Mexican Money Deal Taints 'Times'
THE NEW YORK TIMES, America's most prestigious newspaper, has recently rolled over into a deep ditch of debt. Its chances of getting out were estimated to be slim and none. So the paper's corporate executives chose Slim.
That would be Carlos Slim, the Mexican business mogul who used his political connections, monopoly power and low-paid workforce to amass a $60 billion personal fortune, said to make him the second-richest man in the world. In 1990, Mexico's corrupt national government went on a privatization frenzy, selling public assets to a select few political cronies. Slim grabbed Telmex, the telephone monopoly that today controls 90 percent of the country's market. Using this as his core building block, he now owns banks, an airline, railroads, restaurants, and, well, his reach is so pervasive that analysts say you can't spend a day in Mexico City without paying at least one peso to him.
Last year, his reach crossed the U.S. border, buying multimillion-dollar stakes in Saks Fifth Avenue, Citigroup and The Times. This January, Slim dramatically upped his ownership of The Times, to about 17 percent, making a $250 million loan to help executives there cope with the company's billion-dollar debt.
What a deal! At least for Slim. In return for the cash, he got more shares, making him the second-largest owner of the paper. Better yet, he's getting 14-percent interest on the loan, which means that The Times will pay him about $35 million a year to borrow his money.
But The Times is paying an even-greater price in its journalistic credibility. By aligning its reputation with a monopolist baron of Mexico's crony capitalism, the company is now saddled with the kind of apparent conflict of interest that it routinely (and rightly) deplores in others.
© 2009 Providence Journal