Third-richest man gaining on Gates
The world’s third-richest man, Carlos Slim, is gaining rapidly with a fortune that grew $19 bn last year.
By Mark Stevenson, Agencies |
MEXICO CITY: THE world’s third-richest man, Carlos Slim, is gaining rapidly on Bill Gates and Warren Buffett with a fortune that grew $19 billion last year - the largest wealth gain in the past decade. It’s also a sign of the wealth gap in Mexico’s monopoly-laden economy. Since Mr Slim bought the telephone monopoly in a 1991 privatisation, he’s used Telmex as a cash cow to build an empire that includes Latin America’s largest mobile phone company; provides banking, brokerage and internet services; sells insurance and oil industry equipment; and operates retail stores & restaurants.
To many Mexicans, who make Mr Slim richer with nearly every phone call or trip to the mall, his rise shows their businessmen can run world-class companies. He’s widely praised for turning Telmex - once notorious for taking months or years to install a phone line - into a modern, professional operation. But he also has kept phone rates high in a country where the minimum wage is about 50 cents an hour, and his success inspires anger among Mexicans who resent the concentration of wealth in the hands of the nation’s relatively tiny elite. “Why should we want a few people to hoard all the wealth, if the majority of Mexicans don’t have enough to eat and 30 million Mexicans live on less than 22 pesos ($2) a day?” thundered former leftist presidential candidate Andres Manuel Lopez Obrador.
Now worth an estimated $49 billion, the 67-year-old Slim is the son of a Lebanese father who built a small family fortune from retailing. Mr Slim’s Telefonos de Mexico controls more than 90% of the nation’s fixed phone lines and made $15.9 billion in 2006; his America Movil controls about 70% of cell phone service in Mexico and made $21.6 billion. Diners at Mr Slim’s ubiquitous Sanborns resta-urants can use Mr Slim’s wireless service to connect to Mr Slim’s internet provider and check their holdings through Mr Slim’s brokerage, part of Mr Slim’s Grupo Financiero Inbursa. Banking online, they can pay bills to Mr Slim’s car insurance company or credit cards for Mr Slim’s retail stores, among them Sears Mexico and the Mixup record store chain.
It’s an advantage that is not unusual in Mexico, where businesses from beer brewing to television to cement are concentrated in a few hands. As a result, Mexicans pay more than other, wealthier nations for services such as electricity, phones and bank fees. New President Felipe Calderon has promised to battle monopolistic practices, but past efforts to do that have been thwarted by Mexico’s entrenched elite. Mr Slim faces a potential challenge in the telecom sector from the Televisa network, which controls about 70% of Mexico’s broadcast market and is looking to extend its dominance in emerging communications systems that integrate telephone, television and internet transmissions.
“This could be a destabilising factor. It could readjust the players on the chess board,” said Celso Garrido, an economics professor at the National Autonomous University of Mexico. But even there, Slim stands to gain - his fortune includes shares in Televisa and one of his sons sits on Televisa’s board. Mr Slim is on track to overtake the two leading Americans on the billionaires list, particularly since Mr Buffett ($52 billion), who made his money running the Berkshire Hathaway investment fund, and Mr Gates ($56 billion), who founded Microsoft, are more focused these days on giving their fortunes away.
To many Mexicans, who make Mr Slim richer with nearly every phone call or trip to the mall, his rise shows their businessmen can run world-class companies. He’s widely praised for turning Telmex - once notorious for taking months or years to install a phone line - into a modern, professional operation. But he also has kept phone rates high in a country where the minimum wage is about 50 cents an hour, and his success inspires anger among Mexicans who resent the concentration of wealth in the hands of the nation’s relatively tiny elite. “Why should we want a few people to hoard all the wealth, if the majority of Mexicans don’t have enough to eat and 30 million Mexicans live on less than 22 pesos ($2) a day?” thundered former leftist presidential candidate Andres Manuel Lopez Obrador.
Now worth an estimated $49 billion, the 67-year-old Slim is the son of a Lebanese father who built a small family fortune from retailing. Mr Slim’s Telefonos de Mexico controls more than 90% of the nation’s fixed phone lines and made $15.9 billion in 2006; his America Movil controls about 70% of cell phone service in Mexico and made $21.6 billion. Diners at Mr Slim’s ubiquitous Sanborns resta-urants can use Mr Slim’s wireless service to connect to Mr Slim’s internet provider and check their holdings through Mr Slim’s brokerage, part of Mr Slim’s Grupo Financiero Inbursa. Banking online, they can pay bills to Mr Slim’s car insurance company or credit cards for Mr Slim’s retail stores, among them Sears Mexico and the Mixup record store chain.
It’s an advantage that is not unusual in Mexico, where businesses from beer brewing to television to cement are concentrated in a few hands. As a result, Mexicans pay more than other, wealthier nations for services such as electricity, phones and bank fees. New President Felipe Calderon has promised to battle monopolistic practices, but past efforts to do that have been thwarted by Mexico’s entrenched elite. Mr Slim faces a potential challenge in the telecom sector from the Televisa network, which controls about 70% of Mexico’s broadcast market and is looking to extend its dominance in emerging communications systems that integrate telephone, television and internet transmissions.
“This could be a destabilising factor. It could readjust the players on the chess board,” said Celso Garrido, an economics professor at the National Autonomous University of Mexico. But even there, Slim stands to gain - his fortune includes shares in Televisa and one of his sons sits on Televisa’s board. Mr Slim is on track to overtake the two leading Americans on the billionaires list, particularly since Mr Buffett ($52 billion), who made his money running the Berkshire Hathaway investment fund, and Mr Gates ($56 billion), who founded Microsoft, are more focused these days on giving their fortunes away.
Mr Gates, who set up the world’s richest charity foundation, has said he believes “that with great wealth comes great responsibility, a responsibility to give back to society”. Mr Buffett joined in last year, promising to send about $1.5 billion every year to the Bill & Melinda Gates Foundation, which has an endowment of $33 billion. On Monday, Mr Slim announced he would invest in health care and launch a program to supply low-cost computers to rural residents. Telmex already sponsors a charity foundation that supports education and social programs in Mexico, and the billionaire’s investments in downtown real estate have led to an urban renewal in Mexico City’s centre. Mr Slim said his charitable foundations have about $4 billion in endowments. But at 67, he is still expanding an increasingly diversified empire that now involves his three sons, and does not appear ready to focus on philanthropy. He said Monday that businessmen should not “go around like Santa Claus”. “The businessman with his talent, experience and vocation should participate more by doing” than by donating, he said.
Latin American billionaires - there are 10 others in Mexico - don’t have a record of charitable giving comparable to Mr Buffett or Mr Gates, partly for historic reasons and partly because the region’s tax laws often don’t encourage donations as much as in the US. “It’s not that there is a lack of good will, it’s that it has been customary here to see social programmes as the duty of the government,” said Manuel Arango, founder of the Mexican Centre for Philanthropy. His critics say Mr Slim could do more for Mexicans by lowering prices than by making charity donations. A 2005 report by the Organisation for Economic Co-operation and Development found Mexico’s phone rates among the highest in the 30-member group of developed nations, though Telmex questions the study’s methodology.
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