Pretty soon, we'll all be doing business here like they do in Mexico. Reason being, they'll all be here doing business.
Posted on 01/06/2005 6:37:49 PM PST by MeneMeneTekelUpharsin
MEXICO CITY, Jan 5 (Reuters) - "Business as usual" in Mexico can result in dire consequences in the United States, as media tycoon Ricardo Salinas found out the hard way when U.S. regulators filed fraud charges against him this week. Accusations by the Securities and Exchange Commission (SEC) that Salinas pocketed $109 million in a debt deal and then engaged in an "elaborate scheme" to cover it up shocked a country accustomed to a far more lax regulatory environment. Salinas denies the charges. But some analysts say the case could change the way business is done in Mexico, leading to greater transparency and respect for minority shareholders. "Owners of Mexican companies that are listed in the U.S. have to be looking at this and saying 'Wow.' It will have an influence," said Jim Harper, director of corporate research at BCP Securities in Greenwich, Conn.
"Executives will be following this to see how it goes down. They're going to be making bloody well sure that they are making the necessary disclosures from now on," Harper said. The SEC has jurisdiction over the case because shares in Salinas-controlled broadcaster TV Azteca (TZA.N: Quote, Profile, Research) (TVAZTCACPO.MX: Quote, Profile, Research) are listed on the New York Stock Exchange -- meaning they must adhere to the same securities regulations as U.S. companies. Laws in Mexico are theoretically just as tight, but the Mexican equivalent of the SEC is not even allowed to make its punishments public. Analysts claim that publicly traded companies are rarely sanctioned. Minority shareholders often say their rights are ignored by many Mexican companies, which are controlled by insular dynasties that run board meetings like family reunions.
ABOVE THE LAW
"That's the environment that Salinas comes from, a Mexico where businessmen are above the law. What's happening now must be a real shock to him," said a U.S. fund manager who has done business in Mexico for decades. "This might be a wake-up call for guys like him. They're doing business in a globalized world now and the country with the strongest laws can come down on you pretty hard," a U.S. fund manager said. The SEC is seeking fines and the repayment of what it considers ill-gotten gains after Salinas and a business partner bought debt of mobile telephone operator Unefon, which is owned by TV Azteca, at a steep discount. They then sold the debt to Unefon at a much higher price, pocketing between them about $218 million. Salinas at first denied participation in the investment fund behind the debt deal, then reversed ground but still insisted the transaction benefited Unefon, TV Azteca and their shareholders. "It's absurd for the SEC to use a Mexican company and Mexican citizens to try to impose U.S. regulations in an extraterritorial manner," Salinas said in a statement. "In my view, they are trying to politically compensate their deficiencies in supervising U.S. companies in the past."
Analysts say Mexican corporate governance has improved in recent years and compares favorably with that in many other emerging markets, but it is still a touchy issue. The TV Azteca case has caused such a stir that several local businessmen and analysts declined to comment. A handful of Mexican companies, like airport operator Asur (ASURB.MX: Quote, Profile, Research) (ASR.N: Quote, Profile, Research) , have developed strong corporate governance policies to woo minority investors. "It's good business," said a senior executive at one large publicly listed Mexican company. Salinas' experience will strengthen those companies' resolve to guarantee transparency, he said. How many executives improve their behavior following the Salinas case will probably hinge on the punishment. "If this plays out in a way where the economic penalties are significant, or Salinas has to choose between delisting or stepping down, you're going to have lawyers vetting every move that U.S.-listed foreign companies make from now on. It all depends on the outcome," Harper added.
This may affect other Mexican companies trading ADR's on the NYSE such as Cemex (CX) and Maseca (MSK) whose leadership has a VERY Mexican point of view. Something to watch, to say the least.
Pretty soon, we'll all be doing business here like they do in Mexico. Reason being, they'll all be here doing business.
Pretty soon, we'll all be doing business here like they do in Mexico. Reason being, they'll all be here doing business.
Martha Stewart of course is an American so had to face the consequences for her crime --- but we can't punish the Mexican criminals for far worse crimes.
""That's the environment that Salinas comes from, a Mexico where businessmen are above the law. "
Yes, and they are pushing their environment into the USA, where our businessmen are "above the law" hiring illegals.
We are being diluted down to the lowest common denomenator.
I'm realizing how much time we wasted hating France.
ROFL What!? Mexico corrupt??? Say it isn't so.
In so many words, Salinas basically told the SEC off. It's about time someone stepped up and put a stop to his type of bravado, the Islamofacist/Baathist drivel and then for good measure stomp the tar out of North Korea or whoever else needs an attitude adjustment. I'm ready. No regrets.
Exactly right.
Mexico is not corrupt. Those who would stop them from making exhorbitant profit are corrupt and must be made to back off or be eliminated.
I was meeting with a Mexican CEO of a major product supplier. They resent Wal-Mart cutting prices in their territory. Whenever Wal-Mart drops the prices of their products, they call their only major competitor, and they both agree to cut Wal-Mart off. All the suppliers of this particular product refuse to sell to Wal-Mart for a specified period of time, and until Wal-Mart agrees not to cut prices again.
The man was shocked that we can't do this in the US. He wondered how we could do business in such an environment.
I could tell you stories that would make your hair curl. Americans in general don't have a clue as to whom they are dealing with. They really have no idea. And, when I try to tell them, then they vilify ME. So, I quit. Carry on. People pretty much are going to get what they deserve for failure to do what is right.
This guy was quite respectable. Their rules of business conduct are just different. Of course, he's always surrounded by bodyguards with M-16s.
ROFL!!! How true. The SEC boys need to learn to keep security like that with them. Mexicans play for keeps. They'll find out.
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