Mexico billionaire gains on Gates
Net worth: $56 billion
Gain: $6 billion
#2: Warren Buffett
Net worth: $52 billion
Gain: $10 billion
#3: Carlos Slim
Net worth: $49 billion
Gain: $19 billion
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 a decade, according to 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 has used Telmex as a cash cow to build an empire.
Mexicans buy cigarettes from Slim's tobacco company, apply for mortgages at his bank and purchase policies at his insurance firm. Shoppers patronize his Sears department stores, eat as his Sanborns restaurants and browse for CDs at his Mixup music outlets.
Travelers fly his airline. Industrialists buy his auto parts, electronics, steel and ceramic tile. The government hires his infrastructure firm to build highways, water-treatment plants and oil platforms. More than 250,000 people draw paychecks from his companies.
"It's virtually cradle to grave. It's Slimlandia," said George Grayson, a Mexico expert at the College of William & Mary in Virginia. "You are engulfed by Slim in Mexico."
Slim, 67, has more than tripled his fortune since Forbes published its 2004 list, thanks to a string of acquisitions and his ballooning telecom holdings. His net worth is equivalent to nearly 6 percent of Mexico's gross domestic product, a feat unmatched by even U.S. robber barons at the height of their influence.
To many Mexicans, his rise shows their businessmen can run world-class companies. He is widely praised for turning Telmex -- once notorious for taking months or years to install a phone line -- into a modern, professional operation.
"I'm rooting for him to take first place" on the Forbes list, said Teresa Sotelo, 50, a Mexico City public accountant. "He's Mexican. We always have to root for our countrymen."
Yet, 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?" former leftist presidential candidate Andrés Manuel López Obrador thundered last week.
If 2007 is as good to Slim as 2006 was, he will overtake the two leading Americans. Buffett ($52 billion), who made his money running the Berkshire Hathaway investment fund, and Gates ($56 billion), the Microsoft co-founder who has topped the Forbes list 13 consecutive years, are focused on giving their fortunes away.
Gates has set up the world's richest charity foundation and 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.
On Monday, 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 real estate have led to an urban renewal in Mexico City's historical downtown district.
Slim said his charitable foundations have about $4 billion in endowments. But he still is 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 told a news conference.
Latin American billionaires -- there are 10 others in Mexico -- don't have a record of charitable giving comparable to Buffett or Gates, partly for historic reasons and partly because the region's tax laws often don't encourage donations as much as in the United States.
"It's not that there is a lack of goodwill; it's that it has been customary here to see social programs as the duty of the government," said Manuel Arango, a founder of the Mexican Center for Philanthropy.
Slim's critics say he could do more for Mexicans by lowering consumer prices than by making charitable donations.
A 2005 report by the Organization for Economic Cooperation and Development found Mexico's phone rates among the highest in the 30-member group of developed nations, although Telmex questions the study's methodology.
"It's not so much that he's building a fortune," Mexico City-based economist Jonathan Heath said. "The thing that's bad is that he's building more on his monopolies; he's getting monopolistic rents, that's why he's become so stinking rich."
Now worth an estimated $49 billion, Slim is the son of a Lebanese father who built a small family fortune from retailing.
Slim's Telefonos de Mexico SA controls more than 90 percent of the nation's fixed phone lines and made $15.9 billion in 2006; his America Movil SA controls about 70 percent of cellphone service in Mexico and made $21.6 billion.
It's an advantage that is not unusual in Mexico, where businesses 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 Calderón has promised to battle monopolistic practices, but past efforts have been thwarted by Mexico's entrenched elite.
"I have tremendous respect and affection for him personally," said former Foreign Minister Jorge Castaneda, who has publicly advocated breaking up Telmex. "The problem is that this is a country where we don't have either the regulatory capacity or the political will to break up monopolies."
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.
Even there, Slim stands to gain -- his fortune includes shares in Televisa, and one of his sons sits on the network's board.
Copyright © 2007 The Seattle Times Company