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 Business News | May 2005 
López Obrador Would Challenge Banamex Sale
 Wire services
Mexico City Mayor Andrés Manuel López Obrador said he would seek to recoup taxes from Citigroup Inc.'s US12.7 billion purchase of Grupo Financiero Banamex-Accival SA should he win next year's presidential election.
Citigroup's 2001 purchase of the nation's second-largest bank was tax free under Mexican law because it was conducted through a public offer on the Bolsa.
"It's not fair to ask people to pay taxes and then exempt people close to politicians," López Obrador said on Tuesday at a press conference in Mexico City. "These are the things that have to end in the country."
López Obrador, 51, said last month the Banamex sale was an example of how Mexican business executives who are wellconnected to government officials thwart regulations that apply to the rest of the country. A government tax on a sale the size of the Banamex offering could be as high as 30 percent, said George Grayson, a professor of government at the college of William & Mary in Williamsburg, Virginia.
Raising the issue of Banamex taxes underscores the concerns of international investors that López Obrador's policies as president would be hostile to business, Grayson said.
"It may be a good idea but it's not going to fly legally," he said. "You can't go back and unscramble that egg."
López Obrador said on Tuesday he would try to find a legal way to collect taxes from the sale. The Mexico City mayor said he would make fighting tax evasion part of his economic plan.
The nation's decision to privatize the bank grew out of the country's six-year struggle to recover from the peso devaluation of 1994. As a result of the devaluation, rising interest rates led hundreds of thousands of debtors to default on their obligations.
Some legislators and politicians opposed the sale, arguing that the bank's shareholders would profit while taxpayers who had bailed out the banks would receive nothing back. About 80 percent of bank assets are controlled by foreigners, according to government statistics.
Salvador Musalem, a spokesman for President Vicente Fox's office, and Ana Olvera, a Finance Secretariat spokeswoman, both declined to comment. José Ortiz Izquierdo, spokesman for Citigroup's Banamex unit in Mexico City, declined to comment. |
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