(Bloomberg) — They made quite the odd couple in Mexico: the world-famous billionaire and the rising leftist politician. For years, they teamed up on projects and spoke nicely of one another in public.
But just as the politician, Andres Manuel Lopez Obrador, was preparing to move into the presidential palace late last year, his relationship with the billionaire, Carlos Slim, suddenly soured. Mexico’s richest man didn’t join the president’s business advisory board and AMLO, as the leader is known, began taking shots at one of Slim’s companies.
One potential explanation for the chill: a hand-written note Slim sent in October.
As Lopez Obrador was weighing whether to scrap a $13 billion airport being built for Mexico City, Slim reached out to the president with a personal letter making a plea to save the project, according to two people with knowledge of the matter. He argued that the airport could be turned over to the private sector, and offered to take it on himself, said the people, who asked not to be named because the correspondence was private.
Slim’s strong support wasn’t a surprise — he had publicly defended the new hub and talked about the option for a privately run airport, known as a concession — but the note also proposed that the deal include operations of another airport nearby, Toluca. For Lopez Obrador, who had just staked his winning campaign on a pledge to rein in Mexico’s corporate elite, the bold overture didn’t go over well, said one of the people.
We know the outcome: Lopez Obrador proceeded with a public referendum on the airport and then canceled the project. Slim, who was heavily invested through construction contracts and a financing vehicle, took a heavy hit. But the note and Lopez Obrador’s bristling response help provide some insight into the cooling behind a seemingly good relationship that went back almost two decades. Now the president is cozier with another billionaire, mogul Ricardo Salinas Pliego.
“The airport was a big blow for Slim,” said Alejandro Schtulmann, who runs the political-risk consultancy EMPRA in Mexico City. For the president, “Slim could be of use, but if he’s perceived to be in the way, Lopez Obrador will just run him over. It’s not personal, it’s pragmatic utility.”
While Lopez Obrador’s press office didn’t respond to requests for comment, the Mexican president said on Monday April 29, in his daily press conference that he has a good relationship with Slim.
“I just went for a meal with Carlos Slim last week, it was a good conversation,” Lopez Obrador said, without providing additional details.
The pair have a history of working together; they teamed up to revamp Mexico City’s historic downtown when Lopez Obrador was mayor in the early 2000s. And in a country where personal connections weigh heavily in politics, the daughter of Lopez Obrador’s tourism minister is married to Slim’s eldest son.
In a sign of frayed ties, Slim was the only Mexican media mogul missing when the president announced his business advisory board in November. Lopez Obrador said last month that the billionaire’s energy company was unfairly profiting off unfinished natural gas pipelines. He also said in one of his highly watched daily press conferences that Slim, 79, would be retiring in the coming years. Slim’s spokesman later expressed more moderate comments.
The spokesman, Arturo Elias Ayub, said Friday that there isn’t any rift between Slim and the president. To the contrary, “Slim is in total agreement with AMLO’s top priorities, such as fighting poverty, corruption and improving public safety,” he said. “They’re both believers in promoting economic growth via private and foreign investment.”
Once the world’s richest man, Slim has fallen over the years to No. 10 in the Bloomberg Billionaires Index, with a $58.7 billion fortune. He’s still Mexico’s wealthiest person by far. Most of his money has come from telecommunications, but his empire also spreads across construction, banking and mining.
The drop in Slim’s fortune is largely tied to the performance of the Mexican peso, which has fallen about 31 percent since 2013. That same year, a regulatory crackdown from the Mexican government on Slim’s mobile-phone company, America Movil SAB, squeezed profit margins. Since Lopez Obrador’s July 1 election, Slim’s wealth is roughly unchanged, according to the Bloomberg index.
Salinas, the owner of TV Azteca SAB, Mexico’s second-largest broadcaster, and retail and banking conglomerate Grupo Elektra SAB, has strategically positioned his businesses and key collaborators to better align with the new government.
His Banco Azteca SA is in charge of distributing cards with cash from social assistance programs to millions of citizens. There was no bidding process for that contract, a widely criticized move. The man who led Salinas’s charity for more than 15 years is now education minister, and Salinas himself was named to the business council that Slim is not on.
“I celebrate the good relationship,” Alejandro Valenzuela, chief executive officer of Banco Azteca, said in an interview at his office in Mexico City. “The president saw we’re the largest Mexican bank and we can help him deliver on these projects. As they say, be in the right time at the right place.”
As for Slim, it may only be a matter of time before he and Lopez Obrador bridge their differences.
“It’s about what’s convenient,” Schtulmann said. “In the business world, it’s all about whether you’re useful to me or not.”