Director's efforts in line with Fox's business style

By LAURENCE ILIFF and BRENDAN M. CASE / The Dallas Morning News

MEXICO CITY – When Laura Valdés de Rojas took over Mexico's creaky and crooked National Lottery a year ago, it seemed she had won the lottery herself.

Her office, Ms. Valdés discovered, was a suite that sprawled across an entire floor of a Mexico City high-rise. Ninety-one assistants, waiters and hangers-on
effusively greeted her.

Ms. Valdés was shocked by the extravagance. She had spent most of her career in the private sector, where high costs mean low profits.

"When the elevator opened, there were tons of people," she said recently. "It was like a subway station."

She gave most of her staff and other employees severance packages. Then she set about cleaning up an institution that was widely seen as a source of petty cash for well-connected politicos.

Now she's trying to turn it into a model of social responsibility in a nation where philanthropy doesn't have a long tradition.

Ms. Valdés toils in relative obscurity compared with most officials. But her efforts illustrate the efficient, businesslike
management style that President Vicente Fox aims to promote, analysts said.

To be sure, Mr. Fox's effort has stalled in many redoubts of the monstrous bureaucracy, and Ms. Valdés faces little of the heavy lifting in the gargantuan task of
tackling problems such as rampant crime, the sour economy and bad public schools.

Moreover, the lottery's new direction has meant little for average Mexicans, analysts said. Nor has it boosted Mr. Fox's overall popularity.

Daniel Lund, a pollster in Mexico City, said Mr. Fox's approval ratings have slid to about 50 percent from a high of 80 percent just after his election.

"He could fall to 40 percent by the summer if things don't improve," said Mr. Lund, president of Mund Americas, a polling company.

Early progress

Still, part of Mr. Fox's challenge is to shake up seemingly immutable institutions. Ms. Valdés' early results show how those efforts are taking root.

In just over a year, she has doubled profits, sliced bureaucratic fat and helped root out thievery – all while laying plans for the lottery to underwrite much-needed
projects from hospitals to schools.

"People expected that this new government would come in and change everything overnight," Ms. Valdés said as a lone attendant offered refreshments to visitors and
a single press aide sat nearby. "Well, there are so many things that are obsolete and antiquated that we're trying to do as much as we can, but there are things that
take time."

Linda Cloud, executive director of the Texas Lottery, praised Ms. Valdés' efforts. The Texas Lottery had scandals of its own in the mid-1990s, forcing one director
to resign. Ms. Cloud has met Ms. Valdés twice.

"She wants to make changes that are clearly for the betterment of the organization, and I can tell she's certainly headed in the right direction," Ms. Cloud said in a
written response to questions from reporters.

The daughter of a career diplomat and the granddaughter of a director of the Mexican Postal Service, Ms. Valdés originally chose the business world over public
service.

She has worked for AeroMéxico SA, the airline, and Corning Consumer Products, the Chicago-based housewares manufacturer now known as World Kitchen Inc.

She brought her business approach with her to the lottery.

Operating expenses before she arrived stood at 24 percent of overall sales. Now they're 14 percent, and Ms. Valdés wants to lower them to 9 percent – in line with
U.S. lotteries. The Texas Lottery spends 7 percent on operating expenses.

To learn from industry leaders, Ms. Valdés joined the National Association of State and Provincial Lotteries and compared her operation with leading lotteries in the
United States and Canada.

The comparison was not encouraging. Mexico's 230-year-old lottery is one-fourth the size of the Texas Lottery, which sold $2.6 billion in tickets in 2001. And the
Mexican lottery has dumped almost all its money into the federal government's general fund instead of directing it to social programs.

But the comparison gave Ms. Valdés ideas for improvements.

"I would say that we are probably going to be one of the institutions that will show with specific actions that the change in this country is reality," she said.

Plenty of challenges remain. Sales didn't grow during 2001, and the lottery's take from the big December jackpots on Christmas Eve and New Year's Eve was
disappointing.

The lottery also faces distribution headaches in its core business of twice-weekly drawings and newer "instant win" scratch tickets.

"It's a very good institution that has existed for many years, but lately it has failed to distribute the tickets in a timely manner for the drawings," said María del Refugio
Escobar, 65, who has been selling lottery tickets in southern Mexico City for 18 years.

"The tickets come within days of the drawings, and that does not give us enough time to promote our sales."

Ms. Valdés said there is much left to do. "It's the oldest lottery in the hemisphere, and it shows," she said.

Dispersing funds

For decades, Ms. Valdés said, her predecessors had discretion to give away $3 million each year to whatever causes they wished. In some cases the money went to
organizations run by friends and family members of lottery directors.

Government investigators confirmed that abuses abounded. In recent weeks, Mr. Fox's anti-corruption czar, federal Comptroller Francisco Barrio, has brought
charges against several former lottery employees, including a former director named Carlos Salomón.

They face accusations of misappropriating funds and handing out lucrative contracts to relatives.

Mr. Salomón, who served briefly as an adviser to former Fox spokeswoman and current first lady Martha Sahagún, has denied the charges. Moreover, the attorney
general's office has had little success pushing corruption cases through the graft-ridden justice system in recent years.

Ms. Valdés has given free rein to Mr. Barrio's investigators, but she's mostly focused on the future of the institution. By the end of her six-year term, she hopes to see
Mexico's lottery grow at least to the size of the Texas Lottery.

By publicizing the lottery's efforts, Ms. Valdés said, she hopes to show customers that even if they don't win, their money will go to worthy causes.

'Culture of philanthropy'

In the past, lottery profits have gone to the Finance Ministry. Ms. Valdés has persuaded Finance Minister Francisco Gil Díaz to let her set up a trust fund with the
millions of dollars in savings she has obtained through budget cuts. She also hopes to persuade lawmakers to send lottery profits to schools, hospitals, orphanages
and other charities.

"We want to create a culture of philanthropy for Mexico," she said. "In the United States and in many other countries, people participate in their societies and are
very active. ... One of the things we want to do is create that culture [for Mexico], that you've got to be part of making changes in your society. They don't come by
themselves."