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May 21, 2001

The Citigroup-Banamex Merger

Breaking The Information Blockade

The Mexican Press Speaks:

Narco News 2001

The Clamor in Mexico

Over Citigroup's Deal

El Universal, Mexico City

Pulso Político Column: May 21, 2001

By Francisco Cárdenas Cruz

It Is Said that Citibank "Launders" and Buys Banamex

But Fox Praises It

General Clamor: First It Should Pay Its FOBAPROA Debt

Slim Warned Us When Banamex Tried to Buy Bancomer

That it is said that Citibank "launders" drug trafficking money and in spite of that buys Banamex doesn't matter: President Vicente Fox praises it.

The same day that Citigroup, owner of Citibank, acquired Banamex and the purchase was announced and formalized, there had been a hasty presidential praise - just like when the Indigenous Law was passed. After he asked how much the bank made - and it will continue wearing the name of Mexico - it falls into the hands of a very questionable foreign institution. But Fox said that that the investment demonstrates "the absolute confidence in the economic policy" of his government, as well as "the strengthening of the peso."

However, the optimism of the commander in chief contrasts with the recommendations of "prudence" that the principal advisors and raters of investment on Wall Street have made and with the newspaper reports, including last Friday in El Universal, that recalled that Citibank has been suspected in various cases of "laundering money from drug trafficking" of Raul Salinas de Gortari among others, that some years ago provoked a public scandal.

But beyond the recognition of the President and of critiques, suspicions and accusations over the recent acquisition of Banamex, what is on the minds of many today is whether the large sum that Banamex received in this $12.5 billion dollar sale - more than120 billion Mexican pesos - will pay the debt that it contracted after buying the Mexican institution for $3 billion, 195 million dollars (that, in 1991, was 9 billion, 745 million pesos) and it owes to the FOBAPROA, and later the IPAB funds, after the bank bailout of the last presidential term.

The purchase of Banamex by Citigroup completed on Thursday of last week, and described by some financial specialists as "the deal of the century," also recalls that severe charge that Carlos Slim Helu, president of the Carso Group, made a year ago against Roberto Hernandez Ramirez, director of Banamex-Accival, the powerful financial group, when he tried to acquire the Bank of Commerce (Bancomer) and the purchase was, in the end, made by the Bilbao Vizcaya-Argentina bank.

Slim then declared that "it is a shame and a cynicism" that the principal stockholders of Banamex-Accival, headed by Hernandez Ramirez, would try to sell their stock to purchase Bancomer "instead of paying their financial bankruptcies that stem from FOBAPROA," after revealing that "the only bank where the stockholders did not lose in spite of the bankruptcies was Banamex, which proves the favoritism that existed in FOBAPROA."

He also said that the better alternative to financially rescue Bancomer was the proposal of the Spanish bank since, he warned, "Banamex only wants Bancomer in order to dismantle it." Months later, in effect, BBV-Argentina acquired Banamex.

Slim Helu mocked Hernandez Ramirez a year ago, who had declared that Banamex-Accival tried to merge with Bancomer in order to reach a "world-class size."

And Slim predicted what just happened: "Neither alone, nor together, will they be of world-class size. If they want to enter the world arena, they will end up buying a third foreign bank because making an institution bigger doesn't mean it will be better or stronger."

One Hand Washes Another

Bob Rubin, Roberto Hernández and Sandy Weill

The conflict between Slim Helu and Hernandez Ramirez happened in mid-May of last year, only two months before the presidential election and in moments in which both men were signaled as sympathizers with the then-candidates of the PRI, Francisco Labastida, and of the PAN, Vicente Fox, respectively, something that the president of the Carso Group roundly denied, although he admitted that he did back the candidacies of some of his friends who sought popular election.

What Slim Helu said about Banamex-Accival having to sell its stocks, but to do so in order to pay its financial bankruptcies that are in the FOBAPROA fund, has been reiterated now by the PRI and the PRD, whose national and legislative leaders demand that the amount of unpaid debt that they must liquidate be reported to the public and that it be paid to the Mexican people.

Dulce Maria Sauri, national leader of the PRI, said that she understood that the institution of Hernandez Ramirez has an unpaid debt of more than three billion dollars and that "it would be highly recommendable, very laudable, that if this merger happens, there be absolute clarity and transparency in how much this bank had in the FOBAPROA fund and now has in the IPAB," because that would avoid suspicions and many headaches since "the only ones who profit are the stockholders of Banamex-Accival while the Mexican people continue paying the cost."

The Yucatan politician declared herself to be against the idea that the stockholders of this institution would receive a double benefit: The federal government rescued them under the last president, with the transfer of their loans to FOBAPROA. And now they receive billions of dollars while the Mexican people continue to pay.

For her part, Amalia Garcia, national leader of the PRD, and Marti Batres, that party's leader in the House of Representatives, agreed that Banamex-Accival must be acquired by Citigroup with debts and all and pay what it still owes to the IPAB fund.

Carlos Navarette, spokesman for that party of the Aztec Sun, asked, with more than enough reason: "Why are the Mexican people going to pay, through taxes, for the financial bankruptcy of a bank that today is successful because it has foreign capital, and also, because its owners are being paid in dollars?" That, certainly, is what is being asked far and wide inside national territory. Why do the Mexican people have to pay the debts of a fistful of bankers and stockholders of Banamex-Accival that today have made the deal of their lives with the acquisition of this bank without paying anything and now they succeed in selling it for more than $12 billion dollars?

With all that - and the grave matter that it is said that Citibank "launders" money from drug trafficking, or that it does it or does not - and it buys Banamex-Accival, or whether or not President Fox praises the deal, his government should not permit that the immense majority of Mexicans continue paying the debts of a privileged minority, scandalously enriched, when the country needs resources and tries to obtain them from those who have the least.

Authentic Journalism for Those Who Have the Least