Mexico Firms Cashing In on Private Prisons as Foreign Rivals Stay Away Nacha Cattan and Eric Sabo - Bloomberg News
go to original August 2, 2012

Two Mexican homebuilding companies are embracing the government’s turn to private enterprises to help run violence-plagued prisons that has been shunned by international jail-management firms.

The country will open its first private prisons this year as the U.S.-backed war against drug gangs fills cells past capacity. In Central America, where a fire at an overcrowded Honduras jail killed 366 inmates in February, business groups are also pushing governments to build and run facilities.

It’s an opportunity that global prison operators such as G4S Plc (GFS) and Corrections Corp. of America are passing up in the face of the disorder and corruption that plagues Latin American jails. That’s left untested firms like Mexican builders Desarrolladora Homex SAB (HOMEX*) and Empresas ICA SAB (ICA*) with the task of bringing order to facilities the United Nations says lack basic sanitation and are plagued by “alarming” levels of violence.

“It’s hard to say that things could get worse because the jails are so bad,” said Mark Ungar, a professor at the City University of New York in Brooklyn who studies Latin American prisons. “But I can’t imagine many international companies wanting to jump into this.”

Outgoing Mexican President Felipe Calderon’s administration has said farming out prison construction to private companies would cut costs for such projects by 29 percent and the new jails would increase capacity for inmates by as much as 30 percent. Enrique Pena Nieto, who will succeed him in December, says he also supports private investment to expand facilities that hold 22 percent more inmates than the 180,000 they were designed to accommodate, according to a May 2011 government report.

Read more at Bloomberg News

To contact the reporters on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net; Eric Sabo in Washington at esabo1@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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