Reed Irvine - Editor
  February B, 1986  

IS THE LEFT HIJACKING UPI? by Daniel James

 THIS ISSUE:
  • IS THE LEFT HIJACKING UPI?
  • Potential Third World Propagandist
  • Who Is Vazquez Rana?
  • The Squeeze Play
  • Selecting a New Owner
  • How Independent?
  • Why Does Vazquez Rana Want UPI?
  • Decision Not Yet Final
  • Labor's Curious Role
  • Covering Up the Controversy
  •  What You Can Do
  • Notes
  • United Press International (UPI), the perennial Avis to the Associated Press's Hertz, has been purchased by Mexican publisher Mario Vazquez Rana. Mr. Vazquez Rana's standards of journalism are suspect in the eyes of some American publishers and editors, but he insists that they conform to the best American criteria. Not as widely questioned are his political attitudes, which in the long run may pose a more serious problem for those who depend upon the UPI for news. The American media seem not to have fully grasped the potential danger in his take- over of this major supplier of news to newspapers and broadcasters throughout the United States and many foreign countries.

    In a roundup of U.S. editors' opinions of Vazquez Rana's takeover of UPI, The New York Times report- ed on November 4, 1985: "The principal reservation the editors expressed was that UPI's coverage of Mexico, Central America and South America might be influenced, even unconsciously, by Mr. Vazquez Rana's ownership. Several editors said that they would carefully scrutinize the news service's re- porting). And there was concern that the new owner might have ties to the Mexican government."

    Potential Third World Propagandist

    The UPI describes itself as "the world's largest privately-owned independent general news agency." Those familiar with the background of Mr. Vazquez Rana wonder if it will now become, in effect, an instrument of Third World and socialist propaganda. UPI claims "more than 12,000 total sub- scribers" among newspapers, radio and television stations in "more than 100 countries." Many of its subscribers are in Latin America, where UPI is sometimes preferred to the AP. In the wrong hands, UPI could become a potent weapon that could be used against the best interests of the United States.

    Vazquez Rana's purchase of UPI has yet to be finalized by the United States Bankruptcy Court for the District of Columbia, where the news agency has its world headquarters. Meanwhile, serious questions concerning the sale as well as Vazquez Rana's suitability to run the news agency remain unanswered.

    Notwithstanding the potential impact on American journalism, the media have shown little inclination to take a hard look at Vazquez Rana and what his control of UPI may portend.

    Some media, however, notably the newspaper industry's trade magazine, Editor & Publisher, have come close to flacking for Vazquez Rana. In its November 30, 1985 issue, E & P, on the basis of a one-hour interview with the Mexican publisher, concluded that his "Cuban connection seems harm- less." A week later it announced, "Prospective UPI owner Mario Vazquez Rana sets positive reaction from most of the U.S. newspaper execs he's met."

    Who Is Vazquez Rana?

    Since last November, when he made his bid for UPI, Mario Vazquez Rana has been traveling about the country in his private jet seeking the approval of its major customers. He has assured them that he is an "independent" publisher, that he believes "information must be objective," and that "news must not be manipulated." He claims that he has been close to five presidents of Mexico, but he insists that he has "no political affiliation." Addressing UPI senior editors and executives after he won the bidding, the only comment he made on foreign affairs was, "I am a foe of the apartheid policies of South Africa."

    Vazquez Rana's, record as a publisher in Mexico clashes with what he is telling his clients in this country. Though much has been written about how he got into publishing through the acquisition of a Mexican newspaper chain, certain revealing facts have not been previously disclosed in our media.

    UPI's public relations office says that he entered business in 1950. at age 18, as chairman of his father's furniture company. He sold his interest in what became Mexico's "largest furniture and retail chain" in 1976. it continues, "to acquire the Mexican Publishing Organization, eliminated all of its debt, and later acquired 34 additional Mexican newspaper companies. All... are operating profitably."

    Nowhere does UPI reveal that the newspapers Vazquez Rana acquired had belonged to Col. Jose Garcia Valseca, an entrepreneur who had run them for four decades. He was forced into receivership by the Mexican government and finally had to sell his papers to it. The government proceeded to sell the papers to Vazquez Rana, after first eliminating a higher bidder it regarded as among "the most reactionary and backward businessmen." The government sold the papers to Vazquez Rana for only $8 million, $2 million less than it had paid for them. Garcia Valseca owed just under $19 million when he was forced to go belly up. If the papers were in debt to the tune of $78 million when Vazquez Rana took them over, as UPI now claims, it was because of excessive spending by the government receivers.

    The Squeeze Play

    Garcia Valseca's debt was owed mainly to two official entities: Nacional Financiers, a development agency, and the Sociedad Mexicans de Credits Industrial (SOMEX), a banking institution. It was, and still is, the custom of the Mexican government to tolerate, even forgive, debts owed to it by news- paper publishers. Such debts usually consist mainly of money owed for newsprint supplied by the government's monopoly, PIPSA, and/or machinery obtained through the Nacional Financiera or other official lending agencies. Most Mexican publications could not last a day without such indirect, and often direct, government subsidies. This includes the two Marxist dailies, El Dia and Uno mas Uno. These publications possess neither the advertising nor the circulation to be serf-sustaining, but the government has not forced them into bankruptcy.

    Col. Garcia Valseca's 37-paper chain was, by comparison, financially healthy. It planned to pay off its debt in five or six years, since its annual profit was then $4 million. It requested the government to roll over the debt as usual. But this time the government refused. On March 28, 1972, it formed a "technical committee," six of whose nine members were government officials, to take over the chain.

    Why had the government acted so arbitrarily? President Luis Echeverria had already begun a virtual class war to cripple or eliminate Mexico's private sector. By 1982, when the term of his hand-picked successor, Jose Lopez Portills, had ended, this objective had been practically accomplished. One of Echeverria's early victims was Garcia Valseca's newspaper chain. The reason was that its 37 papers were anti-communist.

    In an effort to save his papers, Garcia Valseca persuaded the dean of Mexico's capitalists, Eugenio Garza Sada, to lend him $14 million with an option to buy the chain. The colonel then asked Nacional Financiera and SOMEX to calculate the exact sum he owed them so he could pay them off. These institutions insisted, however, that he also pay off debts he owed to private creditors. It was not the government's business to collect private debts, but these obligations of about $5 million were included in the total. Garza Sada agreed to pay this additional amount.

    Anxious to block the deal, the government's intervenor, Humberto Hiriart, sent this message to Garcia Valseca through his chief accountant: "We cannot permit the chain to be in the hands of the most reactionary and backward businessmen. I in- form you that, if necessary to prevent that from happening, even direct action might take place."

    That was on September 5, 1973. Twelve days later Garcia Sade was gunned down. On October 10, his close friend and associate in the attempted rescue of the Garcia Valseca newspaper chain, Fernando Aransuren, was also assassinated. The culprits were not ordinary killers; they demanded no money or valuables of any kind. They were labeled "urban guerrillas."

    Next, Garcia Valseca was warned that his would be "death number three," according to his biographer, Salvador Borrego. Undaunted, he signed an agreement with Garza Sada's son, Eugenio, Jr., to sell him the chain for $16 million. Though signed by witnesses. the agreement was never carried out for reasons unknown. But they could be divined when shortly thereafter official radio patrol cars surrounded the chain's Mexico City headquarters. Garcia Valseca was trapped. He had to sell his papers to the government, or else. "I did it against my desires and my interests." the colonel later said.

    Selecting a New Owner

    The government subsequently announced that as a general policy it would never sell any state enterprise, large or small. to a private investor. That included its newly acquired newspaper chain. But in April 1976, the policy was reversed and the papers were sold to Mario Vazquez Rana. Why was an exception made in this case?

    The answer may be, as The New York Times report- ed on May 16, 1976, that President Echeverria was "reportedly an important shareholder of a news- paper group, the Mexican Editorial Organization," the company Vazquez Rana had established to operate the chain. Echeverrie is now rumored to be a silent partner in Vazquez Rana's takeover of UPI. True or not, Echeverria was responsible for Vazquez Rana's publishing career. It was he who had decided to sell the state-owned newspaper chain to Vazquez Rana, and much of the credit for the publisher's subsequent success is due to his friendship with Echeverrie and his successors.

    How Independent?

    Vazquez Rana is trying to convince Americans that his newspaper chain is "independent" of the Mexican government, to show that under his ownership UPI would remain independent. But how can he be independent in a country that does not enjoy real freedom of the press? In Mexico, the press generally toes the government's political line. It never criticizes the incumbent president, currently Miguel de la Madrid. A very few publications are allowed to deviate somewhat, to foster the myth that press freedom exists; but they are small and harmless.

    If a major news organization gets out of line, the government does not hesitate to punish it. Accordingly, it punished not only the Garcia Valseca chain but, later, even Mexico's biggest newspaper, Excelsior, whose editors were forced out by Echeverria. Since 1976, no Mexican publication of consequence has dared offend the sitting chief executive.

    In a revealing sequel, Garcia Valeca's anti-Communist reporters, editorialists, columnists and outside contributors were fired when the government took over, to be immediately replaced by well-known leftist counterparts. The latter included leading refugees from Salvador Allende's Marxist regime in Chile, Argentine Montonero and Uruguayan Tupamaro communists.

    Later, some of the more blatant leftists were weeded out but Vazquez Rana's Mexican newspapers still follow the line of the ruling Institutional Revolutionary Party (PRI). Vazquez Rana told the Washington Post's Robert J. McCartney, in an interview published on Nov. 18, 1985, that he supports the PRI, then added, "because it is neither of the right nor of the left."

    That statement betrays either naivete or disingenuousness--neither one an admirable trait in a men who aspires to lead a world-class news agency. For the PRI is decidedly a socialist party, as its 57-year rule of Mexico clearly demonstrates. During that time, it nationalized all basic industries, in effect socializing the Mexican economy. The latest nationalization, of the banks in 1982, achieved Echeverria's aim of practically wiping out Mexican capitalism. Those policies and the excessive spending and corruption of successive PRI governments have led to an unprecedented economic crisis in Mexico. Is this the kind of "neither right nor left" political philosophy Vazquez Rana would bring to UPI?

    But what of his alleged financial prowess as a publisher? Perhaps he did "restore the financial health" of his Mexican newspapers, as UPI claims. But if so, how did he do it? If, in Mexico, no paper can survive without government support, neither can any of them prosper without it. Such support may consist not only of "credit" for newsprint and machinery, but direct subsidies such as payments for printing puffs disguised as "news stories"--sometimes on page one-- which endorse government policies, praise high officials, advocate PRI candidates for public office, or denounce the party's opponents. Or, it may consist of government advertising which can be withdrawn any time the bureaucracy wants. If Vazquez Rana rejected all forms of government subsidy, his chain's bottom line might look very different.

    Why Does Vazquez Rana Want UPI?

    Vazquez Rana says he will take neither salary nor profit out of UPI. Since UPI has been losing money for years, there probably won't be any profits. He is ready, on the contrary, to invest upward of $15 million in operating capital apart from the purchase price. UPI is in such bad financial shape that it might require more money than that to turn it around. It is thus hardly an ideal investment for one who prides himself on being a good businessman. Why, then, does he want UPI?

    His answer: "To get involved in problems. I sold all my business holdings to get involved in journalism." Is he, again, displaying naivete or disingenuousness? For if he seeks involvement in problems, there are enough of them in Mexico to keep him busy for more than one lifetime. His "close friend," President de la Madrid, has been begging foreign and Mexican businessmen to invest in Mexico. Why doesn't Vazquez Rana put his $4O million into the Mexican economy instead of a risky business like UPI? And why, on the other hand, does the Mexican government not criticize him, as it does other Mexican businessmen, for taking funds out of a country that is thoroughly de- capitalized?

    The Mexican government does not seem to be deter- ring Vazquez Rana from investing in a bankrupt news agency. Why? Does the PRI, which is closely linked with the Socialist International and Third World leftist movements like the Sandinistas, have a vested political interest in Vazquez Rana's acquisition of a powerful means of communication in the United States? Does it expect, through his ownership of UPI, to get more favorable publicity for Mexico in the U.S. media, as editors polled by the New York Times fear? And also, favorable publicity for Third World and socialist causes in general? Given Vazquez Rana's record as a Mexican publisher and his admitted political leanings, the answer to both questions would appear to be in the affirmative.

    Decision Not Yet Final

    Vazquez Rana is well on his way to taking over UPI, but there are still a few hurdles in his path. The Bankruptcy Court must give its final approval. A reorganization plan must be submitted by March and it must be approved by each creditor represented on the official committee for unsecured crediton, a time-consuming process.

    An additional complication is a suit filed by Financial News Network (FNN), a company that bid against Vazquez Rana for control of the news service. FNN is suing under the Racketeer Influenced and Corrupt Organizations Act (RICO), charging "racketeerins, conspiracy in restraint of trade, commercial disparagement, breach of contract, tortuous interference with contract, unfair competition and breach of fiduciary duty."

    FNN had been one of three bidders selected by UPI's financial advisers for final consideration. FNN had been told that its bid was the highest and most professional proposal, but the creditors' committee wanted to negotiate two conditions sought by FNN. Even though the FNN bid had been described as "significantly higher" by the counsel for the creditor's committee and as "incontestably a better offer" by one of UPI's financial advisers, the UPI, the creditors' committee and the Wire Service Guild approved a joint bid submitted by Vazquez Rana and a Houston financier, developer, Joe E. Russo. This bid gives a 10 percent interest to Russo.

    A day later, FNN submitted a revised bid, dropping the two conditions the creditors' committee had want- ed to negotiate. Dr. Earl W. Brian, chairman of FNN, contends that he was given orally an additional 48 hours to revise his bid, a claim denied by UPI chair- man Lugs Nosales but not denied by the creditors' committee.

    Labor's Curious Role

    The union which represents 750 UPI employees, the Wire Service Guild, played a decisive role in the decision that favored Vazquez Rana. The FNN suit charges that guild President William Morrissey "re- fused to negotiate and bargain fairly with the plain- tiffs during the proposal selection process." It adds, "Counsel for the Wire Service Guild admitted in open court... on December 15, 1985, that he and the Wire Service Guild would not deal (with FNN) on an equal footing with Messrs. Vazquez and Russo, and had decided in advance... that it would not offer the same concessions to plaintiffs that it has offered to Messrs. Vazquez Rana and Russo."

    The guild's policy was determined, says FNN, by an agreement with Vazquez Rana and Russo to pay its financial advisor, Brian M. Freeman. $350,000 and four percent of future returns on the guild's 7.5 per- cent profit sharing plan, and also guild legal fees. FNN claims that these payments would violate the U.S. Code and constitute racketeerins activity under the Code.

    Further, guild Secretary-Treasurer Dan Carmichael is alleged by FNN to have said that the guild was "not interested in doing business" with FNN be- cause "we believe its intentions are not honorable." Translated, this means that the guild regards FNN, particularly its chairman, Earl Brian, who was director of health in Ronald Reagan's administration in California, as anti-labor. UPI Managing Editor Ronald Cohen has denounced FNN and Brian's other firm, Biotech, as "vulture capitalists," says.

    Morrissey. Carmichael, Cohen, Nosales and George Weathersby, president of New UPI. a new company established by Vazquez Rana to acquire UPI, were all unavailable for comment. Weathersby failed to keep two appointments with the author that had been set at his convenience.

    Covering Up the Controversy

    Although the UPI as a news organization is all in favor of the public's right to know just about every- thing, it has persuaded the Bankruptcy Court to muzzle FNN, which is one reason you may not have heard of this controversy.

    The court has issued a temporary restraining order which bars FNN from "any communications, either direct or indirect, with creditors and customers of UPI concerning the merits of any proposal dealing with the reorganization of UPI or with the process established to attract or react to such proposals." This order allows FNN to contact only the creditors* committee, UPI, Vazquez and Russo, and their respective attorneys. FNN is forbidden to hold press conferences, issue statements or conduct interviews with members of the press on the subject of the bids. It is barred, in short, from presenting its case to the public.

    FNN complains in its suit that the restraining order has "deprived (it) of its right under the first and fifth amendments." A Bankruptcy Court spokesman ex- plains that the law requires that anything having to do with plans and financial offers in a bankruptcy case must be cleared first with the Court.

    The restraining order is based on the determination of Judge George Francis Bason, Jr. that FNN was guilty of making public statements "blatantly harmful" to UPI. The UPI-Vazquez Rana complaint charged that "FNN was engaging in a campaign of letter writing to UPI's creditors and customers designed to persuade them to reject the sale of UPI to the successful bidder. New UPI, Inc., and to persuade them to support instead UPI's sale to FNN."

    On the other hand, FNN charges that "UPI has utilized its nationwide wire-service network to disparage plaintiffs (FNN) by making knowingly false representations as to the attractiveness of FNN and Biotech as acquirers of UPI."

    What Can Be Done? It seems incredible that a financially superior bid was rejected in order to turn control of UPI over to an individual who has close ties to one of the leading promoters of the notorious "New World Information Order," Lugs Echeverria. We can only hope that clients of UPI. newspapers and broadcasters, will make it clear that they will not continue to sub- scribe to this news service if it is permitted to become an organ of the left.

    What You Can Do

    It is probable that your local paper(s) and your local radio and TV stations subscribe to the UPI. They are probably unaware of the potential danger posed by Vazquez Rana's purchase of UPI. We suggest that you call the facts contained in this AIM report to their attention. Feel free to make copies of this report to send to them. If that isn't convenient, request extra copies from us. We will supply them without charge.

    AIM REPORT is published twice monthly by Accuracy In Media, Inc., 1275 K Street, N.W., Washington, D.C. 20005, and is free to AIM members. Dues and contributions to AIM are tax deductible. The AIM Report is mailed 3rd class to those whose contribution is at least $15 a year end 1st class to those contributing $30 a year or more. Non-members subscriptions are $35 (1st class mail).

    NOTES FROM THE EDITOR'S CUFF By Reed Irvine

    ON FEBRUARY 7, THERE WAS A SPECIAL SCREENING AT THE WHITE HOUSE OF AIM'S NEW documentary, "Television's Vietnam: The Impact of Media," for about 150 invited guests. This was under the auspices of the White House Office of Public Liaison. President Reagan did not attend the screening, but he was presented with a video tape of the documentary as a birthday present from one of his old and dear friends. At the president's news conference on February 11, Les Kinsolving asked why public broadcasting was getting $3 million a week from the federal treasury. Mr. Kinsolving pointed out that PBS had refused to show our film, narrated by the president's good friend Charlton Heston, which had been screened at the White House the previous Friday. The president responded by saying that he couldn't explain their programming, but he said he would settle for them showing the speech that Charlton Heston had made about him a few weeks earlier.

    IMMEDIATELY FOLLOWING THE SCREENING, ARNAUD DE BORCHGRAVE, EDITOR-IN-CHIEF OF The Washington Times and of Insight magazine, and Mel Elfin, senior editor of News- week, commented on the film and its theme that the reporting from Vietnam had influenced the way the war was fought and its outcome. Mel Elfin began by saying that he was bothered by the impression given by the film that there was some kind of conspiracy on the part of reporters and editors to report the Vietnam War as they did. He said that from his vantage point as an editor of Newsweek based in Washington, he could say that they made mistakes, they blundered, as everyone else did, but there was no deliberate conspiracy to undermine the war effort. Mr. de Borchgrave said that he disagreed. He had reported to Newsweek from Saigon that the Vietcong Tet offensive in 1968 had been an unmitigated disaster for them. He said that Osborn Elliott, then the editor-in-chief of Newsweek, engaged in a bit of advocacy journalism and declared that it was the consensus of the senior editors of Newsweek that we had lost the war and that we should get out. De Botchgrave said: "My file from Saigon reported just the opposite, and not one word of what I filed got in." He added that even though he was a senior editor, he had not been consulted and was obviously not part of the alleged consensus of senior editors.

    DE BORCHGRAVE SAID THAT THROUGHOUT THE 1960S THE NORTH VIETNAMESE AND THEIR VIET- cong puppets convinced most of the non-communist world that the South Vietnamese Nation- al Liberation Front was an autonomous, independent front that was even hostile to Hanoi at times and that we should be cutting a deal with them. He said he didn't know of a single American journalist who had the courage to follow the example of the French journalist, Jean Lacouture, who said: "During my trips to Hanoi, during the war, I conducted myself much more as a militant than as a journalist, and I deliberately concealed from my readers the Stalinist aspects of that regime of which I was well aware." He said Lacouture had been very important, since he was "a trailblazer" for such American journalists as Anthony Lewis, Harrison Salisbury and Tom Wicker (all of The New York Times).

    "THEN THERE WAS WILFRED BURCHETT," DE BORCHGRAVE SAID. "HOW CAN PEOPLE SAY THEY were not manipulated by Wilfred Burchett, especially those who were desperately anxious to get into Hanoi?" he asked. "There was the case of Pham Xuan An, who was a Time magazine staff correspondent," he recalled. He said that after the war, this very influential "journalist," whose name had been proudly carried on Time's masthead, turned up as a colonel in North Vietnamese intelligence. De Borchgrave said he had spotted Pham Xuan An as a disinformer because he was pushing the idea that the NLF was independent of Hanoi, something that he knew to be false.

    MEL ELFIN SAID HE WAS IMPRESSED BY THE QUESTION RAISED BY BEN WATTENBERG IN THE film: Can a democratic society, given television cameras, ever again pursue a mass war or even a limited action? He cited the great problems encountered by Israel as a result of media coverage of the Lebanon invasion and contrasted it with the absence of attention to the Syrian massacre of some 15,000 people in the Syrian city of Hamma. In the latter case, there had been no television coverage. It went virtually unnoticed by the outside world. He wondered what might have happened in this country had there been TV coverage of the Civil War, when after the battle of Antietam the river ran red with the blood of fallen soldiers. He said, "There has to be some thinking about the role of the camera. It has transformed the way people perceive warfare."

    DE BORCHGRAVE COMMENTED: "WE SHOULD REMEMBER THAT TV IS TO NEWS WHAT BUMPER stickers are to philosophy, and then we'll get it straight." However, he said that he didn't think the real problem was television. He explained that when you are dealing with revolutionary situations in the third world, the problem is a mindset that is tantamount to thought control. He quoted a French philosopher who said in 1910: "It may never be known how many acts of cowardice have been committed throughout history out of fear of not looking or sounding sufficiently progressive." He said he had seen this in every revolutionary situation and that the lessons that we should have learned from Vietnam had certainly not been applied in Central America.

    SEVERAL COMMENTS AND QUESTIONS FROM THE FLOOR INDICATED AGREEMENT WITH THE IDEA that the liberal-left mindset of journalists presents a serious problem today, just as it did during the Vietnam War. This had also surfaced in a panel discussion at the Conservative Political Action Conference on February 1, which featured Arnaud de Borchgrave, ABC's White House correspondent, Sam Donaldson, and me. I started that discussion by pointing out how Sam Donaldson had been puzzled by a remark Secretary of State George Shultz had made a few weeks after the Grenada rescue operation. He had pointed out that back in World War II the reporters had been on our side. Now, he said, they always seemed to be looking for a way "to screw things up." Donaldson had asked President Reagan at his next press conference what Shultz had meant by "our side." Did he mean the administration? Sam asked. The president explained that he meant our side militarily, "all the American people."

    DONALDSON SAID IT WAS WRONG TO ASK REPORTERS, THOSE SIDE ARE YOU ON?" UNLESS YOU think that one side is good and the other evil and that the facts don't matter. He said that if he as a reporter had to hold a particular view of the world he would be "hamstrung." He thought the proper question was, "Are you getting from the press an accurate portrayal of information and opinion that bears on the issue?" The audience roared, "No" Donaldson insisted, "We think we are here to present information regardless of which side it's on."

    BUT WHEN CONFRONTED WITH SEVERAL EXAMPLES OF INACCURATE REPORTING OR REFUSAL BY the media to report significant stories, Donaldson declined to comment on the ground that he was personally not familiar with those cases. One that I brought up was the failure of The Washington Post, The New York Times and the networks to report the story of PBS's refusal to air "Television's Vietnam: The Impact of Media." When Donaldson said he didn't know enough about it to comment, I gave him a copy of the AIM Report, "Investigate PBS." His mindset was revealed by the fact that he left the Report behind, unread, when he left the dais. Sam was very firm in saying that he saw no need to give a balanced report on an evil person such as Hitler. De Botchgrave agreed, saying that was his point about the Soviet Union. Asked if he felt the same way about the USSR, Sam said it was his job simply to give the facts, not to strive for balance. He could not be induced to say what importance, if any, he would attach to fighting communism as a determinant of American foreign policy.


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