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Monday, January 19, 2009

Earth's Richest Man + World's Greatest Newspaper? Damning San Francisco Archive Suggests it's a Match Made in Hell

Posted By on Mon, Jan 19, 2009 at 3:59 PM

As Sunday news reports described Mexican monopolist Carlos Slim Helu's bid to become the largest shareholder of The New York Times, readers and staffers were no doubt wondering precisely what kind of scoundrel he is.

Everyone knows Slim controls Telmex, the politically connected monopoly that has driven investors hoping to compete against Slim's companies out of Mexico. But news accounts haven't yet described the precise methods by which he has used his influence over government officials to grow and protect his empire, which is valued by Forbes magazine at around $60 billion. (During the past year, different publications have estimated Slim to be either the world's richest -- or second-richest -- man.)

Thanks to an archive at the University of California at San Francisco filled with once-secret corporate records of tobacco companies, it's now possible to draw specific connections among Slim's business interests, his relationships with government officials, and his apparent ability to skew Mexican government policies to benefit his corporate empire.

Slim's Grupo Carso holding company has a controlling interest in Cigatam, which has the Mexican franchise to produce Marlboro and other Philip Morris cigarettes. And the the UCSF documents suggest a cozy and highly profitable relationship between Slim and top Mexican officials.

Slim and his companies have lately been on a bit of a global shopping spree, making significant investments in Saks Fifth Avenue and Citigroup, a banking firm among the recipients of the U.S. financial bailout.

It's worth asking whether America's best newspaper might become compromised if Slim is a top shareholder of both The New York Times and of companies in need of Times-style muckraking such as Citigroup.

Thanks to the aforementioned UCSF Legacy Tobacco Archive of indexed, text-searchable documents obtained during years of government litigation against U.S. tobacco companies, researching Slim's business methods is a simple matter of entering search terms such as "Slim," "Helu," "Cigatam," and other words pertinent to the Mexican's business empire.

Documents turned up from such a search show that, in 1992, the Mexican government proposed applying U.S.-style restrictions on advertising for cigarettes -- a losing proposition as far as Slim's interests were concerned. According to a once-secret 1993 Philip Morris marketing presentation, negotiations between regulators and Cigatam representatives led to a compromise that included watered-down advertising rules and tax breaks for Cigatam.

Mexican producers again feared cigarette regulation in 1997, when U.S. state attorneys general agreed to a proposed $368 billion lawsuit settlement with tobacco companies. The question south of the border became: Will Mexico also sue? Mexican regulators close to Slim apparently hoped not. The head of Mexico's consumer product safety commission sent a personal, hand-written note addressing Slim simply as "Carlos," plotting strategy on how to avoid a U.S. style tobacco crackdown.

"In the interest of consumers, and of industry, it's best to prepare in advance for the kind of reaction these measures might provoke in Mexico," the head of Mexico's consumer protection agency wrote that June in reference to the U.S. tobacco settlement proposal. "If we take some intelligent and prudent steps, we can avoid headaches down the road, while serving consumers. The worst thing would be if the industry here had to go through what's happened in other countries."

Twelve weeks later, U.S. tobacco industry executives exchanged memos describing bland new Mexican tobacco regulation proposals that came nowhere near approaching the kind of government crackdown transpiring up north.

In 1999, Slim hosted Mexican President Ernesto Zedillo, the Mexican health and treasury ministers, and a visiting Philip Morris vice chairman, at his home.

The U.S. tobacco executive was impressed how "open-minded" the Mexican health officials were, according to a memo in the UCSF archive. A month after the Zedillo-Slim-Philip Morris pow-wow, Mexican news articles described how regulators in that country thwarted efforts by anti-tobacco attorneys to convince the Mexican government to file U.S.-style lawsuits against Cigatam and other tobacco producers.

It's painful imagining such a man as the top shareholder overseeing America's best newsroom.

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Matt Smith


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