SlimFiles: Beware of Mexican Tycoon Carlos Slim at the top of 1% (English) 

Here are the facts as documented and described in “A Paradox Named Carlos Slim” by Mexican Journalist Óscar E. Ornelas (Summary):

Although his fortune this year dropped down by 5 MILLIONS, he’s still the richest man of the world according to Forbes Magazine. This is a paradox. Why? Because he’s Mexican. Mexican economy is not growing. Mexican minimum wage is not increasing. While Mexican average wage was $206.46 pesos in 2006 (around $20 US dollars), it decreased to $199.10 pesos by the end of 2011. Mexican public services are neither improving nor covering the needs of all the population.

How can this happen? Well, in many ways. First of all, Mexico is the only member of the Organization for Economic Co-Operation and Development (OECD) that does not disclose information about income taxes statements, while such information is available to the public in most European countries since 50 years ago, and other Latin American countries, like Argentina, Brazil and Chili.

Slim’s fortune was not made overnight . . . but almost. He started his career as a Plutocrat being a skillful speculator in the Mexican Stock Market (Inbursa), where he was involved in a fraudulent speculation bubble that ruined thousands of small savings accounts in the late 80s. However, the “Jewel in the Crown” given away to him, as Óscar E. Ornelas puts it, was the state-owned phone company Teléfonos de México, which became “Telmex”. Thanks to his personal friendship with President Carlos Salinas de Gortari, Slim bought Telmex at 30% of its real cost in books, and got protected against any other kind of commercial competition for two decades, while he built his economic empire.

Here is a summary of the practices of Telmex as a monopoly, according to a report published at the end of 2011 by Comptel Corporation:  

"In the case of Mexico, Comptel states that even after constant requests and complaints from competitors, the Mexican government has not taken precise measures to restrain both subsidiaries of America Movil: Telmex, currently supplying 80% of fixed telephony services, and Telcel, currently supplying 70% of mobile telephony in Mexico; these two companies earned their huge market share not necessarily because of the authentic consumer choice, but more by using business practices considered to be monopolistic.
According to Comptel, the actions issued by the Federal Telecommunication Commission (Cofetel) to sanction Telmex, have not been implemented by the Secretariat of Communications and Transportation (SCT), hindering the development of competition in Mexico.
Furthermore, Comptel highlights the following main anti-competitive activities that Telmex, have been perpetuating since 1991, the year that telephony was privatized in Mexico:
1. Blocking the majority of competitive traffic into the rural half of Mexico.
2. Illegally inserting lengthy recorded messages into calls carried into Mexico by certain competitive carriers, telling U.S. and Mexican customers that future calls may be not completed if they use that carrier.
3. Refusing to allow competitors to install local or long haul facilities that would provide competitive termination for U.S. carriers.
4. Maintaining differential and discriminatory pricing structures for interconnection and termination services.
5. Refusing to provide carriers with interconnection in Non-Equal Access (NEA) calling areas that would represent more competition and better rates for the public.
6. Providing interconnection at a degraded quality level.
7. Failing to consolidate local area codes as ordered by Cofetel so that the calls between two areas would be considered as a local call and not a long distance call, which would result in huge savings for the public and the carriers.
These practices and abuses are already well known by competitors and users, but continue to go unpunished for lack of authority and real regulation by the Mexican government.
Comptel acknowledges the constant complaints presented by the various competing companies to Cofetel, emphasizing the one presented by Marcatel in November 2008 about deficiencies and interconnection practices, and which so far remains unanswered by the SCT.
Also, describes the recordings that in May 2010, when Telmex inserted into calls made through Marcatel from the U.S. to Mexico stating that, "the long distance carrier was not paying the contracted rate to the local operator (Telmex) and, if that continues, then the local operator will no longer complete calls," causing confusion and distrust among users.
Telmex then inserted a second recording to a specific operator in Mexico saying that the long distance operator lost a court decision and allegedly was forced to pay an unspecified amount to the local operator, as a condition to continue providing the service. "This recording affects calls into the three main cities in Mexico and heavily impacts international traffic, particularly calling card traffic from the U.S."
The analysis developed by Comptel was published as a direct appeal to the SCT, the authority responsible for not having resolved these conflicts, all of which, from experience in other countries, have been resolved in a timely manner, making the disposition of the authority prevail.
Comptel requests to facilitate the interconnection for Mexican competitors, to fix prices for call termination and an immediate response to complaints submitted by the competing companies to Cofetel, especially the sanctions issued by Cofetel against Telmex in April 2010, which remain unanswered by the SCT."

Let’s now see what workers have to say about this . . .

Telmex privatization was a direct result of the IMF and the World Bank Group to dismantle the Mexican public sector. “In 1988, the Mexican President  that was just been imposed by rigged election, Carlos Salinas, introduced the Development National Plan, announcing the privatization of Telmex among other Government-owned companies. Ever since that moment, for the next to years, the Government and people’s financial resources are devoted to optimize the company as a competitive one, just to give it away in a fake, illegal auction, to Carlos Slim” the expelled democratic union workers tell. “Although the big excuse to do so was that the government did not have the financial capacity to upgrade the telecommunication system, as soon as Slim got the company, it raised three times its value. As the national economy decreased for the next 3 years, the Company grew over 12 percent. The corrupted union leaders worked to help both the Government and the company owner to persuade the workers of the benefits. They were given a lump sum of 70, 000 Mexican pesos as payment of their shares, yet eventually we were all forced to sell our shares. Guess who hoarded all of our shares in the end?”

(To be continued…)

More information in English coming soon.