Roll up - tour our jail

Most Latin American travellers stop off at Peru's majestic Macchu Picchu ruins or unwind along Mexico's spectacular Oaxaca coast…

Most Latin American travellers stop off at Peru's majestic Macchu Picchu ruins or unwind along Mexico's spectacular Oaxaca coast, indulging in sun, sand, sea and a spot of nightclubbing. In Bolivia, however, a unique tourist attraction has developed around the city prison in La Paz where a group of enterprising inmates have set up a guided tour, which includes visits to cells, kitchen and recreation area, along with a frank discussion about the crimes which put the prisoners behind bars. And don't worry about language problems, as the official tour, which costs a fiver, includes an Englishspeaking guide.

San Pedro is organised along the lines of a business innovation centre, as money and contacts determine whether an inmate will live in a private cell with all mod cons, or be confined in overcrowded cells where prisoners must take turns to lie down and sleep at night.

It looks a lot like the world beyond the prison, where 80 per cent of Bolivians live in poverty while a small minority enjoy wealth beyond imagination.

The prison is located on Plaza Sucre, a pleasant square above the main city thoroughfare, reached by climbing a steep incline where every step feels like your last, as the altitude (4,000 metres) takes your breath away, before returning it in short sharp gasps.

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The lemon-coloured facade and the absence of watch-towers give the prison building the air of a folk museum where crowds of people wander in and out all day.

"Are you here for the tour?" asked a prison guard, ushering me inside with only a token search. Once inside, the prison opens out into a series of narrow, labyrinthine corridors away from a central patio and out toward a small football pitch.

The place is a melting pot of nationalities with Bolivians, Peruvians, Paraguayans, Italians, French and English among the 2,000 inmates. An estimated 200 children also live in the prison, a common occurrence in Latin America.

San Pedro has shops, a restaurant, video arcade and dozens of other businesses, all run by inmates, all illegal but tolerated due to the revenues generated for the prison authorities, paid off to maintain a blind eye to the proceedings.

Alejandro Verna is our guide, a robust Panamanian with a keen business sense, as befits the son of Bolivia's Price Waterhouse representative. "Pay your money now," he said curtly, pocketing a fiver from myself and three other curious tourists.

While money is a useful commodity in prisons the world over, it is indispensable here, as arriving inmates must pay 25 bolivianos (£3) just for the right to live in one of the prison wings. Otherwise the penniless arrival must sleep with dozens more inmates in the kitchen or wing corridors, subject to sub-zero night temperatures.

After three months of kitchen work, each prisoner automatically graduates and must seek work in one of the thriving businesses; prisoners can learn a trade, such as tailoring or carpentry. On a more practical level, the Peruvians take care of false documents, charging $500 for a new passport, throwing in a stash of top-quality traveller's cheques for that difficult reinsertion into normal life.

Prostitution has flourished since a successful nightclub owner was put behind bars - he now uses his contacts to carry on trade at his new residence. Another group pirates the Internet through mobile phones, while the restaurant is a major money-spinner, where a captive clientele pays £1 a meal for meat, veg, salad and dessert, light years ahead of the "disgusting" gruel served up in the official prison canteen.

Bolivia's annual prison budget provides just 20 cents per prisoner for each day's food rations, insufficient to keep prisoners alive. In one rural Bolivian prison, inmates are allowed out for two hours each day to scavenge for food before returning to their cells.

As we walked through the prison I spotted a professional-looking sign announcing fillings and false teeth, courtesy of a dentist who was continuing the profession he had left behind on the outside.

The prison is divided into several sections, each one with an elected delegate who controls a wing and mediates with prison authorities. Some prisoners have their own cooking facilities and their own cells.

The property market is in a boom period, with cells fetching anything from $300 to $1,500, depending on its size and the range of improvements made during the previous owner's tenure. The building materials are provided for a fee by a construction worker, also a prisoner, who goes shopping several times a week - accompanied of course by a guard.

The cells are sold through a makeshift Buy and Sell catalogue, with ads pasted onto the walls around the exercise yard. Eric, the latest prisoner to join the guided tour business, saved up all last year to buy his $350 cell, where he has a bed, posters, TV and a stereo. He is renting out his old cell to a new arrival. If all goes well he plans to smash in a neighbouring wall and add an extra room to his modest bedsit - "for parties", he told me.

As the other guests drifted on to another cell, Eric was left alone with me and his thoughts. The atmospheric strains of Orinoco Flow played in the background as Eric, an Enya fan, told me his life story, suddenly looking more vulnerable than his brash earlier self. At the age of 11 he fled a violent home and began to live rough, learning to steal food, then handbags, then from tourists and finally from warehouses, carrying a pistol to guard against any unexpected turn of events.

A police beating persuaded a partner in crime to denounce him, leading the police to his home, where investigators found enough household goods to kit out a small Bolivian village. Eric intends to return to crime after he is released in 2002, having completed his four-year sentence.

San Pedro's prisoners earn 50 per cent remission if they study and show initiative during their time there, with the guided tour business regarded as a certainty for remission certification.

The self-confessed guilt of the tour workers should not be taken as the norm, as Bolivia's justice system is painfully inefficient and presumes guilt, abandoning 70 per cent of the country's 9,000 prisoners to several years behind bars before trial even occurs. A new penal code has just been approved, which, if implemented, would radically alter the nature of the prison system, forcing judges to release prisoners involved in non-serious offences. The new law will help empty overcrowded prisons and may also collapse the clandestine property market.

The record number of visitors on the prison tour was 64 in one day, earning the inmates a whopping £280. Of course, there are palms to grease, with half of the money disappearing to the guards, who in turn send a cut back up through the ranks. The business is illegal but tolerated, one more unregulated scam in a country where more than half of all trade takes place on the street, beyond taxes and other bureaucratic norms.

The guided trip was the brainchild of Ramiro, an Argentinian citizen who looks quite like footballer Maradona; he is a fierce fighter renowned for sudden raging tempers that end in violence. He is the most feared prisoner around, having survived seven months in the "cage", a solitary punishment cell where he was handcuffed and forced to stand upright, day and night. The cage only served to sharpen his anger and, shortly after leaving it, he killed a fellow inmate, adding five years to his sentence.

Ramiro's moods have vastly improved, according to friends, since he acquired a steady girlfriend, who was visiting that morning, the two of them enjoying private time on the second floor of his cell.

The English-speaking guide, Alejandro Verna, cuts a distinct figure among the prisoners. An eloquent, well-dressed member of Bolivia's elite, he dreamed up a remarkable million-dollar telephone scam, pirating long-distance phone signals from Bolivia's official company Entel. He sent the free calls into the prison, where inmates enjoyed cheap calls around the world day and night for several months - at a reasonable price.

One of the beneficiaries was Ricardo, an Uruguayan and the fourth member of the guided tour business, who was caught boarding a plane with 27 kilos of cocaine in his luggage. Ricardo spent entire evenings chatting to his wife and three kids who live in Montevideo, while fellow inmates paid 20 bolivianos (£2.60) for half-an-hour on the phone, allowing the organisers to pocket $150 a day, more than the average monthly wage for most Bolivians.

San Pedro prison is a faithful reflection of life on the outside, where Bolivians sink or swim in a free-market economy that rewards corruption and speculative business deals but punishes salary earners, who bear the brunt of the nation's economic tailspin. Bolivia is now a member of that unenviable club, the Highly Indebted Poor Countries, (HIPC), with living standards on a par with Ethiopia.

The mood of the population is volatile, as evidenced last April, when the privatisation of water services provoked a popular uprising, forcing the government to cancel the contract. The raw, undirected anger of Ramiro, subdued with pepper spray and a spell on the rack, echoes broad popular discontent beyond the prison walls, where the majority poor live in worse conditions and enjoy fewer business opportunities.

As I leave the prison, I turn to the guard who first ushered me in for the tour. "What do you think of the tour business?" I ask him. He looked at me brazenly. "What tour?" And slammed the door closed.