Mexico there was not enough technology, or enough people with that financial capacity, a decision was made for the government to create steelworks. I think that was brilliant, because the United States was consuming all the steel. What is not clear is why we should applaud that fifty years later—you still have that company under the control of the State, when you already have steel coming out of your ears.”
After his exploration of the neoliberal universe, Rogozinski concluded that it was best to start the privatization process with the smallest companies. “That way, if you stick your foot in it, there’s no catastrophic consequences,” he explains.
With that idea in mind, one of the first privatizations he oversaw was El Mirador de Acapulco, a hotel owned by the Mexican government and located beside the iconic cliff of La Quebrada, popular with daring local divers. But Salinas de Gortari had his eye on the telecom sector especially.
During the interview Rogozinski offered me in his office at Nacional Financiera, the government body he leads for Enrique Peña Nieto’s government, he showed me a document in English entitled “Policy Options for Restructure in Telecommunications Industry Structure and Regulation in Mexico.”
“What’s the date on it?” I asked when he showed it to me.
“December 10, 1988.”
That was just months after the contested general elections, in which widespread allegations of electoral fraud led to massive protests. Already, with Salinas de Gortari as president, Rogozinski had a diagnostic report under his arm and plenty of resources to help the new administration begin the bidding process. Telmex was one of the main targets.
“Why the heck would you not want to privatize a company where practically all local calls were free and long distance financed everything else? What’s more, the way the company was organized for long distance calls was a disaster: if you wanted to make a call from Monterrey to Nuevo Laredo, because of the way Telmex was structured, the call had to go from Monterrey to Mexico City and from Mexico City to Nuevo Laredo!”
Speaking of the north of Mexico, the industrial conglomerate Grupo Alfa, the most important consortium in the country at that time, had conducted its own research on the national telecommunications sector, aiming to take over Telmex. Rogozinski recalls meeting with the businessmen in Monterrey and realizing that at the time the consortium had two very strong internal groups: one formed by young people and another, more traditional one. A member of the latter was Bernardo Garza Sada, then president of Grupo Alfa. The businessmen were considering submitting a bid for Telmex and invited Rogozinski to travel to Monterrey to talk about that possibility.
Rogozinski went there, and while they were eating sushi, Bernardo Garza Sada received a card from his assistant. The businessman excused himself, saying that the minister of finance, Pedro Aspe, was on the phone.
When he returned, Rogozinski said jokingly:
“Don’t tell me the minister of finance called you to say you’re in hot water over your taxes?”
“No, it’s worse than that,” the president of Alfa replied seriously.
“What do you mean, worse?”
“He just informed me that Mr. President, Carlos Salinas, has just decided that the steel industry will be privatized, and now bidding for Telmex is definitely out of the question. We are going to focus on the industry we know about.”
In the end, Alfa did not take part in the bid for Telmex. The other two consortiums that participated along with Grupo Carso were Grupo Gentor, led by another Monterrey businessman, Javier Garza Sepúlveda (a childhood friend of Salinas de Gortari), as well as Accival Casa de Bolsa, owned by banker Roberto Hernández, in partnership with Telefónica de España and the company GTE.
The political columns of certain Mexican newspapers used to be the platform through which the PRI regime would communicate the decisions made by the president or government officials regarding sensitive issues. Telmex was one of them, and reading the columns from those years, you get the impression that the favorite candidate and likely winner in the bid was not Slim but Roberto Hernández, who already possessed a significant amount of shares and was on the company’s board of directors. Hernández’s defeat caused the relationship with Slim to cool, although the banker adhered to social convention and in the end published a newspaper spread that conceded the process.
“Numbers are numbers in this bid! There’s no two ways about it,” says Rogozinski when explaining that Slim won because he submitted the best bid and not because he received any presidential help.
“So, to what do you attribute the widespread perception that the bid was rigged?”
“I’ll explain why that perception was created. I recommend you read my book Mitos y mentadas de la economía mexicana (Myths and Mockery in the Mexican Economy). Selling ideas using the media has become an efficient mechanism for developed nations, dominant businesses, important politicians and many others to kick away the ladder for others. In the public discourse of government functionaries, businesspeople and intellectuals kindly offer needy nations access to the ladder, but only in private do they kick it away. And here I give several examples. None of this is new: in the 1990s, global multilateral organizations such as the IMF [International Monetary Fund] and the World Bank, mainly financed and controlled by developing countries, defended the thesis that it was desirable to privatize national businesses. The spokespersons of the Washington Consensus claimed that countries need not worry about the need of new owners: all the global companies were presented as prophets of progress, as voluntary militants in favor of developing countries. If you got distracted, you might start believing that the world was full of good Samaritans. And the media were one of the most useful tools to spread these ideas, but time has demonstrated the fallacy.”
Before the Telmex bid, according to Rogozinski, Slim was very reluctant to participate. President Salinas de Gortari himself and minister of finance Pedro Aspe invited him to accompany them on a tour in Japan and they discussed the subject during the long-haul flight.
“When Salinas, Aspe and Slim returned from the trip to Japan, the secretary said to me: ‘I think we’ve managed to persuade Slim, but he still hasn’t fully made a decision; can you go and convince him.’” A few days later, Rogozinski went to see Slim in his home. “I was with Slim in his home, which by the way had a pool that never had water in it, and he says, ‘If I enter and win, it will change my life and I don’t know if that’s what I want. The whole family gets together every Sunday at home. I’ll talk to them this Sunday, and on Monday I’ll let you know what I’ve decided.’”
Rogozinski returned on Monday and Slim said he would submit a bid. So, on November 15, 1990, he presented his proposal to purchase Telmex. He did it through Grupo Carso, S.A. de C.V., according to the original documentation consulted. Grupo Carso’s proposal included Seguros de México, S.A. de C.V. (Segumex), France Cables et Radio, S.A. (“France Cables”) and Southwestern Bell International Holdings (SBIH) Corporation. The offer was to buy Telmex Series AA shares at $0.80165 per share, for a total of 2,163,040,972 AA shares, together with a stock option for Telmex Series L shares. Grupo Carso and Segumex participated with the majority of the Mexican group package, while France Cables and SBIH underwrote in equal parts the total of the foreign group. The purchase of all the shares and the stock option was carried out through a special trust fund.
The formal proposal with which Slim won Telmex states that the group of investors “wishes to support the development and spread of knowledge in the field of telecommunications in Mexico, for which purpose it proposes to establish, carry out and finance education programs and training in said field, acting through the appropriate Mexican institutions.” It also clarifies that
