The `New York Times'' Mexican Billionaire Connection Revisited Again: Part 3

New York Times Owner Slim’s Historic Tobacco Industry/Philip Morris International/Altria Connection

A 2010 research paper by Tiffany Burch, Nathaniel Wander and Jeff Collin, titled “Uneasy money: the Instituto Carlos Slim de la Salud, tobacco philanthropy and conflict of interest in global health”, described some conflicts-of-interest and ethical issues related to New York Times Owner Slim’s foundations that raised some questions about whether or not the New York Times owner is actually a “new breed” of billionaire who has aided health historically:

“In May 2007, the Instituto Carso de la Salud—now Instituto Carlos Slim de la Salud (ICSS)—was endowed with US$500 million to focus on priority health issues in Latin America… ICSS was soon criticized, however, on the grounds that its funding was derived from tobacco industry profits and that its founder Carlos Slim Hélu remained an active industry principal…This research…demonstrates a prima facie conflict of interest between ICSS's health mission and its founder's involvement in cigarette manufacturing and marketing, reflected on ICSS's website as a resounding silence on issues of tobacco and health….”

According to the “Uneasy Money” research paper:

"The Instituto Carlos Slim de la Salud (ICSS) or Carlos Slim Health Institute (originally Instituto Carso de la Salud), was founded as a health charity by Mexican businessman Carlos Slim Helú and inaugurated on 18 September 2007 by Mexican President Felipe Calderón and Sra. Vivian Fernández, wife of the president of Panama. Backed by health and political elites, ICSS…is partnering with the Clinton Global Initiative…Slim, one of the world's richest men whose holdings include telecommunications, finance and retailing, also owns a 20% stake in the Mexican cigarette manufacturer Cigarrera La Tabacalera Mexicana (Cigatam), with the majority interest currently held by Philip Morris International (PMI). Having previously served on the board of Philip Morris Companies, Inc. (renamed Altria in 2003), Slimjoined the board of PMI when it was spun off from the Altria parent in April 2008. His annual compensation from PMI includes a retainer of at least US$100 000, reimbursement of travel and business expenses and shares worth US$140 000….

“…The then editor of Tobacco Control Simon Chapman described Slim as ‘a direct beneficiary of massive sales of tobacco’…This paper documents Slim's…involvement in tobacco corporations, detailing tobacco's significance in the development of his Grupo Carso (GC) and his historic and ongoing strategic value to the global tobacco industry…The documents presented here substantiate a longstanding pattern of financial and political relations between Carlos Slim/GC and Philip Morris/Altria/PMI…..

“The relationships between ICSS, Carlos Slimand the tobacco industry remain rooted in the finances of the Slim/GC commercial enterprise and in the services to the tobacco industry thatSlim continues to provide. They have been and remain arguably antithetical to national, regional and global interests in public health…

“…GC (originally Grupo Galas) was incorporated in 1980 ‘to obtain the majority stake in Cigatam, in which Philip Morris was a 29% partner’….By 1995 Cigatam was Mexico's most profitable domestic cigarette company, generating 24% of GC's revenue and 32% of its net income. In 1997, immediately before Slimwas elected to its board of directors, the Philip Morris parent company increased its stake in Cigatam to 50%, paying GC US$400 million. Shortly after the inauguration of ICSS in 2007, Slim/GC further profited by selling an additional 30% of Cigatam to PM/Altria at a price of US$1.1 billion. By 2008, Cigatam commanded 55% of the Mexican cigarette market and continued to increase its profits. The Slim/GC enterprise continues to benefit from its remaining 20% share of Cigatam, as well as from holdings in PMI.

“During the early 1980s, Slim/GC also became the largest shareholder in Cigatam's main competitor, Cigarerra La Moderna (CLM), which was partnered with British American Tobacco (BAT), though seemingly less openly than was Cigatam with PM…In 1985, ostensibly ‘to avoid antitrust problems’, Slim sold his 40% stake in CLM (which then held a 75% share of the Mexican market) to competitor/colleague Alfonso Romo Garza for US$32.4 million…Though formally competitors, Cigatam and CLM were described as functionally cooperative, being said to constitute an effective merchandising duopoly that controlled 98% of Mexico's cigarette market in 1997….

“Slim's direct involvement in PM/Altria intensified during his service on the company's board of directors from 1997 to 2006, and he benefited additionally from annual retainers and share accumulations. Altria's 2005 Annual Report, the last full year in which Slim served, showed him owning over 4 million company shares, almost 1.5 times that of then-Chairman Louis Camilleri. In 2000, Slim purchased 3.9 million shares at greatly depressed prices, selling them for a profit of US$63 million 1 year later. Slim retained 1.5 million Altria shares when he retired from its board in the spring of 2006.

“…Tobacco money enabled GC to purchase a share of the privatized Telefonos de Mexico (Telmex) from the Mexican government in 1990, which became the basis of GC telecommunications holdings…ICSS's funds originated in the tobacco industry…

“Even before his elevation to its board…Slimhad been serving as a Philip Morris conduitto the Mexican government….Slim's value to Philip Morris was further demonstrated when the company made a substantial donation to aSlim family charity consistent with its wider ‘influence’ strategies….In March 2008, less than a year after the launch of the ICSS, Slimbecame a director for the newly independent Philip Morris International, when it was spun off from the PM/Altria parent company…Specifically, he serves on PMI's Regulatory Affairs and Product Innovations Committee…

“If Slim had no further role than the financing of a health charity, it would still present a problematic case of ‘white coating’—the tobacco industry clothing itself in the respectability and goodwill of medical research and healthcare provision. While Slim appears to have no official role in ICSS per se, he remains the Chairman Emeritus of GC, within which ICSS and its parent the Carlos Slim Foundation, are described as ‘a fundamental part of Carlos Slim Helú's business strategy and culture’…Although Slim does not sit on the ICSS board of nine directors,…three are family members (son Marco Antonio, also CEO of Inbursa and a GC director; son-in-law Arturo Elias, a GC director and a key Telmex executive, described as Slim's spokesman; and daughter Vanessa), a fourth is a GC executive (Raul Zepeda, a Telmex attorney and Inbursa director), two are directors of GC and/or its subsidiaries (Jose Kuri and Roberto Kriete)…

“Finally, it cannot be overemphasized thatSlim, who is said to remain in close communication with his three sons and two sons-in-law, the active managers of his business interests, is not simply any wealthy patron. His family holdings were reported to comprise more than 5% of Mexico's 2006 gross domestic product and to account for one-third the value on Mexico's US$422 billion stock exchange. Consistently ranked alongside Bill Gates and Warren Buffett as one of the three richest men in the world, Slim's significance within a national economy 1/14th the size of the US substantially exceeds that of Buffett and Gates…

“ICSS's funding from telecommunication and infrastructure shares ultimately derives from the tobacco industry. By Slim's account, it was the large cash flows generated by cigarette manufacturing, and by our analysis, additional profits from shares in domestic and transnational tobacco companies that financed GC's expansion into these other sectors…The tobacco links at play here are not matters of ancient history: GC, which parents the Carlos Slim Foundation of which ICSS is a subsidiary, retains a 20% share in the pre-eminent tobacco company in the largest market in Spanish-speaking America, and Slim and his family have benefited from owning large volumes of shares in Altria and PMI….By serving PMI, the founder of what would be Latin America's most influential health charity has agreed to promote the long-term interests of the world's leading tobacco transnational....

“The profits, power and prestige of Slim, his family and GC are substantially derived from selling cigarettes; their ongoing engagement in this business suggests their continued acceptance of this activity as unproblematic…ICSS can reasonably be viewed as essentially the tobacco-funded gift of one of the world's richest men….”

(end of part 3