John Key says a damning report into the failings of Serco at Mt Eden prison isn't a sign the Government should end the private prison programme, despite Opposition claims.
The Chief Inspector's report into the remand prison's 'fight clubs' and availability of contraband has found Serco didn't have sufficient control over some aspects of the prison's management.
It lays out more detail of how the organised fights worked, how banned items were brought into the prison and makes 21 recommendations for change.
Labour and the Greens say it shows the "experiment" of private prisons needs to end.
"It's time for Serco - and all private companies - to get out of our prisons, for good," Green Party co-leader Metiria Turei says.
"The bottom line is that Serco can't be trusted to run our prisons, and the Government should immediately cut all ties to this negligent company."
Labour's corrections spokesperson Kelvin Davis says "prisoners had taken control of the prison".
He says private prisons have no place in New Zealand.
But the Prime Minister says Serco's failure at Mt Eden isn't symptomatic of a disastrous programme.
"It's definitive proof Serco failed to carry out the contract in the way they agreed to with the Corrections Department."
He says so far, the new Serco-run prison in Wiri, south Auckland, shows no signs of being mismanaged.
"Philosophically, I think there's a place for private and public prisons and they hold each other to account - and everything we see in Wiri so far, it's a very successful combination."
The contracts mean Corrections can hold them to account if they breach terms, such as what happened at Mt Eden.
Corrections stepped in to take over the running of the Mt Eden remand facility in July last year and announced it wouldn't be renewing the Serco contract.
In April, the parties reached an $8 million settlement to cover the cost of Corrections taking over and performance notices. Serco also missed out on its performance bonus for the 2015/16 year, totalling $3.1 million.
He says if the Government were to also cancel the Wiri contract, it could open them up to legal action.
Asked if Serco was the wrong company to contract, Mr Key replied that in hindsight, "clearly they were the wrong choice".
A number of the recommendations relate to the monitoring of contracts in prisons by Corrections, and the department has already strengthened their oversight of private prisons, including at Wiri.
The organised fights were brutal and sometimes involved multiple 'rounds' of fighting and a number of consecutive bouts per session.
On occasion, the winner of the first fight would immediately face another challenger.
Some prisoners reported being forced to fight, saying if they refused they'd be threatened, "pack attacked" or assaulted by senior gang members from the Killer Beez, Head Hunters, Black Power and others who helped put on the bouts.
Aside from one instance where a staff member was identified on CCTV footage participating in sparring, the report says there was insufficient evidence to say staff were directly involved.
Serco senior management received a number of internal reports suggesting such fights were going on, but it was likely they didn't know the full extent.
Serco's rostering of day-to-day staff was "fundamentally flawed" because it included staff on annual or medical leave or who had resigned, resulting in an "inaccurate picture" of staffing levels.
A review of CCTV footage showed instances where no staff members could be seen in some units for extended periods - in one situation there was no supervision for more than two-and-a-half hours.
Staff were also seen on CCTV playing pool and table tennis.
Long periods without supervision and a lack of CCTV cameras in cells allowed the fights to happen, the report found.
Serco said plans were in place to address general violence at the prison before the fight club was exposed, but no evidence was provided to the investigation.
During the media storm around the prison, it was alleged prisoners suffered serious injuries including broken limbs and brain damage. Two of those incidents were reviewed and showed prisoner on prisoner violence which met the criteria to be notified as a serious assault. But instead of that, they were reported to Corrections national office by Serco as an accident or not reported at all.
The report also found staff members were the most likely to have smuggled in "freely available" contraband to prisoners.
Prisoners spoken to made statements saying anything that would fit in an icecream container could be smuggled in.
Two staff members have recently been dismissed for contraband-related reasons, while another is under investigation.
The report notes how staff search procedures were "relaxed" from July 2013. Instead of every staff member being screened on entry, a minimum of 40 staff were randomly searched each month.
"Although Serco exceeded its own random searching numbers, this meant that many incoming staff were not searched, giving them the opportunity to smuggle contraband into the prison, if so inclined," the report says.
Cells weren't searched as often as required, with some having no recorded searches for three months.
Corrections stepped in to take over the running of the Mt Eden remand facility in July last year and announced it wouldn't be renewing the Serco contract.
In April, the parties reached an $8 million settlement to cover the cost of Corrections taking over and performance notices. Serco also missed out on its performance bonus for the 2015/16 year, totalling $3.1 million.
Corrections boss Ray Smith says since taking over the prison, contraband searches have been stepped up, staffing levels are adequate and the kitchens have been upgraded to ensure hygiene levels are met.
Staff will get more training and a Corrections prison director and deputy director have been appointed. There are extra monitors at the Serco-run Auckland South Corrections Facility.
Mr Smith says he accepts all of the report's 21 recommendations, with 13 already in place and eight underway.
The terms of reference also looked at eight other prisons, but found no evidence of organised fights there.
"From time-to-time the management of prisons can fail, be they public or privately operated. It's important that we learn from these experiences to make the Corrections system stronger," Mr Smith says.
He considers the report "important reading" for those in prison management to show "what can happen when control systems fail".
Corrections Minister Judith Collins, who was not in the role when the fight club videos emerged, says she's confident lessons will be learned "by all parties".
Mecf Final Report 8 Dec 2015 - Final Redacted by NewshubNZ on Scribd
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