Raúl Salinas, aka Mr. Ten Percent, derived his power and his money from the fact that he was head of the state food distribution network Conasupo. Raúl was also the co-owner of a tuna-canning operation in Ensenada. Place these items in conjunction with the well-established fact that one of the prime methods of smuggling cocaine and heroin north from Colombia and Venezuela is on tuna boats, and the origin of at least some of Raúl’s fortune becomes explicable.
By 1993, the Mexican press was already detailing the way in which Conasupo – under Raúl’s supervision – was used as a distribution network for illegal drugs and as the embarcation point for the long process of laundering drug money. Raúl dumped on the long-suffering Mexican people radioactive milk, some of which apparently made its way north to US schoolchildren. He used US food credits to buy powdered milk that had been contaminated by the Chernobyl nuclear disaster. The newspaper La reforma has also noted that Raúl Salinas was suspected of having “diverted high-quality US corn, bought with US foreign aid credits and meant for Mexico’s poor, for sale as tortillas in US supermarkets.” Instead of the corn meal, Salinas palmed off animal feed to the Mexican poor. These scams alone are estimated to have put $20 million into Raúl Salinas’s private bank accounts.
The Mexican newspaper El Financero and the US Drug Enforcement Agency have produced estimates of how much money goes from the narco-traders to bribe PRI officials: half a billion dollars a year in 1995. El Financero reported that it reckons an equivalent amount goes north of the border each year to corrupt US officials and private citizens.
So much for Raúl, just one of tens of thousands of powerful people around the world stealing the resources of poor countries and raking in millions from the drug trade. Turn now to the US banking industry. In fourteen years of the War on Drugs that began in Ronald Reagan’s first term, it has apparently never crossed the minds of US editors and reporters that the US banking industry cannot be unaware of the fact that it is handling large amounts of hot money. The DEA reckons that from Mexico alone $30 billion in drug profits enters the US.
It certainly has crossed the minds of some US politicians. Henry Gonzalez, the fiery Texas populist who was, until 1995, Democratic chairman of the House Banking Committee, held hearings on money laundering and drug trafficking back in 1994. Entered into evidence in those hearings was a US State Department watch list of countries handling drug money in particularly large quantities. The list ran from Aruba, the Caymans, Colombia, Hong Kong, Mexico, Nigeria, Switzerland and Venezuela to the US. One homegrown example cited by Gonzales was the Beverly Hills branch of the American Express Bank, where two officials were indicted for helping Raúl Salinas’s associate Juan García Abrego launder $100 million. The bank was fined $950,000 by the Federal Reserve. But Gonzalez wryly noted the bankers probably still made money on the transaction.
These Gonzalez hearings also established that the overseas subsidiaries of multinational banking concerns, such as Citibank, did not regard themselves as bound by US laws on money laundering, but by the money-laundering laws of the countries in which they were doing business. “Moreover,” the report continued, “bank, privacy and data protection laws in some of those countries [namely Switzerland, France and Mexico] serve to prevent US regulators from conducting on-site nations of the US bank branches within their borders.” No doubt this is why Citibank gave the name Confidas to its Swiss subsidiary.
Gonzalez’s hearings and subsequent investigations presided over by his successor as House Banking Committee chairman, rep. Jim Leach of Iowa, concluded that the “banks within banks” – similar to the Citibank operation described by the New York Times – are conduits for hot cash, primarily from narco-trafficking.
So much for the “War on Drugs.” As a method of social control and political subversion it has been very effective in putting away troublesome poor people and feeding federal pork to the prison lobby. Meanwhile, there has never been the slightest attempt to interfere with the operations of the large and powerful US financial institutions handling the profits, part of which are regularly remitted to US politicians, in the form of campaign contributions from the US banking industry.
Back in 1987 Andrew Cockburn interviewed Ramón Milian Rodríguez in Butner Federal Penitentiary in North Carolina. Milian Rodriguez was serving forty-two years, having been arrested by a south Florida task force while carrying $5 million on a plane, money which he – while working for the Colombian cocaine cartels – described casually as “walk around” cash or tips. Milian Rodríguez told Cockburn that all the major US banks had “special representatives” who would greet people like himself as they came north, provide entertainment, women and covert cash for $100 million denomination certificates of deposit.
“Who did they think you were?” Andrew asked.
“A major drug money launderer, of course,” Milian Rodríguez answered, laughing heartily.
In the Kerry hearings on drugs and the Contras, Milian Rodríguez testified that he gave $10 million to the Contras at the request of Reagan administration operatives. Indeed, his account books, which were seized by the FBI at the time of his arrest, showed as much. During his testimony, one congressman told him that he “must be very clever.” “Well,” Milian Rodríguez answered, “First Boston [caught up in the laundering charges and now partly owned by Crédit Suisse] paid a fine of $25,000 and I’m doing forty-two years. Who do you think is cleverer?”
On June 6, 1996, the British news agency Reuters reported that another Swiss bank account under the control of Raúl Salinas had been identified. It held $240 million. It now appears that Raúl Salinas controlled more than seventy different off-shore accounts. Citibank, whose top officials knew well the enormous scale of their bank’s transactions with Salinas and who no doubt were also sensitive to the overwhelming likelihood that his millions were criminally acquired, continued to do business with the imprisoned murder suspect after his arrest, since Raúl deployed money through Citibank accounts using a phone from his prison cell.
Ten months after Salinas’s arrest, Ann Wexton, an internal investigator at Citibank charged with monitoring “questionable” currency transactions, began to take an interest in possible improprieties in the handling of the Salinas account. It was later reported that her investigation was quickly blocked by senior officials at the bank. Wexton quit Citibank and went to work for General Electric in its capital unit.
But Raúl Salinas’s millions may be just the icing. By 1996, the Mexican press was circulating reports that former president Carlos Salinas may have left office with a private hoard amassed during his six-year term of as much as $5 billion, thus putting him on the A-list of Third World looters. The Salinas family was indeed uniquely well-placed for thievery on a grand scale, though it should be noted that Carlos Salinas, unlike his brother, has not been charged with any crime.
At the period of its political ascendancy two torrents of money were sluicing into Mexico. From the north came billions in US loans, bond purchases and corporate bribes to capture the richest pickings of privatization. Suddenly there were more billionaires in Mexico than in Canada. Simultaneously Mexico had become the prime staging area for drug shipments sent north from the Calí and Medellín cartels, with billions in drug money irrigating the Mexican elites. Citibank was uniquely positioned to enjoy the benefits of this confluence. From the 1940s throughout most of the 1980s, it was the only US bank with branches in Mexico, and its executives, who had led the negotiations on two rounds of Mexican financial bailouts, spent many evenings carousing with Carlos Salinas and associates.
On April 14, 1998, one of the biggest business mergers in the world was unveiled: a proposed union between Citicorp and the Travelers Group, an insurance conglomerate. This cleaving was valued at $76 billion, and the only factors that threatened a smooth marriage ceremony were the Glass-Steagall Act of 1933, inhibiting cross-ownership between the banking and securities industries, and a Justice Department criminal probe of Citibank, a Citicorp subsidiary, for washi
ng drug money.
The Justice Department began this investigation into Citibank’s handling of Raúl Salinas’s money in 1996. But in news reports of the Citicorp/Travelers merger, it was emphasized that the Federal Reserve would not factor possible criminal conduct by one of the marriage partners into its assessment. In other words, drug billions could effortlessly flow into Citibank without a squeak from the prime banking regulator.
This is the point on which Maxine Waters, US representative from South Central Los Angeles, seized. It was Waters who had been the fiercest critic of the CIA in the wake of Gary Webb’s series in the San Jose Mercury News. In speeches from the floor of Congress in April 1998, she took on not only the CIA and the drug lords but also the international banking houses, who make money handling their business. Waters understood that these colossal financial mergers aren’t good for ordinary people. It’s going to be even harder for the poor to find banking services at competitive rates, and what little credit is available in poor urban areas will instead flow into the Wall Street money mart, jostling for investment opportunities with the criminal drug millions garnered by exploitation of such markets as South Central L. A.
Zedillo, Guns and Money
While lacking the flare of the Salinas regime, the government of Ernesto Zedillo, who trampled Cuauhtémoc Cardenas in the 1994 presidential election, continued the neoliberal economic and political agenda of his patron, auctioning off public businesses, opening Mexico ever more widely to foreign corporations and financial houses, and bearing down hard on dissidents, all the while exhibiting complaisance toward Mexico’s $35 billion annual drug trade.
There was a report in the Colombian press that the Calí cartel was so enthusiastic about Zedillo that it funneled $70 million into the campaign coffers of the PRI. This story was followed by a February 1997 account in La Reforma of a videotape, secretly recorded by Mexican prosecutors, of a lawyer for Carlos Salinas boasting that Mexican fugitive banker Carlos Cabal Peniche had given $40 million to the Zedillo campaign. Cabal Peniche is suspected by US and Swiss banking authorities of using his banks to launder drug money.
Zedillo entered office promising reform. He said he wanted to make Mexico “a nation of laws.” And there were some high-profile arrests early in his term, including the capture of Juan García Abrego. But mostly the drug cartels continued to flourish with the indulgence of the government. “It’s a joke for the people of Mexico and the US who think Mexico is fighting drugs,” said Ricardo Cordero Ontiveros, a former drug investigator in the Mexican attorney general’s office. “The only thing they are fighting is to make them disappear from the newspapers.”
Cordero said he brought his frustrations to Mexico’s new attorney general, Antonio Lozano. Lozano told Cordero to stop whining. “People would pay $3 million to have your job,” the attorney general said.
Bill Clinton also saw things differently from Cordero. Under mounting pressure to decertify Mexico as a vigilant fighter against drug trafficking, Clinton praised Zedillo’s government. “They are taking steps to address a problem they inherited,” Clinton said. “We’ll help them in every way appropriate.” One of the remarkable aspects of this observation is Clinton’s dulcet admission – after two years of furious denials -that there had in fact a drug problem under the Salinas government.
Critics of Clinton accused the president of a double standard when it came to Mexico. They noted that in 1996 Clinton had imposed harsh economic sanctions against Colombia after decertifying it as a drugfighter, though Mexico’s record was equally poor. “Of course it’s a double standard,” said Peter Hakim, director of the Inter-American Dialogue, a Washington policy center. “Imagine decertifying your partner in NAFTA just one year after you lent it $13 billion to help it recover from an economic crisis.”
The major feature of Zedillo’s counter-narcotics strategy was to use the allegations of corruption to transfer much of the drug enforcement work (and budget) from the police to the Mexican military. To further this realignment, Zedillo picked General Jesús Gutierrez Rebollo as the chief of his new anti-drugs unit. Gutierrez Rebollo, a well-regarded military commander from Jalisco state, had been vetted by the CIA and had received training by the US Army. In his first two months in office, the general met frequently with US intelligence officers to share information on the Mexican drug trade. General Barry McCaffery, the US Drug Czar, knew Gutierrez Rebollo from McCaffery’s stint as head of the US Southern Military Command. McCaffery declared his unflinching confidence in the general’s ability, saying, “He’s a guy of absolute unquestioned integrity.”
The main US contribution to Zedillo and Gutierrez Rebollo’s new militarized approach was to step up military aid and training to Mexico. In the summer of 1996, the Pentagon launched a $28 million program to train more than 1,100 Mexican soldiers a year at US bases. At the same time, the CIA embarked on a plan to bring ninety Mexican intelligence officers to the US for training at Langley and at Boiling Air Force Base’s intelligence unit near Washington, D.C. In consequence, US anti-drug aid to Mexico shot up from $10 million in 1995 to $78 million in 1997. The Mexican army accounted for the largest share of foreign troops getting US military training.
The instruction classes were assigned to seventeen US military bases, including the School of the Americas at Ft. Benning, Georgia, and the helicopter school at Ft. Rucker, Alabama. Officers of the new Mexican drug strike force, a unit called Airmobile Special Forces or GAFE, were sent to Ft. Bragg, North Carolina, where they underwent an intense twelve-week course given by the US 7th Special Forces Group, an army unit specializing in covert operations. The GAFE troops were trained in helicopter assault methods, bomb-making, counterinsurgency operations and intelligence techniques.
The Pentagon claimed that the GAFE training program was intended solely for purposes of anti-narcotics operations and not intended to bolster the Mexican army’s counterinsurgency capability. Moreover, the US military has asserted that the instructional sessions conducted by the Special Forces Group include “a substantial human rights component.”
These assertions are disputed by Mexican defense analyst Raúl Benitez. “The GAFE are not just for the drug war,” Benitez told the Guardian. “They are for everything.”
To date, the GAFE graduates of Ft. Bragg don’t have much to show for their American education. A 1997 report on the program by McCaffery’s office could not identify a single large seizure of cocaine or an arrest of a major drug baron by the special forces units. That’s not to say the GAFE unit was inactive on its return to Mexico. In September 1997, eighteen members of the new Mexican counter-narcotics strike force were arrested after being caught flying a military plane loaded with cocaine from Chiapas to Mexico City. The two pilots involved in the crime had just completed training in the United States.
More disturbing have been persistent reports of torture and assassination by GAFE squads. In Jalisco state, twenty-eight GAFE officers were jailed for their involvement in the abduction and torture of six young men. One boy, Salvador Jiménez Lopez, was beaten, had his tongue pulled out and was ultimately murdered by members of the GAFE. The Pentagon later admitted that some of the officers involved in the torture and killing of Jiménez had been trained at Ft. Bragg, saying dismissively “some soldiers sought retribution for the theft of a watch.”
Another incident occurred in September 1997, when six young men from Colonia Buenos Aires, an impoverished area in Mexico City, were kidnapped and killed. Their mutilated corpses turned up a few days later in two remote areas. The Mexican newspaper La Jornada cited police sources as saying GAFE members had carried out the killings.
The Clinton administration has admitted that there is little or no review over how US counter-narcotics aid is spent or what the US-trained forces do after they go back to Mexico. Reports of abuses and corruption did not dent Drug Czar McCaffery’s faith in Mexico’s program. “It should not be my business how foreign countries organize for their counter-narcotics strategy.”
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p; McCaffery’s judgment has been somewhat less than unerring in these matters. In late January 1997, McCaffery invited his Mexican colleague, General Gutierrez Rebollo, to Washington, D.C. The Mexican general toured the capital, met with members of Congress, visited the Pentagon and lunched at the White House. At a White House ceremony, McCaffery stood shoulder to shoulder with the general from Mexico City. “General Gutierrez Rebollo has a reputation of being an honest man who is a no-nonsense field commander of the Mexican army who’s now been sent to bring the police force the same kind of aggressiveness and reputation he had in uniform,” McCaffrey said. “We are not unaware of the progress that they have made at enormous personal sacrifice.”
But the man McCaffery praised so extraordinarily had a more nuanced concept of sacrifice. Five days later, General Gutierrez Rebollo was under arrest in Mexico City, on charges that he had accepted more than a million dollars in bribes from drug lord Amado Carillo Fuentes. Investigators for the Mexican Defense Ministry became suspicious about the general after discovering that he was living in an expensive apartment in an exclusive section of Mexico City. The apartment had been rented by a ranking member of the Carillo Fuentes cartel. That’s not the only favor the general received. He was also given an apartment for his mistress, several cars, a jeep, an encrypted cellphone that allowed him to communicate freely with his drug cartel patrons, and several thoroughbred horses.
The US government expressed shock at this turn of events, although Clinton said he remained confident that the Mexican military was a good “antidote, a counterweight” to the drug corruption problem. Ernesto Zedillo claimed that he was “fully deceived” by the general. He called the arrest the “most difficult, saddest, bitterest moment of my administration.”
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