VivirLatino

Immigration, Money and a CEO's demise

12:52 H | Topics: Business - Immigration

Most of you have probably never heard of First Data Corporation, a Denver-based company specializing in transaction services. But the brand name Western Union should ring a bell. Western Union, a company that makes billions of dollars yearly on the backs of Latino immigrants who send money to their home countries has long been criticized for exploiting customer with high fees for wiring funds. Now, a Colorado publication is speculating that the involvement of First Data CEO Charles Fote's in the immigration debate is the issue that proved to be his demise:

Over the last two years Fote had become a champion of enlightened debate over immigration reform, and First Data has sponsored a series of public forums to discuss and explore the issue. In March 2004, First Data created a $10 million “Empowerment Fund” to support Hispanic immigrants and counter anti-immigration movements across the country. The Fund, whose advisory panel includes Raul Yzaguirre, CEO of the National Council of La Raza (“The Race”), had allocated $800,000 for a Denver pilot program to increase the number of Latino business owners via the local Hispanic Chamber.

Apparently, being a "champion of enlightened debate over immigration reform" translates into giving money to immigrants rights groups. Sounds nice, huh? It's called growing your target market. Less opposition to immigration means more immigrants -- more customers. Cha-ching.

While Fote’s calls for respecting the rights and dignity of immigrants were imminently sensible, this was not a principled stand on his part. Western Union, First Data’s most profitable division, makes billions of dollars annually on “remittance” payments sent home by immigrants to this country. According to Hispanic activists, those profits come from gouging low-wage workers on transmission feesAccording to Hispanic activists, those profits come from gouging low-wage workers on transmission fees(a case made strongly in this month’s issue of Harper’s magazine). "Our center is the receive side,” Western Union’s CEO Christina Gold told Business 2.0 magazine last year, “because, for our customer, 'home' is not the US." First Data has also made $5.5 million in charitable donations to settle class-action lawsuits over the company’s alleged failure to disclose “unreasonably high commissions” for money transfers to foreign countries.

At the writing of this post, First Data's stock is at over $43. With or without Fote, the market he was trying to build will continue to grow. And with the absence of convenient options beyond Western Union and its major competitors, immigrants will continue to shell out high premiums for sending money home. And First Data will continue to get rich.

Via / New West Network

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