
Mexico City – Un último saludo defeño. Few families are as enigmatic as the Larreas. While Mexico’s most wealthy individual, Carlos Slim Helú, and quite possibly other well-known captains of industry and oligarchs are public and often polemical figures, the same cannot be said of the Larrea family. Comfortably placed in slot #4 behind Slim, Ricardo Salinas Pliego, and Alberto Bailléres González in the rankings of Mexico’s richest families, Germán Larrea Mota-Velasco and family, as well as their companies, are certainly not household names. However, upon closer inspection, a pattern develops similar to that of the development of other Mexican family fortunes. The growth of the Larreas’ financial success from a small construction company in Mexico City to one of the world’s largest mining companies and the country’s largest railroad enterprise can be traced alongside the emergence of perhaps Mexico’s most influential group of business leaders, the Consejo Mexicano de Hombres de Negocio (see my last two blogs). Just as the Mexican Council of Businessmen (CMHN) evolved to become economically and politically dominant within Mexico while thriving on its own insularity and even secrecy, the Larrea family has applied the same model to itself, operating behind large, faceless holding companies while using proxies to tend to its affairs and grease the wheels of Mexico’s political and corporate hierarchy.
Germán’s father, Jorge Larrea Ortega (b. 1912, d. 1999), began his business career in Mexico City during the presidency of Miguel Alemán Valdés (1946-52) by starting his own construction company, Construcciones Jorge Larrea, which would later become México Constructora Industrial, S.A. de C.V. Subsequently, Larrea Ortega met and gained the confidence of Bruno Pagliai, an Italian-American businessman and perhaps Mexico’s wealthiest individual at the time, becoming the industrialist’s legal proxy in matters concerning his seamless tube business in Veracruz, Tubos de Acero de México, S.A. de C.V. (TAMSA). Through this relationship, Larrea Ortega became a shareholder of TAMSA and began his rise in the steel and metallurgic sector. Around this same time, Pagliai introduced Larrea Ortega to what would become a lifelong passion, horses and racing. Pagliai had recently constructed Mexico City’s only horserace track, Hipódromo de las Américas, at the insistence of former presidents Manuel Ávila Camacho (1940-46) and Alemán Valdés. Later, in 1962, 12 business leaders, including Pagliai and Larrea Ortega, founded the CMHN, which historically has included members of Mexico’s wealthiest families.
In 1965, Larrea Ortega guided a group of investors through a partial acquisition of the American Smelting and Refining Company’s (ASARCO) Mexican properties and a partial acquisition of the La Caridad copper mine, after changes in mining laws favored Mexican-controlled companies. He later added more mining construction, financial, and railway interests to his group, while expanding from the mining and refining of copper into wire and other copper products. However, Larrea Ortega became truly wealthy during the Salinas de Gortari presidency (1988-94) after Larrea’s mining company, which would later become Grupo México, bought out the Mexican government’s share of the bankrupt La Caridad mine in 1988 for an exceptionally low US$680 million and won a privatization bid for Cananea, Mexico’s largest copper mine, paying only US$475 million in 1990, again well below market value. In 1994, Larrea Ortega ceded control of his holdings to his eldest son, Germán, while remaining Grupo México’s honorary president. Throughout his career, Larrea Ortega invested in numerous businesses and sat on various corporate boards, many controlled by other founding members of the CMHN. Additionally, many of them also sat on the Grupo México board of directors.
In 1981, Larrea Ortega named Germán to the Grupo México board of directors, later naming him Executive Vice-Chairman of the Board of Minera México and Grupo México. Upon his father’s death in 1999, Germán Larrea was ceded the family’s professional responsibilities and today is Grupo México’s largest individual shareholder. Currently, he is the Chairman of the Board, President, and C.E.O. of Grupo México. Larrea is also Chairman of the Board of Americas Mining Corporation; Chairman of the Board of Southern Copper Corporation; and Chairman of the Board of Grupo Ferroviario Mexicano, S.A. de C.V. Previously, Larrea was Chairman of the Board and C.E.O. of ASARCO. Germán Larrea also owns several other companies with significant investments in or business interests tied to Grupo México. Among these, Larrea is Chairman of the Board and C.E.O. of Empresarios Industriales de México (a holding company which is Grupo México’s largest shareholder) and chairman and C.E.O. of Compañía Perforadora México (drilling company) and Fondo Inmobiliario (real-estate company). He also founded a printing and publishing company in 1978, Grupo Impresa, where he remained President and C.E.O. until it was sold in 1989.
In addition to Grupo México and his separate business interests, Germán Larrea is a board member of several corporations and institutions linked to the CMHN, including: the Mexican Council of Businessmen, Mexican Stock Exchange, Grupo Bursatil Mexicano, Grupo Televisa, Grupo Financiero Banamex-Accival (owned by Grupo Financiero Citigroup), Banco Nacional de México, and Grupo Comercial America (owned by ING). He has also been linked as an investor to Grupo TMM and ScotiabankInverlat. And given his passion for horses and racing, which he shares with his father, he has long been rumored to frequent the Hipódromo de las Ámericas, where it is rumored that he is also an investor. Additionally, the Larreas, through Germán’s mother, Sara Mota Velasco, own Desarrollo Punta Bruja, a real-estate company.
According to the Mexican on-line financial daily Sentido Común, Germán Larrea’s net worth is nearly US$3.5 billion. The Larrea family owns approximately 47% of Grupo Mexico’s shares, including individual and business shares. Germán Larrea is married and has two children, a son and a daughter. He reportedly spends more time at his castle in Tuscany, Italy, among his grape vineyards and far from his family and business interests, than he does at his homes in Mexico City and Acapulco and for that matter his own corporate headquarters. Given the intimate linkages between the Larreas, their businesses, and other members of the CMHN – relationships that date back to at least the 1960s – it would seem that the origins of Mexico’s de facto powers do indeed lie with the CMHN. Volviendo a los archivos, los deja . . .
Ben Cokelet
MA Candidate, NYU International Business & Politics