Latin CEO / October 2001
By Larry Luxner
If Jaime Rosenthal is indeed the richest man in Honduras – as both his staunchest admirers and nastiest critics maintain – you’d never know it by glancing around his office.
Here, on the third floor of a rather decrepit bank building in the congested heart of San Pedro Sula, is the humble headquarters of Rosenthal’s empire, Inversiones Continental SA de CV, better known as Grupo Continental. Visitors are greeted by a cracked linoleum floor, noisy air-conditioning and exposed telephone wires running along the ceiling.
Since Rosenthal himself is more than an hour late to our interview, there’s plenty of time to take note of his inner sanctum: a red-and-blue dart board, fake potted plants, file folders haphazardly stacked on chairs, a plaque from the Liberal Party honoring “Don Jaime – Next President of Honduras,” and at least a dozen frames on the wall, each displaying name tags from every meeting and convention Rosenthal has ever attended.
There’s also an award from the Central America-US Chamber of Commerce, a trophy from the Taiwanese government, and a White House luncheon menu from May 27, 1986 – the day Rosenthal, then vice president of Honduras, was invited to the Oval Office to meet his hero, Ronald Reagan.
Almost obscured by the tackiness on the walls and the clutter on his desk is a framed picture of Rosenthal, his wife and children attending a family bar-mitzvah.
"All my kids are in the business,” says the 65-year-old Rosenthal, whose father emigrated from Romania to Honduras in 1929. “Johnny is a lawyer, and president of our cement company. Adela Patricia runs our industrial park and part of our bank. Carlos José runs the newspaper El Tiempo, which has a circulation of 40,000, and César runs our savings-and-loan association.”
By all accounts, Grupo Continental is one of the biggest conglomerates in Honduras, with annual sales of more than US$100 million. “We are to Honduras what GM is to the United States,” boasts Rosenthal, with typical chutzpah. “Profit fluctuates a lot, from US$2.5 million dollars in a bad year to US$10 million or US$15 million in a very good year.”
The grandfatherly Rosenthal – whose friendly demeanor belies an uncommon shrewdness – attributes his success mainly to the shortcomings of his rivals. “We do not have a real private sector in this country,” he claims. “Most of our entrepreneurs are good, hard-working people, but they made their money by saving every penny. They study very little, and they don’t even read Business Week or The Wall Street Journal.”
An organizational chart supplied by Rosenthal himself shows that Grupo Continental has its hand in 35 business entities. The most important of these are Banco Continental, Banco de Occidente, Seguros Continental, Sociedad Televisora Nacional, Cementos del Norte and Cia. Azucarera Chumbagua. But there are also small ones, like Bananas Naco, Ganadera Quimistán, Cacao Continental and Corderos Continental, each with less than US$100,000 invested.
About 25 percent of our sales come from agribusiness, 35 percent from cement operations, 25 percent from the financial group and 15 percent from ownership of newspaper and television stations,” he says, noting that the Rosenthal family owns more than 50 percent of Grupo Continental, while individual investors own the rest. The conglomerate directly employs 5,000 people; another 5,000 work in factories located at ZIP Continental, a company-owned industrial park in the northern coastal town of La Lima.
By far the best-known of Rosenthal’s companies is Banco Continental. With more than 40 branches, it is one of the largest banks in Honduras. Also high on the totem pole is Cementos del Norte, which is 51 percent owned by a joint venture between Grupo Continental and Grupo Atlantida, and 49 percent by Guatemalan and Mexican interests.
Asked which business is his favorite, Rosenthal doesn’t hesitate: “The insurance business. I grew up hearing about insurance from my father and his business partner. From that one, we’ve developed all our other companies.”
Another of Rosenthal’s pet projects is Cocodrilos Clal Continental – a Honduran-Israeli venture that aims to grow at least 25,000 crocodiles a year for meat and fine leather. “We’ve invested US$10 million so far, but we’re losing money because it takes a lot of money to find out how to grow these animals in captivity,” he says. “We’ve been at this for the last 10 years.”
Continental is also heavily involved in farming; it owns about 20,000 acres of land and between 15,000 and 20,000 head of cattle. “Because of laws restricting the amount of land you can have in this country, we had to form several companies that plant coffee, grow cattle and process meat all the way from the slaughterhouse to making hamburger patties,” says Rosenthal, estimating that his conglomerate suffered more than US$5 million in losses when Hurricane Mitch devastated Honduras in 1998, killing some 7,000 people and leaving hundreds of thousands more homeless.
After Mitch, Honduras got a lot of reconstruction loans,” says Rosenthal. “Our cement company is doing very well because of that. But the losses coming from Mitch, plus high interest rates prevailing because of the recent devaluation, means that it’s very hard for our company to recuperate.”
His financial situation is not exactly cause for sympathy among Hondurans, whose average per-capita income is less than US$800 a year. If anything, people here seem to resent Rosenthal, who was the nation’s vice president from 1986 to 1990, and has had his eye on the presidency for years. His most recent attempt, last December, ended in failure when Rafael Piñeda Ponce defeated him during the Liberal Party’s primary elections.
"I’ve tried three times already, and this time I was supposed to win. The public-opinion polls said I was going to,” says Rosenthal, who readily acknowledges his nation’s reputation for being one of the most corrupt in Latin America. “Hondurans have been living off the government for years. That’s why we have that horrendous reputation. I wanted to correct all these things, but they did not let me, because people are afraid of change. I talked too much about dollarization and privatization and being efficient. That doesn’t get you votes.”
He complains that he lost his first presidential campaign because his opponent, Carlos Roberto Reina, “went around telling people that I became wealthy by taking from other people.”
In fact, Rosenthal figures prominently in an internal document issued a few years ago by the US Embassy in Tegucigalpa, entitled “How the Elite Screw Honduras.” The report argues that a powerful Arab minority, led by Miguel Facussé – uncle of President Carlos Flores Facussé – and a tiny Jewish elite group led by Rosenthal work together to deprive Honduras of hundreds of millions of dollars in international aid, keeping the impoverished nation’s 5.5 million inhabitants in a perpetual state of misery.
Rosenthal simply laughs at such charges. “People in Honduras believe that when you have money, it’s because you’re corrupt or you have a pact with the devil. They believe that when you become wealthy, someone else becomes poor,” he says. “I’ve tried to teach people that you can create wealth. But we do not have enough education.”
Rosenthal, on the other hand, graduated in 1958 with a civil engineering degree from the Massachusetts Institute of Technology and studied at MIT’s Sloan School of Management.
"If I had stayed in the States, I’d be much wealthier,” he says. “Most of my former classmates have more money than I do.”