The resulting prison-building boom, and rapacious bargaining by the prison-guards union, meant that state penitentiaries became the fastest-growing major cost in the state budget.
Homex quelled market worries somewhat in April via the sale of stakes in two penitentiaries, and by securing a bridge loan for construction under a new loan-guarantee program being offered by the government.
Prison gangs in Sao Paulo state penitentiaries brought Brazil's largest city, Sao Paulo, to a standstill last May when they used cells phones in jail to order their foot soldiers on the outside to attack police stations.