Mexico Political Ties: New Owner of UPI Stirs Press Unrest

Here is a July 12, 1986, story by Thomas Rosenstiel of The Los Angeles Times:

WASHINGTON -- In business meetings at United Press International now, a simultaneous translator sitting behind a screen interprets the words of the new owner to his staff. They, in turn, listen to the translation through headsets.

"It's like the United Nations," Editor-in-Chief Maxwell McCrohon said. "But it is a lot faster than having the interpreter in the room."

A language difference probably is one of the simpler problems that Mexican newspaper magnate Mario Vazquez Rana faces as he tries to revive America's tattered, bankrupt second news agency.

Vazquez Rana, who bought UPI last month, not only must transform a company that last turned a profit in 1963, but he also must convince his journalistic clients that a foreign owner will maintain American-style editorial independence.

Mysterious Death

That task may be complicated, however, by Vazquez Rana's ties to Mexican government officials and concerns about whether he might use the agency for political purposes. At a meeting of the Inter-American Press Association in March, for example, other Latin American journalists sharply questioned Vazquez Rana about the Mexican government's handling of the mysterious death earlier this year of one of Vazquez Rana's most vocal domestic critics.

American journalists also have concerns. "I'm not accusing the new owner of UPI of any wrongdoing," said E. W. Scripps, chairman of the Scripps League Newspapers group, which has canceled UPI at its 20 daily papers. "We just don't know where it (foreign ownership) might lead," he said, explaining that few countries share the American tradition of an independent press.

"I've heard the stories pro and con about Vazquez Rana," said Gene Roberts, executive editor at the Philadelphia Inquirer, which has retained the service. "I think UPI is too important for the new owner not to be given a chance."

850 American Papers

Who owns UPI matters to journalists both abroad and at home. About 850 American newspapers and 3,300 radio and television stations buy some type of service from the organization.

And in Latin America, where many governments restrict local reporting, wire service stories often are the most reliable material published.

That has made interest in the short, carefully groomed 53-year-old Mexican publisher all the greater. Although little known in the United States, Vazquez Rana is famous in Mexico as head of the country's largest newspaper chain, the 61-paper El Sol group, whose size he has doubled in 10 years.

He runs his empire from a Mexico City headquarters complete with interior gardens, fountains, a computer room, cinema, gymnasium, sauna and a barber shop. His home includes a soccer field and, like many of Mexico's wealthy, he surrounds himself with bodyguards.

Vazquez Rana made his fortune running Mexico's Hermanos Vazquez furniture store chain, an enterprise he built in part by borrowing a technique from American used-car dealers--sponsoring late-night television movies.

At the request of his friend and then-Mexican President Luis Echeverria, Vazquez Rana, a former Olympic marksman, also helped found a Mexican national sports institute.

In 1976, again at the suggestion of his powerful friend, Vazquez Rana entered the newspaper business by buying from Echeverria's government the El Sol chain of newspapers for $12.5 million and debts. The government had seized the group in 1971 for unpaid debts to government banks.

Rumor of Partnership

From the beginning, "the rumor started that the ex-president of Mexico (Echeverria) was my partner," Vazquez Rana told the publishers in March. It is, he said, "a 100 percent lie. I deny it and I have denied it one thousand times."

One reason for such suspicions was that Edward Garcia Valseca Jr., son of the founder of the El Sol chain, maintained that the papers were worth much more than Vazquez Rana paid for them. Valseca also disputed Vazquez Rana's contention that he has since paid off the debts he inherited when he bought the chain.

Assessing the charges is difficult because published accounts of the chain's debts differ. In a recent interview with The Times, Vazquez Rana said he assumed $84 million in debts at El Sol and paid them off himself.

But UPI's official biography of its new owner says Vazquez Rana assumed debts of $78 million. And last March he told the Reuters news agency that he assumed debts of less than $30 million.

Named Echeverria Aides

Vazquez Rana also fueled the allegations about governmental ties, he admits now, by naming two key Echeverria aides as partners in the newspaper company. Press Secretary Fausto Zapata became editor and part owner of the papers. Interior Minister Mario Moya Palencia -- now Mexico's ambassador to the United Nations -- became a partner and director general of the chain.

Vazquez Rana said the two left the company within two years and dismisses their contribution.

Others, however, do not dismiss the questions about the Mexican publisher's ties to his country's government. Anxiety over them, in fact, surfaced at the meeting in Brazil of the Inter-American Press Assn., a trade group of American, Caribbean and Latin American newspaper executives.

Questions About Death

In its report on freedom of the press in Mexico, the IAPA raised serious questions about the death a few weeks earlier of Carlos Loret de Mola, one of Vazquez Rana's critics.

Loret de Mola, the former governor of Yucatan, was writing a book about the events leading to Vazquez Rana's acquisition of his newspapers, the IAPA report says.

In February, Loret de Mola's body and that of his secretary were found near his charred Mercedes-Benz off a desolate road in western Mexico. Rather than alerting the family, the government had the two buried in unmarked graves. Relatives found the graves later after they went looking for the missing pair.

The mysterious circumstances surrounding Loret de Mola's death, the IAPA report says, "create fear and suspicion that the journalist could have been the victim of an assassination, which would be difficult to prove" because the government "has ordered the case closed."

Investigating Case

In a frank two-hour session with editors and publishers at the IAPA meeting, Vazquez Rana, who said he was as disturbed by Loret de Mola's death as everyone else, said he had reporters investigating the case, and promised to report back to the IAPA with whatever he found.

The IAPA based its report in part on the statements of Rafael Loret de Mola, the dead man's son, who has demanded that the government reopen the investigation.

"There are false aspects to this death," Loret de Mola said in a phone interview from Mexico. "I have never suggested that Vazquez Rana was involved. I've only said I had important doubts about the death of my father."

Vazquez Rana now says he has nearly finished with the investigation, and "the son of the man who died is now really very sorry" that he made what Vazquez Rana calls "insinuations." Among the discoveries the publisher contends his reporters have unearthed is an autopsy report purporting to show that the elder Loret de Mola had been drinking shortly before he died.

'Asked Forgiveness'

"The son of the man who died then came to see me," Vazquez Rana said. "He asked forgiveness. He offered apologies. He knew that I had been investigating and asked me not to publish anything."

Rafael Loret de Mola said he is astonished by Vazquez Rana's version of events. For one, Loret de Mola said the autopsy is a fake, manufactured by the government to embarrass him. His father, Loret de Mola said, was well-known in Mexico as a temperance champion.

Loret de Mola said he did meet with Vazquez Rana, but he said they had made "a gentlemen's agreement" to share information about the death and not to publish allegations until they had done so. "I didn't ask him for forgiveness, nor did I absolve him of anything," Loret de Mola said.

Cites Political Ties

He also repeated the allegations about Vazquez Rana's political connections. "My father was convinced . . . that Luis Echeverria and a current high-ranking Mexican official were the ones who were really buying UPI."

Many others, however, consider such allegations groundless. "I had to do research into Vazquez Rana's political ties," countered Dr. Jorge Bustamante, a Mexican sociologist who is director of the government's Center for Border Studies of Northern Mexico. "I found absolutely nothing."

Vazquez Rana, who has taken over the 10th floor of UPI's Washington headquarters, denies all such rumors. "Luis Echeverria and I are friends, and I will not deny that friendship ever," he said. Other friends include Echeverria's successor, President Jose Lopez Portillo, and current Mexican President Miguel de la Madrid, he said.

"But that does not imply that my businesses are of some kind of service to my friends. . . . The biggest mistake I could make is to have any kind of commercial relationship with any politician," Vazquez Rana said.

Philosophy 'to the Right'

"I don't care about the interests of the left or the right. If I would have to define my personal political philosophy, yes, I would be to the right. But my newspapers . . . exist to point out things that are done wrong by people and to give the news."

Some editors, however, remain troubled by Vazquez Rana's links to Echeverria, in part, because the former Mexican president and one-time candidate for U.N. secretary general has vocally backed the so-called New Information Order, which has been proposed by various Third World and East Bloc countries.

The proposal seeks to redress what its advocates claim is the dominance of underdeveloped nations by media organizations based in the industrialized countries, particularly the United States. Among its many contested provisions is one that would allow governments to license foreign correspondents.

Letter to Clients

Vazquez Rana has tried to assuage doubts about his associations. In a letter sent to UPI clients this month, he wrote: "I have no interest or intention of using the news agency to further any personal ambition, to favor any person, any region or any country."

He said he intends to allay fears by creating a board of five well-known American journalists to review UPI's coverage. The group would convene more often than the current editorial advisory board of American editors that meets with UPI twice each year.

Some, like Roberts of the Philadelphia Inquirer, think UPI's troubles are so extreme, and the survival of an alternative news source to the Associated Press so important, that no one should prejudge "anyone who is holding out a hope of saving the company."

'Had Plenty of Time'

Roberts also thinks objecting to foreign ownership of UPI makes no sense, saying: "American interests had plenty of time to buy UPI and didn't." Roberts recently joined the UPI editorial advisory board.

Los Angeles Times Managing Editor George J. Cotliar also noted that "Reuters is foreign-owned and does a very good job. We are going to have to wait and see if Mr. Vazquez Rana does the same."

Others have concerns, both about Vazquez Rana and about Mexican press traditions.

"I'm not sure he shares some of the basic principles of a free press we have in the United States," said Chicago Tribune Editor James D. Squires. "On the issue of whether the media should be licensed," as it is in many Latin American countries, "he was unable to allay our concerns."

Government Owns Newsprint

Mexican newspapers also do not operate with the same freedom as American papers. The Mexican government, for instance, owns all the newsprint.

"The fact that you are able to get newsprint in Mexico suggests that you have the blessing of the government," Squires said, and Vazquez Rana is the largest buyer of newsprint in the country.

"There also are questions in Mexico about whether certain publishers get favorable treatment" over newsprint "and whether everyone gets billed equally," said Bill Williams, executive director of the IAPA.

Yet even the doubters are rooting for Vazquez Rana to succeed.

"Regardless of where his money comes from, or how he deals with his enemies, if he keeps his hands off the news report at UPI, it will probably survive and maybe be a good thing he owns it," said Edward Seaton, editor of the Mercury newspaper in Manhattan, Kan., and a member of IAPA.

Vague on Strategy

Vazquez Rana is vague about his strategy. "I just got here," he said in a recent interview. He says he intends to provide the news service with new communications technology, open new bureaus and hire more reporters.

Houston real estate developer Joe Russo, who has purchased a 5 percent minority share in UPI, said the service hopes to follow the lead of the British news agency Reuters and become "an information utility." Reuters regained its financial health by supplying businesses with financial information. The financial data service now subsidizes the news service.

Vazquez Rana did vow that he would not take any money out of UPI. He already has invested $18 million in working capital and paid another $22 million to the service's creditors.

"UPI is not really worth what I am paying for it," he said. "But if I can straighten out the financial picture and make UPI more prestigious, then it will be worth more."