Did Immigration Stance Hasten CEO’s Departure?

By Richard Martin, 11-29-05

Usually, when the CEO of a public company resigns “for personal reasons,� it means the company’s share price is dropping faster than George Bush’s approval ratings, the CEO is facing indictment or the company’s earnings for the last two years are about to be restated. That doesn’t appear to be the case with Charles Fote, head of First Data Corp., who resigned yesterday.

Based in Greenwood Village, in the south Denver suburbs, First Data is the world’s largest processor of credit-card payments and the owner of Western Union. While the company’s stock climbed on the announcement of Fote’s resignation, and some analysts speculated that Fote had been forced out, The Wall Street Journal called his departure “unexpected� – which means that Wall Street wasn’t clamoring for his head. First Data’s credit-card business had stumbled lately, but Fote, who will be replaced by his predecessor Henry R. Duques, had been exploring strategic options to overhaul or unload that division.

News reports did not explain the personal reasons that supposedly led to Fote’s resignation. There’s a subtext to this story, though – one that involves the rancorous debate over illegal immigration in the United States.

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.

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 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.

Meanwhile, Fote’s activities on behalf of immigrants and immigration reform have made him a villain in the eyes of anti-immigration forces, and he has been viciously attacked on right-wing blogs like “Freedom Forum.�

In other words, Fote has gotten it from both sides: from the left, he’s charged with building his company on the backs of immigrants trying to help their families back home; from the right, he’s called a profiteer advocating an “open-borders policy� for America. Did the intense attacks over immigration contribute to the personal reasons for Charlie Fote’s resignation? It seems unlikely, but we may never know for sure. [End of article]