The New Corporate Colonialism

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Click here to read the Spanish version of this executive summary.


How BlackRock built its Mexican infrastructure business through a tangled web of cronyism, corruption and conflicts of interest


Since 2011, BlackRock, the world’s largest asset manager, has rapidly expanded its presence in Mexico, buying local companies, expanding its in-country operations, appointing and hiring key Mexican business and political leaders and aggressively ramping up its infrastructure financing business.

As Mexico has sought badly needed foreign direct investment, BlackRock has masterfully negotiated the country’s byzantine system of cronyism and political patronage to get a favored seat at the table. While this has undoubtedly been good for BlackRock’s bottom line, many Mexicans question whether the firm’s activities have been good for them. And while BlackRock’s CEO, Larry Fink has worked to cultivate a profile as a promoter of a more transparent and benevolent vision of capitalism, his firm’s aggressive inroads into Mexico appear to have benefited from, and even reinforced, the country’s stubborn corruption.

Over the last several years, BlackRock has not only expanded its presence in Mexico but strengthened ties to the some of the country’s most powerful people. Marco Antonio Slim Domit, the son of Mexico’s richest man, Carlos Slim, joined BlackRock as a board member in 2011. The country’s former undersecretary of finance Gerardo Rodríguez Regordosa joined the company as a managing director in 2013. In mid-2015 the company had a 50-member team in its Mexico office managing approximately $26 billion in assets.  By 2017, it acquired the asset management business of Mexico’s Citibanamex, a transaction involving another $31 billion in assets.

It has aggressively moved into pensions as well, successfully capitalizing on regulatory changes allowing global asset managers to manage Mexican pensions on behalf of Mexican workers.

But BlackRock Mexico’s infrastructure financing business is where the company has placed its biggest bets. Encouraged by a new and charismatic president, Enrique Peña Nieto, who committed to opening up the country and its energy sector to foreign infrastructure investment, BlackRock rushed in, buying infrastructure management companies, toll roads, hospitals, gas pipelines, prisons, and oil exploration businesses.

For BlackRock, international infrastructure makes sense. The demand for higher-yielding investment options, with predictable returns is stronger than ever and infrastructure investments fit the bill in this regard. BlackRock’s strategy is to meet that demand through alternative investment offerings like real estate, commodities and infrastructure.

But BlackRock’s infrastructure ambitions have also clashed with Chairman Fink’s kinder, gentler vision of capitalism, opening the company to charges of hypocrisy for its aggressive business ambitions in a country that Transparency International still ranks as among the world’s most corrupt.

“Society is demanding that companies, both public and private, serve a social purpose,” Fink wrote in his annual letter to shareholders and company CEOs this past January. In Mexico however, the record shows that BlackRock has often not adhered to those standards, becoming one of the largest and most influential private infrastructure investors in the country by making deals and striking relationships with a menagerie of shady characters.

Fink has chummy relationships with the highly unpopular Peña Nieto and other key Mexican officials and business leaders linked to corruption. BlackRock has numerous business partnerships with state-owned PEMEX – a company where “corruption is everywhere and at all levels of the hierarchy” according to a former PEMEX CEO.  Such relationships reveal a glaring inconsistency between BlackRock’s “social purpose” rhetoric and its actual business behavior.


A detailed examination of the record by the BlackRock Transparency Project shows repeated instances of the Peña Nieto administration appearing to ensure BlackRock’s infrastructure deals succeeded.

In one case, an oil and gas company acquired by BlackRock through the purchase of a subsidiary only a month prior, won a major exploration bid by state-owned PEMEX. The bid was the only one awarded in the country’s first public tender process to open exploration to private companies.

In another case, the Peña Nieto administration inexplicably raised payments by 18 percent to a prison contractor who had repeatedly missed construction deadlines just before BlackRock bought the project.

In a third case, President Peña Nieto signed an executive order expropriating 91 acres of land for a toll road construction project marred by local protests less than a month after BlackRock’s acquisition of the project’s owner.


Among BTP’s other findings:

  • Over the past seven years, BlackRock and Larry Fink created a remarkably close partnership with the Peña Nieto Administration and state-owned petroleum company PEMEX, meeting frequently with the president and his finance minister in Mexico and New York and signing several infrastructure and energy partnerships and agreements – at least one without a transparent and competitive bidding process.
  • BlackRock took advantage of Mexican President Peña Nieto’s 2013 energy reforms and its relationships with top PEMEX execs to invest at least a billion dollars, including hundreds of millions of Mexican pension assets, in oil and gas exploration projects and gas pipelines. This prompted outrage from across Mexico that average people’s financial security could be put at risk.
  • BlackRock has benefited from a “revolving door” relationship with the Mexican government. In 2013, the company hired Mexico’s former undersecretary of finance and credit, Gerardo Rodriguez Regordosa (an expert in pensions and infrastructure), presumably to capitalize on infrastructure investment opportunities in President Peña Nieto’s development and infrastructure plans.
  • The revolving door has swung the other way as well, as BlackRock’s Mexico CEO Isaac Volin became general director of PEMEX subsidiary PMI Comercio Internacional in 2016. As the new head of the company’s international trading arm, Volin was PEMEX’s second in command for all practical purposes, overseeing numerous PEMEX subsidiaries – including some that have alleged involvement in notorious tax haven scandals.
  • In 2015, BlackRock purchased Infraestructura Institucional (aka “I Cuadrada”), an infrastructure investment fund closely tied to Mexico’s top political elites. Only one month after BlackRock’s acquisition, an oil and gas company in I Cuadrada’s portfolio received a major oil exploration and drilling contract from PEMEX, the only award granted.
  • BlackRock’s purchase of I Cuadrada came with several other problems as well, including numerous allegations of contractors involved in corruption, conflicts of interest, waste, fraud and project mismanagement.


Throughout it all, BlackRock and its powerful CEO refined the company’s access and influence business model to aggressively court top Mexican business elites and politicians for business deals with almost unlimited impunity.

While BlackRock’s record of questionable behavior in Mexico is troubling enough, its focus on public private partnerships raises larger concerns: Allowing large asset managers to operate and control public infrastructure assets that taxpayers have funded, sometimes for decades, can force governments to decide between two bad economic outcomes — using taxpayer resources to subsidize uneconomic projects or forcing pensioners to take losses.

The recent landslide election of Andrés Manuel López Obrador (“AMLO”), who has promised to curb corruption in Mexico, may spell trouble for Larry Fink and BlackRock’s future infrastructure ambitions.  AMLO has criticized Peña Nieto’s energy reforms, and on the campaign trail promised to re-examine contracts tainted by influence and corruption. He has also called out the suspicious timing of the sale of I Cuadrada to BlackRock a mere month before one of the company’s major oil and gas investments won a major PEMEX contract.

His choice for energy minister, Rocío Nahle García, a fiery former legislator, has criticized the employment revolving door between BlackRock and PEMEX as well as the energy reforms of the Peña Nieto administration.

On the other hand, there have already been hints that overhauling Mexico’s system of corruption and cronyism will be easier said than done. In what appeared to be a change of heart, the populist candidate backed away from some of his campaign promises as Mexico’s Presidential election approached this summer – vowing that energy contracts would not be canceled, only reviewed, and reassuring investors that he was not a “radical leftist.”

Importantly, AMLO’s moderation coincided with a May 2018 meeting with the 28th most powerful person in the world – BlackRock CEO Larry Fink. It now seems that AMLO, like Peña Nieto before him, could embrace the political benefits he can garner from BlackRock’s power.