The perils of billionaires bearing gifts

February 2, 2009

On page 45 of its ethics code the New York Times offers its newsroom employees a sample letter to use in politely declining a gift. The letter explains that they may not accept “anything of value from the people or groups they cover.” Plainly, it believes the kindness of strangers can be harmful.

Indeed, its code tells employees their most solemn duty is safeguarding the newspaper’s reputation for integrity and independence. The limit on acceptable largesse is $25 for them.

And for their employer? Here the code is silent, so I can’t say the Times broke its own rules by accepting $250 million last month from Carlos Slim, the Mexican multi-billionaire who Fortune magazine figures is the richest person on earth. But that’s the best I can say for it.

Slim already invested $120 million in September – half of it vanished as the paper’s financial condition worsened. Under terms of his latest outlay he could end up the company’s largest shareholder.

True, he wouldn’t sit on the Times board and would have no voting power; only members of the Sulzberger family own voting shares.

Maybe that’s why other media have treated this largely as a footnote to the widening crisis that is swallowing the newspaper industry. It’s more than that, it’s a profoundly troubling action that raises serious doubt not just about whether the Sulzbergers will keep control of the Times, but whether they should.

Should the Times really be deepening its dependency on this man? Not to get too moralistic, but at some level a great newspaper stands for something – principles of social justice, popular sovereignty, open government, fair competition.

Carlos Slim is a predatory capitalist who built a $67 billion empire — worth a stunning 7 percent of Mexico’s gross domestic product — through political cronyism, cunning and the relentless use of monopoly power, which means charging much, delivering less and crippling competitors, real and potential.

He worked the country’s vast privatization of the early 1990s to acquire his core ownership of the national telephone system – which only half Mexico’s homes benefit from, paying rates among the highest in the developing world – and assembled a mobile phone company with 124 million subscribers in a dozen countries. He now controls over 200 companies.

He is, as a Times editorialist suggested in 2007, a “robber baron,” or as the Wall Street Journal put it, “Mexico’s Mr. Monopoly,” the well-born scion of a grotesque plutocracy that rules a country of nearly 110 million, half of them poor, a fifth of them making less than $2 a day. Thousands of his compatriots, desperate for jobs Americans won’t touch, risk their lives to flee the misery he and his pals preside over, while his own earnings, the Journal estimates, are some $27 million a day.

Maybe somebody should have drafted a polite letter of refusal for Times CEO Arthur Sulzberger Jr. Instead he accepted, from a highly problematic source, money that is at best a stopgap, which will doing nothing to overhaul the Times online business model, which continues to be based on the absurdity of trying to make money by giving away what it produces.

And he has embraced a conflict of interest that’s indistinguishable from the ones the Times prohibits for its own staff.

Conflict of interest is tricky. It’s not that Times reporters will be kept from stories that might displease Slim, or that causes he favors will be shilled on the paper’s op-ed page. Who knows.

It’s that Carlos Slim is a player, one of the biggest. It’s impossible to report on social, political and economic realities of the Western Hemisphere, where independent journalism is notoriously rare, without bumping into his interests or addressing the same polarities and injustices that he has prospered from. How does a Times reporter reassure a source in Mexico City who believes her boss is in Slim’s pocket? How will his competitors regard inquiries into the myriad industries where he operates?

Conflict of interest isn’t something you prove, it’s what you suspect when you know somebody has an outside obligation that would affect how they do the job you’re trusting them to do for you. Now the Times, followed avidly by journalists worldwide and by ordinary people who despair of the corruption of their own media, will be scrutinized for evidence of Slim’s off-stage influence. Finding reasons for mistrust is never hard. Now it’ll be easy.

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