Drug War on Trial (Page 4)

The accuracy of all these stories will in the end be determined by a court of law. In the meantime, there is one revealing element common to all the legal actions. It is a financial institution that is far closer to home than any of the Mexican enterprises operating south of the Rio Grande: Citibank. It was Citibank that brought Carlos Hank Rhon to the attention of the Fed during the Mercantile Bank investigation because of his ties to Raul Salinas, brother of then-Mexican President Carlos Salinas. Hank Rhon introduced Raul Salinas to the top banking agent in Mexico for Citibank, which Treasury Department investigators claim helped facilitate the laundering of some $200 million that Raul Salinas skimmed off Mexican government food programs, corrupt procurements and drug payoffs during his brother's tenure as president. (Raul Salinas is currently serving a twenty-year sentence in a Mexican prison for murder and illicit enrichment; Carlos Salinas is living in self-imposed exile in Ireland.)

Most pungently, on May 18 Citibank, now Citigroup, announced that it was purchasing Banamex for $12.5 billion in cash and stock--making Hernández, overnight, one of the richest men in the Americas.

"How can they [Banamex] claim that I've ruined their reputation when they've just done a massive deal with Citibank?" exclaimed Giordano, interviewed by telephone from his office in Mexico shortly after the sale was announced.

The Citibank-Banamex deal now joins the largest US financial institution--which was criticized by the Federal Reserve Board during Senate subcommittee hearings in 1999 as having lacked the proper procedures to detect Salinas's and other corrupt Mexican politicians' money-laundering activities--with a bank that has been excoriated in the Mexican and US press for its corrupt ties to the PRI. (Responding to widespread criticisms of its monitoring of suspect accounts, this past spring Citigroup hired one of the Fed's top experts on money laundering, Rick Small, to oversee its compliance office.) A further irony: When Citigroup chairman Robert Rubin was Treasury Secretary during the Clinton Administration, he authorized a comprehensive assault on money laundering that was dubbed Operation Casablanca. Among the tens of millions of dollars identified as having illicit origins over the course of Casablanca's multipronged investigation (which was partly immortalized in the film Traffic) was $3.3 million seized during a sting against none other than Banamex, which the DEA, in coordination with Mexican law enforcement, alleged was drug money from a northern Mexican smuggling operation.

In many ways, all these cases are also united by the phenomenon of NAFTA's having opened the door to Mexican capital flowing north, just as US capital and jobs have been flowing south. Follow the money far enough across the ever-more-open US-Mexican frontier, these challenges suggest, and journalists and scholars alike, not to mention the federal government itself, could face a new NAFTA-inspired boomerang of unintended consequences. Giordano now claims that if his case goes to trial, it will not be just him but "the entire drug war" that will be going on trial.

The guiding principle of Operation Casablanca was to "follow the money" that helps fuel the drug trade. Whatever the courts decide, the three pending cases offer an ominous warning sign to anyone who tries to do just that. Congressional investigators estimate that as much as $500 billion is laundered through the US financial system each year. But attempting to draw the links between the legitimate and illegitimate economies, the great untold secret of the drug war, remains a dangerous business.

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