After Bank Bust, Mexico Says US Must Settle Own Account

Biggest drug-money laundering bust in US history was announced on Monday.

By , Staff writer of The Christian Science Monitor

The folks living in glass houses up North are throwing stones again. So says a rising chorus of Mexican businessmen and politicians in the wake of the arrest of scores of Mexican bankers in the United States in what US officials are calling the country's largest-ever drug-money laundering case.

Despite US claims that the three-year undercover investigation was carried out without Mexico's knowledge, Mexican officials insist that binational cooperation against the drug trade is strengthening.

But many are questioning why such a large and costly investigation in the US of drug-money laundering focused on Mexican banks and bankers.

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That reflects another question that is widely voiced any time US officials comment on or act against Mexico's drug cartels: Why doesn't the US do more to dismantle its own drug-trafficking organizations?

"It's not that [Mexican] people are anxious to defend bankers, but at the same time they find it hard to believe that the bad guys of the movie are only in Mexican banks," says Luis Astorga, a drug trafficking expert at Mexico's National Autonomous University.

US officials estimate that perhaps $15 billion in illegal drug profits are laundered through Mexico every year. But at the same time, US officials estimate that perhaps a third of the more than $300 billion in annual worldwide drug profits are laundered in the US.

US Attorney General Janet Reno and Treasury Secretary Robert Rubin announced Monday that banking officials from 12 Mexican banks - including several of the country's largest - had been arrested as part of the investigation. The bankers were lured to the US with a variety of ruses, including a faked casino opening and invitations to participate in a money-laundering conference in San Diego.

Code-named "Casablanca," the case has netted at least $35 million in drug money, and tons of cocaine and marijuana. So far, 42 people have been arrested.

The case marks the first time Mexican banks have been directly linked to the laundering of US drug profits for Colombia's Cali cartel and Mexico's Juarez drug organization, US officials said.

In revealing the outcome of the investigation, US officials said they found no evidence that US bankers were aware of the source of the large sums of money transferred to their institutions from Mexican banks. Referring to those comments, Mr. Astorga says "for many Mexicans it is simply infantile to think that the Mexicans are pulling a fast one on poor, innocent US bankers."

STILL, Astorga says there is good reason why such an investigation of an illegal activity with penetrating tentacles in both countries was carried out in the US. Noting that US officials put the cost of the three-year investigation at $30 million, they say neither Mexico nor any other similar country - like Colombia - has the resources for such an effort. Mexico passed a law to facilitate such probes only last year.

Two opposing points of view were already forming this week on the impact the US investigation will have on Mexico's financial system. On one hand is the position that some bad apples are not going to spoil a barrel of thousands of bank employees. "What this investigation shows is that the problem is not the financial system, but a few bad employees within some banking institutions," says Manuel Angel Nuez Soto, a federal congressman on the finance committee and a member of the ruling Institutional Revolutionary Party.

But other observers say Monday's bombshell is likely to throw off quick approval of a financial system reform package now before Mexico's Congress. At a Tuesday press conference, members of the opposition Democratic Revolutionary Party (PRD) called on President Ernesto Zedillo to give the country a full accounting of "the true state of the Mexican banking system." The banking system isn't suffering from "the presence of only a few delinquents, but from the real absence of any supervisory mechanism on the part of Mexican financial authorities," said PRD Congressman Alfonso Ramirez Cuellar.

The US investigation could mean months of trouble ahead for Mexico's already-weak banks. "US pressure on Mexico over drugs first led to arrests of small guys. But that wasn't enough and we finally got up to the generals and drug lords themselves," says Astorga. The money laundering drive is starting out against banks' small fish, "but that won't be enough, either," he predicts. "We're seeing only the beginning."

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