Mexico’s Carlos Slim may overtake U.S. billionaires

Houston Chronicle | Mar 13, 2007 

Some in Mexico resent him as he approaches wealth of Gates, Buffett

His success inspires anger among Mexicans who resent the concentration of wealth in the hands of the nation’s relatively tiny elite.

The world’s third-richest man, Carlos Slim, is gaining rapidly on Bill Gates and Warren Buffet with a fortune that grew $19 billion last year — the largest wealth gain in the past decade tracked by Forbes magazine.

It’s also a sign of the wealth gap in Mexico’s monopoly-laden economy.

Since Slim bought the telephone monopoly in a 1991 privatization, 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 and restaurants.

To many Mexicans, who make 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.

Living on $2 a day

“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 after Slim’s jump to No. 3 on Forbes’ list of billionaires announced last week.

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.

An entrenched elite

New President Felipe Calderon has promised to battle monopolistic practices, but past efforts to do that have been thwarted by Mexico’s entrenched elite.

Slim faces a potential challenge in the telecom sector from the Televisa network, which controls about 70 percent 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 destabilizing 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.

Slim is on track to overtake the two leading Americans on the billionaires list, particularly since Buffet ($52 billion), who made his money running the Berkshire Hathaway investment fund, and Gates ($56 billion), who founded Microsoft Corp., are more focused these days on giving their fortunes away.

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.” 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.

Slim was reportedly ready to announce new philanthropy of his own. Telmex already sponsors a foundation that supports education and social programs in Mexico, and the billionaire’s investments in Mexico City’s downtown led to urban renewal in the central zone.

Slim told local media last year that he planned to give between $2.5 billion and $4 billion of his fortune.

But he is still expanding an increasingly diversified empire that now involves his three sons, and he doesn’t appear ready to focus on philanthropy.