Carlos Slim’s Company Still Eligible for Mexico Contracts Despite Train Crash
Carlos Slim’s Company Still Eligible for Mexico Contracts Despite Train Crash
(Bloomberg) -- Mexican billionaire Carlos Slim’s Grupo Carso SAB will need to take responsibility for building a section of Mexico City’s metro that collapsed but it won’t lose existing government contracts or be locked out of future work, according to a person close to President Andres Manuel Lopez Obrador.
An independent probe published Wednesday showed the disaster, which killed 26 people when an elevated train line collapsed, was caused by construction errors. Grupo Carso built the portion of Line 12 that gave way, which the report said suffered from a lack of bolts, problems with welding and issues with the concrete used.
The catastrophe won’t jeopardize Carso’s chances of winning future bids as long as the company abides by any punishment it may receive, according to the person familiar with the government’s thinking, who asked not to be identified discussing private information.
Arturo Elias Ayub, a family spokesman and Slim’s son-in-law, declined to respond to a request for comment.
The scandal has dealt a blow to Carso’s reputation. It’s also triggered a collapse in the approval rating of Foreign Minister Marcelo Ebrard, who was the capital city’s mayor when the line was built, and current Mayor Claudia Sheinbaum, amid media reports that the construction was rushed and maintenance was inadequate. Both the politicians, members of Lopez Obrador’s Morena party, have been cited as likely candidates in the 2024 presidential election.
Lopez Obrador, known as AMLO, is unlikely to come down too hard on Carso or Slim because of their prominent roles in other government infrastructure projects and because the president gains market credibility from maintaining a relationship with the billionaire, according to Duncan Wood, senior adviser to the Wilson Center’s Mexico Institute.
“AMLO doesn’t want to get into a fight with Slim,” Wood said. “Their relationship is too important to jeopardize. AMLO needs Slim in terms of infrastructure spending.”
Carso shares fell 0.7% to 64.06 pesos at 2:38 p.m. in Mexico City. They are down about 2% since the New York Times first reported Sunday on construction failures in the collapsed metro line.
Though Carso relies heavily on public works, the company represents a sliver of Slim’s fortune and business empire. Its market value of $7.1 billion pales in comparison to his main telecommunications business, America Movil SAB, which has seven times the capitalization.
Slim and AMLO’s relationship has had its up and downs over the past two decades. The president’s move to cancel construction on an airport that Carso was helping to build put the two men at odds. Then a dispute over a partially-built highway and another over natural gas pipelines also tested their relationship.
But last year, a Carso unit won a contract to build part of Lopez Obrador’s pet project, the Maya Train. The two men shared a breakfast in April to chat about the train, the president tweeted at the time, with an accompanying photo of the two wearing guayabera shirts.
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