Drug War on Trial : 'FOLLOWING THE MONEY' CAN PROVE DEVASTATING TO CRITICS OF THE ILLEGAL TRADE

Article excerpt

A new counteroffensive has been launched in the drug war: Financiers have begun to retaliate against allegations of money laundering and drug trafficking by suing the messengers. If successful, the suits could hinder future investigations into the G spot of the drug trade, where billions of dollars in illicit profits meet the highest precincts of international finance.

At the heart of the legal assault are a Mexican billionaire and majority owner of a Texas bank, Carlos Hank Rhon, of the powerful Hank family (frequently referred to as the "Mexican Rockefellers"), and Roberto Hernandez, president of Banamex, Mexico's second-largest bank. The suits are being fought out in US courts, pitting scions of the Mexican elite against an American journalist, a scholar and a little-known agency of the US government.

Carlos Hank Rhon is the eldest son of Carlos Hank Gonzalez, who parlayed friendships with former Mexican President Carlos Salinas and his predecessor into a multibillion-dollar financial empire. Hank Gonzalez died in August at the age of 73; his two surviving sons, Carlos Hank Rhon and Jorge Hank Rhon, now oversee a multinational conglomerate that includes holdings in real estate, television, manufacturing, trucking and banking. In the mid-1990s Incus, a Caribbean-based holding company controlled by Carlos Hank, engineered the purchase of the Laredo National Bank of Texas, in one of the most significant expansions of Mexican capital into the United States in the NAFTA era.

Carlos Hank's takeover of Laredo, however, ignited the interest of the Federal Reserve Board and the suspicions of the National Drug Intelligence Center (NDIC), which supplies intelligence and analyses to law enforcement agencies. In a draft summary of an 800-page report detailing the links between drug traffickers and top Mexican politicians and financial figures, the NDIC drew connections suggesting that Hank was involved in the drug trade and included reports of his involvement in money laundering for Mexican drug organizations. The report, compiled at the request of the FBI and the Drug Enforcement Administration, was dubbed Operation White Tiger, in reference to an attempt by Carlos Hank to smuggle an endangered white tiger into Mexico in the back seat of his Mercedes in 1991.

In the spring of 1999 the contents of the leaked White Tiger draft summary--including the assertion that Hank posed "a significant criminal threat to the United States" and that his enterprises helped facilitate cocaine and heroin shipments into the United States--broke in a series of articles in the Washington Times's weekly magazine Insight, the Washington Post, the Mexican newspaper El Financiero and a feisty quarterly journal of Hispanic politics and culture, El Andar, based in Santa Cruz, California, which has been dogging the Hanks with investigative reports over the past two years. The Laredo bank immediately threatened legal action against El Andar, which has a circulation of some 10,000 readers, demanding a retraction, $10 million and the bank's approval of any future articles. Julia Reynolds, author of the story and editor of El Andar, refused, and continued to write about the bank's funding and connections to Texas political figures--including George W. Bush. After publicity on the threat against El Andar appeared in the Los Angeles Times, Laredo backed off its threat to sue.

The news about the Hanks was explosive, breaking just as then-Attorney General Janet Reno and then-White House drug czar Gen. Barry McCaffrey were visiting Mexico for a series of meetings on US-Mexican cooperation in the drug war. The White Tiger findings would generate more attention to the NDIC than at any time in its short, mostly obscure history. Based in Johnstown, Pennsylvania, the center, with a staff of some 200 scholars and researchers, was created by George Bush senior as an arm of the Justice Department to signal his commitment to fighting drugs (and as a signal of Democratic Congressman John Murtha's commitment to providing employment for his constituents). …