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 Editorials | Issues | April 2007 
The Giant Who Ate a Nation
 brisbanetimes.com.au
Last month Carlos Slim Helu announced a grand expansion of his already significant philanthropic activities in his native Mexico. He unveiled new charitable institutions, spewing cash in myriad directions to provide education, health care and recreation opportunities for the very poor.
In a country where almost half the population subsists on $US2 ($2.44) a day, the initiative will draw wide praise. The giving away of personal fortunes is a relatively new practice in Mexico - in contrast to the US, where philanthropy has long been expected of the very rich - and over recent years Slim has become good at it.
Yet the timing of his gesture will raise eyebrows and prompt some to question his motives.
This son of Lebanese immigrants with an extraordinary talent for business has a problem that needs immediate attention: his wealth. It is not just that he is obscenely rich, but also that more and more people are becoming aware of it. Worse, they are starting to notice that his fortune is derived from his success in carving massive monopolies that hardly help the Mexican economy or Mexican consumers.
For the publicity surrounding his pecuniary status he can thank Forbes magazine, which last month ranked him as the world's third-richest person, with a personal worth of $US49 billion. That was the same spot he occupied last year, but something else was astonishing: his fortune grew by $US19 billion in one year, the biggest jump achieved by anyone on the planet in a decade.
However you look at it, his accumulation of money is jaw-dropping. Over 12 months, his wallet grew by roughly $US2.2 million an hour. His wealth is equivalent to about 6 per cent of Mexico's gross national product. At this rate, he may soon overtake the two leaders on the rich list, Bill Gates of Microsoft and the investor Warren Buffet, who respectively clocked in at $US56 billion and $US52 billion.
If average Mexican don't quite know what to think about the ascent of Slim, 67 and, after losing his wife, Soumaya, to kidney disease in 1999, the country's most eligible widower, who can blame them? On the one hand, they can be excused some nationalistic pride that he is bucking the stereotype, held in the US at least, of Mexico as a country of farming peasants and an exporter of illegal immigrants and underpaid dishwashers. But they have plenty of reasons to bristle as well.
Slim is the quintessence of the greatest social woe that still afflicts Mexico, the shocking divide between its haves and have-nots. Today, the country's wealth and economic power remain concentrated in a tiny group of clans, sometimes known as the "100 families", although in truth their number is somewhat larger. Like Slim, most of them reside in Lomas de Chapultepec, a leafy enclave of grand mansions behind high walls and electric fences to the north of Mexico City.
They drive the latest luxury imports, protect themselves from the ever-present danger of kidnappings with bodyguards, and regularly jet in and out of the US on extravagant shopping expeditions.
A narrow snapshot of these modern Mexican dynasties can be gleaned from the latest Forbes list, which includes the heads of nine other ruling families. They include the media moguls Ricardo Salinas Pliego and Emilio Azcarraga Jean, the silver-mining and retail baron Alberto Bailleres, the brewing family member Maria Aramburuzabala - think Corona - and the cement producer Lorenzo Zambrano.
All benefit from the failure of successive governments to inject anything like real competition into the country's main industries. There are just two rival television companies in Mexico, five radio stations and two brewing concerns. And there are only two food processors in the whole country.
"Mexico is just suffused with obstacles to competition," says George Grayson, a Mexico expert at the College of William and Mary in Virginia. "It is still full of public and private monopolies and bottlenecks."
As the icon of this super-privileged class, Slim is also emerging as the main lightning rod for complaints and anxiety about the continuing absence of economic competition. And the problem is no more obvious than in the telecommunications business, where Slim is the unchallenged emperor.
Slim's path to riches began in 1990, when the then government plunged into a frenzy of sell-offs of state companies. Leading a consortium of investors, Slim took control of Telefonos de Mexico, or Telmex, in a sweetheart deal that priced the company at just $US443 million, thought now to have been less than two-thirds of its real value.
He turned it from a loss-making liability into a veritable cash machine, instituting new user fees that consumers, private and business, had no choice but to pay. Profits from Telmex allowed him to make investments in other communications companies, notably America Movil, the mobile giant that is now the largest in Latin America.
After heart surgery in 2000, he turned over most of the day-to-day running of his empire to three of his sons, Carlos Slim Domit, Marco Antonio Slim Domit and Patrick Slim Domit.
Slim and his companies control more than 90 per cent of Mexico's phone business, and consequently have little difficulty charging rates that are the highest of almost any industrialised country. Through America Movil, he has snagged 72 per cent of all wireless clients in the country as well, prompting squeals of complaint from would-be foreign competitors, notably Spain's Telefonica Moviles.
But the grip of Slim on day-to-day business in Mexico hardly stops there. His companies now account for nearly half of the entire $US366 billion value of the Mexican stock index. Their ubiquity has reached the point where no Mexicans can expect to get through the day without directing some of their hard-earned pesos into Slim's pockets, whether they want to buy cigarettes, connect to the internet, buy insurance, apply for a mortgage, eat in one of his restaurants or buy music in one of his CD outlets. If they fly on his discount airline, again they are bolstering his books.
Many of these companies operate under the umbrella of Slim's holding company, Carso, which is also involved in heavy engineering, constructing oil-rigs for the state oil giant Pemex, and helping to build roads. It is a network that extends also into the US, where he recently bought a large chunk of the Saks Fifth Avenue department store as well as CompUSA, a retailer of computer goods.
It is no wonder then, that the fledgling Government of the conservative President, Felipe Calderon, is coming under ever greater pressure to force greater competition on Slim.
"A country like Mexico, with such an unequal distribution of wealth, needs much more strict regulation to promote more competition," the Economy Minister, Eduardo Sojo, said recently.
Slim is acutely aware of the perils of a popular backlash. During last year's polarising presidential campaign, he cannily avoided publicly backing either Calderon or his populist rival, Andres Manuel Lopez Obrador. While his business instincts might normally have inclined him firmly towards Calderon, there was always the real possibility that he would lose. Moreover, over the years he had forged a close relationship with Lopez Obrador, a former mayor of Mexico City, by ploughing millions into revitalising the city's historic central district.
Sensing a left turn in politics in many parts of Latin America, Slim has strived almost counter-intuitively recently to deepen relationships with an assortment of left-leaning political leaders. Last year, he specifically championed a plan called the Chapultepec Accord that rather vaguely called for further private-public investment in education to push, as he put it, for the "development of Latin America through the development of human capital and structural investment".
But if Slim is to ward off new regulations to free competition his best weapon is his power to give. Only thus might he combat what Professor Denise Dresser, of the Autonomous Technological Institute of Mexico, calls "a growing public consensus that Slim's attempts to block competition are hurting the Mexican economy".
In truth, Slim's philanthropic endeavours are already off to an impressive start. His spending on the Centro district of Mexico City, a tangle of narrow streets and Spanish colonial edifices surrounding the main square and baroque cathedral, has transformed the area from an area of rampant crime into an oasis for tourists, and artists, who have been given empty buildings for studios, galleries, cafes and performance spaces at low rents.
His main vehicles for charity have been the Telmex Foundation, with an endowment of $US1.2 billion, and his own family charity, the Carso Foundation. The former has given away 95,000 bicycles to help poor children get to school, nearly 70,000 pairs of spectacles, and scholarships to 150,000 university students.
But sceptics note that even Slim's generosity can sometimes be lined with self-interest. They predict the artists will find themselves turfed out of Centro when the time is right to bring in more moneyed tenants. Criticism has also surrounded a program to donate thousands of laptop computers to students to give them access to the internet, as long as they use a Slim connection.
The defence of monopoly holders everywhere is that their endeavours are creating prosperity and jobs. And 250,000 Mexicans are drawing their wages from one Slim entity or another. Nor does Slim pay much attention to those who second-guess his motives.
"I don't care what people say," he says about the laptop program. "What's important is that as many people as possible get connected to the internet so they can be more productive."
"I'm not just giving away money. I'm channelling resources to try to solve problems as quickly as possible."
The Independent
CARLOS SLIM HELU
The "Warren Buffett of Latin America"
* Born January 28, 1940, in Mexico City into a family of Lebanese Maronite immigrants. His father, Julian, made a fortune in real estate during the Mexican Revolution early last century.
* Graduated in 1961 with a civil engineering degree from the Universidad Nacional Autonoma de Mexico.
* Widowed; his wife, Soumaya, with whom he had six children, died of kidney disease in 1999.
* Collector of baseball memorabilia, a keen bonsai hobbyist, noted art collector and philanthropist.
* By the age of 26, he had accumulated wealth of $US400,000.
* Acquired controlling stake in state-owned phone company Telmex in 1991 and turned it into a cash cow.
* Extensive holdings in mostly Mexican companies through his conglomerate Grupo Carso. Core businesses include telecommunications, construction, retail, mining, tobacco, insurance and banking.
* Focuses increasingly on his philanthropic activities - his charitable foundations have combined endowments of more than $US4 billion; programs range from school scholarships to bicycles for poor children and providing surgical equipment for hospitals. |
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