Source: New York Times (NY)
Pubdate: Tue, 04 Aug 1998
Contact:  http://www.nytimes.com/ 
Author: Tim Golden, New York Times

TRACING MONEY, SWISS OUTDO U.S. ON MEXICO DRUG CORRUPTION CASE

MEXICO CITY -- When the young chief of Switzerland's drug police
arrived here in late 1995 to inquire about $132 million found in Swiss
bank accounts belonging to the influential elder brother of a former
president, he knew enough about Mexico's political underworld to be
wary of his official hosts.

No sooner had he been whisked from the airport by a squad of burly
Mexican plainclothesmen, for example, than he began to wonder if he
wasn't being kidnapped.

"I had seen it in the movies," the official, Valentin Roschacher,
said, recalling what turned out to be merely some aggressive police
security measures en route to his hotel. "I thought, 'Are these guys
the good guys or the bad guys?"'

Now, more than two years later, Roschacher and his men have learned
enough about organized crime in Mexico to follow a complicated
financial trail and information from convicted drug traffickers to the
conclusion that Raul Salinas de Gortari earned vast of sums of his
money by assuring the safe transport of cocaine through Mexico to the
United States.

Yet while the Swiss are preparing to use that evidence in a civil
court action to confiscate the fortune of Salinas, the elder brother
of former President Carlos Salinas de Gortari, a much larger and more
experienced group of law enforcement officials in the United States
has been unable to make a similar case of their own.

Some of those officials say they may yet win criminal indictments.
Privately, though, others acknowledge that Washington's pursuit of
Salinas has been troubled from the start, with turf battles among law
enforcement agencies and federal prosecutors, disputes over the
handling of witnesses and complaints from agents in the field of
meddling and a lack of interest by higher-ups.

The secrecy with which both governments have proceeded makes it
impossible to fully evaluate their evidence before it is presented in
court, and Salinas has denied any wrongdoing.

Justice Department officials are also quick to note that they have
sought to build a criminal case, which entails a higher standard of
proof than the Swiss will face.

Nonetheless, the unlikely initial success of Roschacher's small
detective team has turned an unflattering mirror on Washington's
handling of what U.S. officials once described as a watershed effort
to combat not just the flow of drugs through Mexico into the United
States, but the complex system of official corruption that has long
allowed it to flourish.

The contrast is even more striking, officials say, because the Swiss
appear to have relied almost entirely on witnesses and information
that were first uncovered by the United States.

"They're like the mouse that roared," one former senior American law
enforcement official said of the Swiss authorities. "They were blocked
almost every step of the way. But they just kept going and kept going,
and they finally made a case."

Whether any of the investigations will definitively resolve the
question of the Salinas family's alleged collusion with the drug trade
remains far from clear.

A partial account of the Swiss and U.S. inquiries, assembled from
government documents and dozens of interviews, suggests that neither
has penetrated into the brothers' inner circle.

But some experienced investigators have concluded that Raul Salinas
could have been a valued asset for the traffickers even if he could
not necessarily pick up the phone and call off police raids. He might
have been paid off, they said, just to provide an impression of
acquiescence at the highest levels.

"Raul Salinas was not somebody who protected a truck with a gun as it

went to the border," Roschacher said in an interview at his office in
Bern, the Swiss capital. "What we are talking about is a system -- a
system in which a person can give orders to someone who gives orders
to someone else."

Raul Salinas, who remains in a maximum-security prison cell in Mexico
on charges of ordering the murder of a prominent politician, has
steadfastly proclaimed his innocence. He has insisted that most of the
money in his accounts was given to him by major Mexican industrialists
for an investment fund that he was to establish.

"I have never had any kind of dealings with drug traffickers, nor have
I received any benefit or money from any drug trafficker," he told the
Swiss attorney general, Carla del Ponte, in a handwritten letter from
prison two months ago. "The source of my money, and of all the money
that I managed, is legitimate."

Carlos Salinas, who left office just before the Mexican economy
collapsed at the end of 1994 and left the country soon afterward, has
never been charged with any crime. He lives in Ireland and the south
of France, one of his old friends said, waiting impatiently for some
judgment more generous than the one a bitter Mexican public has handed
down.

Within months after the Swiss police found Raul Salinas' bank accounts
on a tip from American drug agents, his case had entangled some of
Mexico's biggest businessmen, as well as banks in Mexico, the United
States, Britain and France. Initially, though, Swiss officials saw
nothing remarkable in the notion that a foreign leader's relative
might have stashed illicit wealth in their banks.

"I thought, 'It's just a case like any other case," Roschacher
said.

Like the hidden fortunes of Ferdinand Marcos of the Philippines or
Mobutu Sese Seko of Zaire, the Salinas accounts presented an
opportunity for the embattled Swiss to show that dirty money would no
longer be safe in their vaults. There was another incentive as well:
Whatever part of Salinas' money the government could convincingly tie
to drugs, officials said, it would be able to keep under Swiss law.

In Bern, the Swiss capital, Roschacher had three hard-working
detectives and the support of Mrs. del Ponte, the plain-spoken
prosecutor who has earned a wide reputation for pressing to open up
Switzerland's banks. He didn't have much else.

After years of collaboration with American law-enforcement agencies,
Swiss officials assumed they could count on help from the United
States. Instead, banking and credit card records took months to
arrive. Interviews with convicted drug smugglers and other witnesses
from United States court cases were sometimes slow to be granted,
sometimes postponed and sometimes refused.

By the second half of 1996, with the Swiss under pressure to show
progress, tempers began to rise. At one point, officials said, as Mrs.
del Ponte was trying to interview one American-supplied informant in
the presence of a fastidious federal prosecutor from New York, she
exploded in anger and later fired off a letter to her counterpart,
Attorney General Janet Reno.

"Sometimes we have had difficulties coordinating our procedures," Mrs.
del Ponte said euphemistically, emphasizing her gratitude for the
American help that eventually arrived. "Of course, when I am over
there and the public prosecutor says to me, 'You cannot ask this
question,' I am going to get angry."

In Washington, law-enforcement officials had far more investigative
resources and more knowledge of the mechanics of Mexican corruption.
But they also found themselves struggling to move their
sometimes-rivalrous agencies and prosecutors in the same direction at
the same time.

The rumors that circulated about Raul Salinas during his brother's
presidency had centered on the notion that he had grown rich from the
kickbacks of Mexican businessmen whom he might have helped to win
lucrative deals from the state. American drug-enforcement, Customs and
FBI agents had also received reports linking him to at least two major

Mexican cocaine smugglers.

Drug-enforcement officials said the reports were startling, but not
enough to merit a special inquiry. That view quickly changed after the
discovery of the Swiss accounts, but after some bureaucratic struggle,
it was the FBI's office in New York, where Salinas had also banked,
that was finally assigned the investigation.

Bureau officials said the inquiry was important because its targets
were high-profile: Salinas, who had moved tens of millions of dollars
through Citibank, and officers in the bank's private-client section,
who appeared to have helped him without trying very hard to verify the
legitimacy of his funds. Still, people familiar with the probe said it
was not a primary focus of the bureau office, which soon consumed by
its investigation into TWA Flight 800.

"It wasn't a big man-burner," one former senior official said, noting
that the inquiry focused more on the trail of financial transactions
rather than on the history of Salinas' alleged misdeeds. "It was a
paper chase."

At offices of the Drug Enforcement Administration in Washington,
Mexico and Texas, agents were turning their attention to Mexico's new
cocaine kingpin, Amado Carrillo Fuentes. Again, there was a thin
record of informants who said Raul Salinas had met with Carrillo and
his associates, received money from the trafficker's operations, or
helped assure the movement of his loads.

Officials said they knew they would be hard-pressed to turn such
intelligence information into witnesses who could stand up in court
and convincingly accuse the brother of a former Mexican president. But
some complained that the greater challenge was navigating the
disparate and sometimes competing investigations going on around the
United States.

For months after Mrs. del Ponte's confrontation with the New York
prosecutor, two officials said, the Swiss authorities' access to
American informants all but dried up. They had yet to solidly link
Raul Salinas to the drug trade. And the outcry over Switzerland's
handling of the bank accounts of Nazi victims was adding to pressure
on the government to prove its vows of greater openness.

Then, little more than a year into the effort, the investigators' luck
began to turn.

"We had a chance to talk to witnesses who knew a lot about what had
happened in Mexico," Roschacher said. "For the first time, they were
people who knew things concretely -- 'I was there; I saw that' -- and
not by hearsay."

Not long thereafter, though, Swiss investigators also began to see the
confidentiality of their witnesses start to erode as information
leaked to the news media, particularly in Mexico, raising questions
about Salinas' accusers.

One such witness, officials said, was Marco E. Torres, a Mexican
smuggler who pleaded guilty to drug charges in the United States in
1996 and received a reduced sentence for his cooperation.

According to two officials familiar with his statements, Torres said
he arranged the protection of cocaine shipments with Raul Salinas and
paid him one large bribe himself after a drug seizure in Mexico in
1993. But parts of Torres' account, including his claim to having
known the Salinas brothers for years, were refuted by Salinas' lawyers
after they were first reported last year.

Roschacher said he was not sidetracked by such particulars.

"As long as no one can say, 'He is a notorious liar -- we have checked
and what he says is wrong,' then for us he is a witness and we take a
look at him," he said. "Our case is not built on Marco Torres. His
credibility is good. But we have several others who are as good or
better."

Swiss officials would not name those other witnesses, saying their
identities would only be disclosed to judges who will review the
matter if, as expected, lawyers for Salinas challenge the confiscation
of his accounts.

But starting in early 1997, for reasons that remain unclear, the
spigot of American assistance opened wider. The Justice Department
arranged for Swiss interviews with almost a dozen more witnesses,

officials said, including at least three convicted drug smugglers who
offered detailed information linking Salinas to specific payoffs.
Mexican officials also produced records showing that during the last
half of his brother's six-year administration, Raul Salinas had made
huge deposits in Mexican banks.

In an interview, Mrs. del Ponte said the evidence made it clear that
he had been "directly involved in receiving money for protecting the
shipment of tons of cocaine through Mexico."

Precisely how Salinas might have arranged such protection -- despite
never working in law-enforcement and having left the government
altogether in 1992 -- was a question law-enforcement officials
struggled to answer.

Mexican investigators said that they have focused closely on a
relationship between Raul Salinas and one of his closest business
associates, Justo Ceja, who served as Carlos Salinas' private
secretary and is a fugitive from charges that he illegally amassed a
large fortune while in government. (Raul Salinas' accountant was
arrested in mid-July on similar charges, while Salinas' wife was
sentenced to two years' imprisonment for pressuring witnesses to lie
in the murder proceedings against her husband.)

Investigators said they have also determined that both Salinas and
Ceja had dealings with several senior Mexican law-enforcement
officials, each of whom has since been accused publicly of taking
bribes. But the only one of those former officials to ever be charged
with drug offenses, Mario Ruiz Massieu, has shown little promise as a
government witness.

American officials said that drug-enforcement agents in Mexico City,
Houston and El Paso who tried to build their own case against Salinas
were able to find several informants by the spring of 1997 who told of
drug payoffs that Raul Salinas supposedly received. Two of those
witnesses, in particular, gave detailed accounts of having seen
Salinas meeting with major drug traffickers.

The two most important informants were taken from Mexico to Texas,
officials said, where they submitted to lie-detector tests and
appeared at first to be telling the truth. But under what agents
described as unusual high-level pressure to recheck the men's stories,
they were given further tests in which they appeared to be less
candid. In May 1997, officials said, the United States Attorney in San
Antonio abandoned the case entirely.

"We knew there was an enormous political component to the case," one
former law-enforcement official who worked on it said. "But the
Justice Department, without ever saying so, appeared not to want us to
deal with the political targets. They wanted us just to concentrate on
the drug traffickers."

Similar questions have been raised following the announcement in April
by Citibank's parent company, Citicorp, that it will merge with
Travelers Group Inc. -- a $70-billion corporate marriage that could
conceivably snag if the bank is ensnared in a major money-laundering
case. Justice Department officials declined to discuss the Salinas
investigation in detail. But they denied that their problems in making
a case had anything to do with political or foreign-policy concerns.

Still more doubts about Washington's coordination of the Salinas case
were raised by two other key witnesses, a Chilean-born computer expert
named Guillermo Pallomari and a Colombian cocaine trafficker named
Jose Manuel Ramos.

Pallomari, a former aide to the main boss of the Cali cocaine cartel,
Miguel Rodriguez Orejuela, fled Colombia in August 1995 after threats
on his life and was interviewed by American drug-enforcement agents
for nearly three months.

But officials familiar with the debriefings said he was never asked in
detail how the Colombians had protected their shipments through
Mexico, and some officials were stunned to learn what Pallomari, now a
protected witness, told the Swiss last Nov. 19 at a Federal prison
facility in southern Virginia where American officials took him to be
debriefed.

According to officials familiar with his debriefings and a partial
transcript of his statement recently published in the Mexican
newspaper El Universal, Pallomari said the Colombians began to
strengthen their partnership with Carrillo, the Mexican trafficker, in
about 1992, after problems with their operations in the Caribbean.
Rodriguez Orejuela also tried to replicate in Mexico the network of
political protection he had established in Colombia, Pallomari said.

To this end, the informant said, Cali bosses drafted a manual on
political corruption and sent a copy to Carrillo. They also funnelled
some $80 million in bribe money to Mexico -- about half of which was
supposed to have gone to Raul Salinas to assure the compliance of his
brother's administration.

Pallomari said the money was sent with cocaine loads, deposited with
front companies, or paid through a Bolivian intermediary whom the
Colombians stationed in Mexico. On one occasion, he said, Raul Salinas
intervened at the Colombians' request to get back most of a five-ton
cocaine load the police had seized in Acapulco in early 1994 with
American help. Pallomari also showed the Swiss how payments to Mexican
politicians were reflected in a partial set of 1994 accounting ledgers
that were seized from the Cali cartel by an elite Colombian police
unit in 1995.

Officials said Pallomari's story had some inconsistencies, but they
did not question that it might have been vital to the drug-enforcement
agents in Texas who were then trying to tie Salinas to Carrillo 's
enterprise.

In the end, those agents did not learn even the outlines of
Pallomari's account until a year and a half after he came under
American protection. When law-enforcement officials from around the
country caucused in El Paso in January 1997 to assemble the available
evidence against Carrillo's organization, officials said, Pallomari's
information was about the best they had against Salinas.

But Pallomari was unavailable. Federal prosecutors in Miami said they
could not loan their witness until they had finished their own case
against the Cali gang. Long before they did, the drug-conspiracy case
that might have linked Salinas to Carrillo collapsed when the
trafficker died after plastic surgery last July.

U.S. prosecutors were apparently even less successful in coordinating
the information offered by Ramos, a former lieutenant to the Colombian
drug cartel based in the city of Medellin.

According to two people familiar with Ramos' case, he approached
prosecutors in Houston in 1991, the year he was sentenced on drug
charges to two life terms in prison. He had met Raul Salinas in the
late 1980s, he told them, and had contracted with him to arrange and
protect the landing of drug planes in different parts of northern Mexico.

One American official said doubts lingered about part of Ramos'
account, and his credibility was challenged by a federal prosecutor
who did not believe he had been forthright about another Colombian
drug operation that had been discovered in Texas.

But Ramos also offered unusual documentation to corroborate his
claims: encoded payment ledgers, photographs and even a special
Mexican passport he had received under the carefully chosen alias
"Alejandro Salinas." Still, two people familiar with the case said
Ramos was all but ignored until late 1997, when the U.S. Customs
Service arranged for him to be interviewed by a federal prosecutor in
New York and then by the Swiss authorities.

"He knocked on the door several times," one of those people said. "He
was rebuffed each and every time."

- ---
Checked-by: "Rich O'Grady"