; and behave in a tolerant, respectful and culturally sensitive manner towards transferees, avoiding perceptions of discrimination and bias”, among other conditions.

The spokesperson said the government remained committed to maintaining regional processing as part of Operation Sovereign Borders, which had “successfully stemmed the flow of irregular maritime ventures to Australia, disrupted people smuggling operations in the region and prevented unnecessary deaths at sea.

“Under this approach, people who attempt to travel to Australia irregularly by boat will not be settled in Australia.”

Nauru remains Australia’s sole offshore processing centre, after the detention centre on PNG’s Manus Island was ruled unlawful and ordered to be shut down by the country’s supreme court. Australia was forced to pay more than $70m in compensation to more than 1,900 people it had illegally detained on the island.

Nauru and Australia signed a memorandum of understanding in 2021, committing to an “enduring form of offshore processing” on the Pacific island state, and the new Labor government has committed to maintaining offshore processing as a policy.

Those currently held on Nauru are not in detention but living in the community. However, the detention centre remains on standby, ready to house any new boat-borne asylum seekers sent there by Australia.

The Nauru processing centre has been plagued by controversy, including violence against asylum seekers and refugees, systemic sexual abuse of children, inadequate medical and psychiatric care, and a spate of suicides.

The Nauru files, a cache of leaked internal working documents written by staff, detailed sexual violence against children as young as six, violent assaults against detainees, and systemic neglect. Senior United Nations officials said the Nauru camp was “cruel and inhuman” and a violation of the convention against torture. Médecins Sans Frontières said the mental health suffering on Nauru was “among the most severe MSF has ever seen”.

The existing garrison and welfare provider, Canstruct International, has run the offshore processing regime on Nauru since 2017.

Its tenure on the island has been controversial because of the way in which it was awarded the contract and subsequent extensions, as well as the tenaciously high cost of caring for a shrinking cohort of refugees on the island.

No new asylum seeker arrivals have been sent to Nauru since 2014 but the cost of running the regime has remained between $35m and $40m a month. The number of asylum seekers and refugees held on Nauru has fallen from more than 1,000 to 112.

According to the government, the cost to hold a single refugee on Nauru in 2021 was more than $4.3m annually – more than $350,000 a month.

In March, Australia accepted New Zealand’s longstanding offer to resettle refugees from its offshore regime. Those transfers have not yet started.