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 Business News | September 2006 
Billionaire in Mexico Settles Case with S.E.C.
 Elisabeth Malkin - NYTimes
| | Last year, Mr. Salinas Pliego paid $2.3 million in fines to Mexican regulators. |
The billionaire tycoon Ricardo Salinas Pliego and the Securities and Exchange Commission of the United States reached a settlement on Thursday in the first lawsuit against a foreign company under the corporate governance rules of the Sarbanes-Oxley Act.
Mr. Salinas Pliego, who owns Mexico’s second-largest broadcaster, TV Azteca, agreed to pay $7.5 million in penalties and compensation to settle accusations of fraud involving a scheme to conceal a deal between a TV Azteca subsidiary and a company secretly owned by Mr. Salinas.
In the settlement, Mr. Salinas Pliego neither admitted or denied wrongdoing. One of his executives, Pedro Padilla Longoria, agreed to pay $1 million.
TV Azteca, which was also a defendant in the case, said in a statement that the settlement “does not entail economic consequences” for the company. Mr. Salinas Pliego had no comment.
Under the agreement, Mr. Salinas Pliego and Mr. Padilla are forbidden to serve as executives or directors of any publicly listed American company. Mr. Salinas Pliego delisted his companies from the New York Stock Exchange last year, arguing that “excessive regulation” was a burden.
The S.E.C. charged Mr. Salinas Pliego with fraud in January 2005 in connection with a debt deal involving what was then the cellphone unit of TV Azteca. A company called Codisco, secretly owned by Mr. Salinas Pliego and a partner, bought discounted debt owed by the cellphone unit.
The cellphone unit later paid back the debt at full price to Codisco. Mr. Salinas Pliego and his partner each made a profit of $109 million.
Mr. Salinas Pliego did not reveal his involvement in Codisco to his board and to regulators until TV Azteca’s lawyer in New York resigned at the end for 2003. That led to investigations by the S.E.C. and the National Banking and Securities Commission of Mexico.
The S.E.C. also accused Mr. Salinas Pliego and his executives of engaging “in an elaborate scheme to conceal Salinas’s role,” and said that Mr. Salinas Pliego sold TV Azteca stock while his involvement in the debt deal remained undisclosed.
Another executive, Luis Echarte, settled earlier with the S.E.C.
Mr. Salinas Pliego has argued that the debt deal was legal and that his actions helped save the cellphone unit.
The executive, who is not related to former President Carlos Salinas, has a reputation for using his successful companies — which include a national chain of furniture and appliance stores and a bank — to finance unrelated projects.
Through local affiliates, Mr. Salinas Pliego is building a Spanish-language television network in the United States.
Last year, Mr. Salinas Pliego paid $2.3 million in fines to Mexican regulators. Corporate governance advocates in Mexico saw the case as a test of Mexico’s new securities laws, which include criminal penalties. Mr. Salinas Pliego was never prosecuted. |
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