eavci^ STORY

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U.S. lawmen say billionaire power broker Carlos Hank Gonzalez and sonsprotect narcotratfickers. Asecret probe is underway, but details have leaked.

By Jamie DettmerThey've dubbed the federaloperation "White Tiger" — atart reference to the noncha

lant attempt by one of the targets to smuggle into Mexicothrough Southern California

a rare Siberian cub seven years ago.But trafficking in exotic animals isn'tthe focus of the audacious DrugEnforcement Administration, or DEA,probe. Its goal, indeed, is to catch "bigcats," but of the human narcosmug-gling, money-laundering variety.

San Diego-based agents drawn fromseveral federal agencies believed theiroperation was shrouded in secrecy,i^d well it should have been, as Operation White Tiger is a hugely ambitiouseffort to expose the key relationshipunderpinning Mexico's narcotraffick-ing — the association between drugbarons, such as Tijuana's ArellanoFelix brothers and the Juarez-based

Vicente Carillo Fuentes and RafaelMunoz Talavera, and top Mexicanpoliticians. Particular targets are somestalwarts of Mexico's long-standinggoverning party, the Institutional Revolutionary Party, or PRI, which somefederal lawmen long have regarded asa shadowy cartel behind the cartels.

Fearful that sharing any information with Mexican authorities auto

matically would result in the subjectsof the probe being forewarned and,therefore, forearmed, federal agentsfrom the DEA, the U.S. Customs Service, the FBI and the IRS have donetheir best to keep the thrust and principal targets of the investigation secretfrom their leaky counterparts south ofthe Rio Grande. But when it comes tothe Southwest border — or any m^orprobe of Mexican politicos suspected ofbeing the padrinos, or patrons, of thecountry's .drug kingpins who areresponsible for 70 percent of thecocaine sold on U.S. streets and 18 per-

10 • Insight

Carlos Hank Rhon: He oversees thelarge, lucrative banking and communications holdings ofthe family.

cent of heroin buys — little can be keptunder wraps for long.

And so it is with White Tiger — thetargets being too illustrious, too significant, for leaks not to occur. A comparison? "It would be like the Mexicans

having tried to indict LBJ or NelsonRockefeller, or both at the same time,and keeping it from us," says a DEAagent.

When the stealthy operation waslaunched in late 1997 security wastight, but recently senior law-enforcement circles in Mexico City have beenabuzz with talk that the United States

proactively is investigating one of Mexico's most prominent political leaders,who also happens to be one ofthe country's richest men — the elegantlydressed, charismatic 72-year-old Carlos Hank Gonzalez. With his two sons,Carlos Hank Rhon, 51, and Jorge HankRhon, 46, the lanky billionaire politician presides over a complex and

Jorge Hank Rhon: He openly cavortsin Tijuana with narcotrajfickers, including the Arellano Felix brothers.

diverse commercial empire that boastsvast holdings in Mexico and overseasas well as in the United States in thefields of telecommunications, brokerage, transport, manufacturing, construction, energy and gaming. Federalinvestigators insist these holdingsserve drug-smuggling operations andlaunder millions of narcodollars.

For the last two decades Hank hasenjoyed almost unparalleled politicalinfluence in Mexico. Denied the presidency himself—his father was a German emigre and the country's constitution requires both parents of apresidenti^ candidate to beMexican-born — Hank has been the compadreto successive Mexican heads of state,stretching back to Jose Lopez Portilloin the 1970s.

In the turbulent wake of the 1994assassination of PRI presidential candidate Luis Colosio, Hank was thepower broker behind the selection of

March 29,1999

Peas in a pod: Carlos Hank Gonzalez(right) was the eminence grise behindthe presidency ofCarlos Salinas (left).

Ernesto Zedillo as the country's currentpresident — even signing his electoralnomination papers. Hank also was considered by many to be the eminencegrise of the 1990-94 Carlos Salinaspresidency and well could be the crucial figure in determining who succeeds Zedillo in the year 2000 — especially if the run-up to the PRI's pick ismessy, enhancing the strength of thebillionaire politician and his so-calledreform-opposed, dinosaur faction inthe party.

Over the years Hank has beenmayor of both Tbluca and Mexico City,governor ofMexico state and secretaryof tourism as well as agriculture. Buthis formal posts don't even begin toreflect the spidery influence Hankexerts in the web of Mexican politics.Described by former Mexican president Miguel de la Madrid as the "master ofgratitudes," Hank is the CardinalRichelieu of his generation, an Armani-suited political godfather armed withan easy smile and a ready handshakeand steeped in the ways of developingand keeping power through the art ofdispensing favors. Other enti'epreneurswho have dealt with him say generosity is his trademark — "If it rains in myland, I will make sure some of the wateralso makes your land wet," he likes todeclare in his deep baritone.

March 29,1999

Carlos HankGonzalez is anApmani-suitedpolitical godfathersteeped in theways of developingand keeping powerthrough the art ofdispensing favors.

"He has loyalists all over — in thebureaucracy, in the PRI — the gratitude he generates is amazing," saysAdolfo Aguilar Zinzer, an oppositionpolitician who headed an inconclusiveMexican corruption probe into Hank."He moves hke a fish in water without

leaving a sign of his presence."The glittering prizes of political

office always have gone hand in handfor Hank with business success.Forbes magazine has estimated hiswealth at $1.3 billion, not bad for a manwho hails from the struggling middleclass — his father was a military-college teacher — and who onceunabashedly quipped in defense of hisfabulous wealth, "Unpoliticopobre esun pobrepolitico" or "A politician who

is poor is indeed a poor politician."A dozen or so major U.S. probes as

well as several Mexican inquiries,including one launched 18 months agoby Mexican Attorney General JorgeMadrazo, have been mounted duringthe years targeting the Hank family,looking into their businesses, sweetheart deals, political strokes andfriendships of the power broker and hissons. But they appeared doomed fromthe get-go, with investigators unable tobreach the byzantine layers of protection or slice through the webs ofintrigue and patronage surroundingthe family, according to dozens ofsenior lawmen and government officials on both sides of the border, all ofwhom declined to be identified for this

article.

Accusations of complicity in murder, drug smuggling, money laundering, political corruption, bribery,income-tax evasion and racketeeringhave bounced off this megapowerfulfamily. When Jorge Hank, a flamboyantmember of the family who openly hascavorted with narcotraffickers in Tyua-na, was accused by the Mexican media10 years ago of ordering the killing ofa popular Mexican columnist — Zetamagazine's Hector Felix Miranda, whoregularly ridiculed the Hanks — thefamily didn't miss a stride: Ttue, theyounger Hank's bodyguards were convicted of the murder, but he wasn'tquestioned and publicly denied anyinvolvement. Likewise, Jorge Hank

Insight' 11

wasn't even formally interrogated aftersharing the first-class cabin of anAeromexico flight from Guadalajarato Tijuana with two assassins ofRomanCatholic Cardinal Juan Jose Posadas,who was murdered just hours earlier ina 1993 slaying that stunned the world.

Now a multiagency task force isfocusing on "Hank Money Laundering/Drug Smuggling," to quote from thetitle of a U.S. law-enforcement document leaked to Insight. This WhiteTiger operation follows another ongoing investigation which touches on theHank family. TWoyears ago, the JusticeDepartment started investigating allegations that some of Mexico'stop entrepreneurs and politi- HH|cians used a Mexican govern-ment agency during CarlosSalinas' presidency to laun-der hundreds of millions ofdollars in drug profits andpayoffs through the agency'sU.S. bank accounts. Theagency — a federal food pro-gram known as Conasupo —was headed by Raul Salinas,the then-president's elderbrother, who was convictedlast year on murder and cor-ruption charges. According to ^^9U.S. law-enforcement and

Swiss authorities, Conasupowas used as the Salinas fami-ly's slush fund, a storehouse ofdrug money and cash fromcorrupt privatization deals,much of which found its wayinto now-frozen $240 millionSwiss bank accounts con-

trolled by Raul Salinas.When the Hank name sur-

faced in that inquiry—CarlosHank denied at one point hehad "loaned" $9 million to Raul Salinasand then subsequently acknowledgedit—few U.S. lawmen who have tracked

the family for years harbored muchhope of making a breakthrough. WillWhite Tiger prove any more successful? Will it result in Hank and his sonsappearing before a court north of theRio Grande? That has to be in some

doubt now, say federal agents familiarwith the operation.

The bid to build one of the mostcomplex cross-border drug andmoney-laundering conspiracy casesinvolving Mexican bigwigs ever mounted by the United States has been compromised by leaks, and Hank and hissons appear destined to live up to thename the more feisty ofMexico's newspapers dub them: The Untouchables.

Insight first learned of the existence of Operation White Tiger lastfall — well before the current politi

12 • Insight

cal squabble about President Clinton's March 1 decision to recertifyMexico as a reliable ally in the war ondrugs. No doubt U.S. lawmakers critical of recertification on the groundsof high-level Mexican political collusion with the drug trade will point toWhite Tiger as further evidence ofwhy Mexico shouldn't be classified asa reliable antinarcotics partner. Thereaction from Mexico will be as furious, with politicians there likely toclaim that Insight's disclosures aboutWhite Tiger are just part of a U.S. law-enforcement bid to disrupt the Clintonadministration's stamp of approval on

Mexico's antinarcotics strategy.In fact, not only does the iiiforma-

tion about White Tiger predate by several months the present furor aboutrecertification, it also originally camefrom tips not from law-enforcementsources in the United States but from

contacts within the Mexican attorneygeneral's office, or PGR, and theHacienda, Mexico's treasury department, many of whose top officials oweallegiance to the Hank family.

As U.S. lawmen familiar with thedirection of White Tiger concede, thevery fact that the PGR and the Hacienda are aware of the ongoing probemeans the targets know they are in thecrosshairs and are likely to be using alltheir political and business might andurging all their loyalists among thePRI hierarchy and Mexican-state governors to sabotage the US. inquiry.

One fear among agents involved in

the investigation is that Washingtonwill conclude that White Tiger is toocontroversial, too potentially disruptive of Mexican-American relationsand will order it shut down in much thesame way that a fledgling federalinquiry into top PRI pohticians washalted, according to retired DEAagents Phil Jordan and HectorBerrellez, in the months leading up tothesigning oftheNorth American ^eeTVadeAgreement. "We are going to getheat and lots of it — particularly whenthe extent of the probe comes out,"says an agent.

And according to U.S. law-enforce-

Arellano Felixes: The brothers laundermoney through Jorge Hank's casinoand satellite wagering operations.

ment documents leaked to Insight, thetask force's scope is broad, involvingpulling together every federal caseinvolving the family ever opened northof the border — from Jorge Hank'srather casual trading in exotic species(the Siberian tiger cub he tried tosmuggle was lounging on the back seatof his Mercedes) to cocaine seizuresfrom trucks owned by firms controlledby the Hank family. Federal agentsalso are scrutinizing an array of business dealings and every tie the Hanksever have had with convicted or suspected narcoti-affickers — from friendships to joint ownerships of businesses, including in the suspecteddrug-linked commercial airline Tkesaand the major cargo-shipping firm

March 29,1999

TVansportacion Maritima MexicanaorTlVIM.

And close observers say the taskforce is probing extensive allegationsmade byconfidentialsources of CarlosHank laundering money through twofamily-owned Texas banks—the LaredoNational Bankand the SouthTfexasNational Bank of Laredo — and allegations that Jorge Hank is "providingthe service oflaundering narcotics proceeds" via the family-owned AguaCaliente Racetrackin Tijuanaand off-track gaminginterests on both sides ofthe border. "Through Jorge HankRhon's gambling casino and satellite I

younger brother Jorge Hank workswith members of tiie Arellano Felixorganization on the California, USA/Mexican border."

The documents also detail allegedHankfamily "criminal associations" inthe past with the former head of thegulfcartel, Juan Garcia Abrego, nowserving 11 life sentences inaTfexas jailfor drug smuggjling; Ramiro MirelesFelix, who is listed in federal law-enforcementdatabasesas a "class-onedrug trafficker who invests monies fortheAFO"; thedeceased smugglers Bal-tazer Diaz Vega and Jesus GuiterrezBaron, both "class-one drug traffick-

im

lotley CP6w: Jorge Hank poses withnen^ andCustoms officials at the'Order crossing south ofSan Diego..

ragering operations the AFO [Arel-ano Felix Organization] is able to effec-ively launder millions of cash dollarsnade from the narcotics trade," statesne document.

The overall objective of the probe?^0 shape a case against the Hanks fortsing their "businesses, corporationsind entities" to help "the most power-ul drug traffickers ever to come to theorefront and operate with impunity."

According to the documents, 51-ear-old Carlos Hank Rhon, who headshe family's financial and telecommu-lications firms consolidated under thelolding company Grupo Hermes, "hasvorked directlywith the Amado Car-lloFuenles organization ontheTfexas,USA/Mexican border, while his

Ml5rrh9^

ers"; and current money-laundering"subjects of investigation" AlbertoMurguia Orozco, Paul Karam Kassaband Nicholas Nassif (described in official U.S. investigative reports as a"Tijuana businessman who worksclosely with the AFO").

A successful conclusion to WhiteTiger will need "major innovativeinvestigative techniques and prosecu-tive strategies," argues one document.That could be an understatement. Inthe wake oflast year's U.S. Customs-ledsting operation toown as "Casablanca,"the Mexican government is more thanever alert to undercover U.S. probessouth of the border — and quicker totake offense on sovereignty grounds.

Operation Casablanca, which led tothe arrests and indictments of several

Mexican bankers, prompted a storm ofprotest from an embarrassed MexicoCity thatled to counterindictments by

Mexican authorities of U.S. lawmeninvolved insetting up tiie sting. The latternow have been dropped afterdiplomatic negotiations but have provokedU.S. fears of possible Mexican policeretaliation against U.S. border inspectors.

WWte Tiger similarlycouldbecomea major bone of contention betweenWashington and Mexico. "Does 'theClinton administration reallyhave thestomach for this?" asks a top U.S. lawman. "When push comes to shove, Idoubt it." Even if the operation doesresult in an indictment against any ofthe Hanks, extradition would be more

than unhkely, and if a warrant were served while JorgeHank, say, was stayingat hishouse in San Diego's Corona-do Cays, or his brotiier was inthe states visiting the family-owned Tfexas banks, a diplomatic firestorm would ensue.

Even so, the task force ispressing on and is convincedit has established throughfinancial investigations andinformation supplied by confidential sources that theHank family, through their"businesses, corporations andentities, are linked to themajor drug-trafficking organizations."

The task force probing theHank family has delved intoHank's past to develop a picture of his rise to wealth andinfluence. Born in 1927 in

^ Santiago Tianguistenco, a vil-g lage west of Mexico City,2 Hank confronted two majori burdens and overcame them.

His father, a retired coloneland teacher at a local military college,died in a motorcycle accident whenHank was 3 years old, and he had tocontend with being the son of an immigrant, a stigma in sharply nationahsticMexico.

Hardworking, astute and charming.Hank quickly gravitated to politics. Bythe age of 17, he became secretary-general of the PRI's state youth federation— a post that brought him to the attention of former Mexico state governorIsidro Fabela, the founder of the Atia-comulco Group, an alliance of localpoliticians determined to transformthe rural state into an industrial powerhouse. The group eventually becameinfluential in national politics and Hankrode with it to become mayor of thestate capital of Tbluca in 1955, a statelawmaker and then on and up. He wentinto business early, too, starting with a

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Insight-13

FAMILY AFFAIRS(continuedfivm page 13)

candy factory and a fleet of trucks.From the beginning Hank skillful

ly merged politics and business, cutting deals with companies seekingcontracts with the city and state governments he ran and awarding contracts to his own firms and friends. Ashe got further up the PRI's ladder,Hank's turning ofpolitical moneyintoa fortune and his creative exploitationof government patronage continuedand became bigger and more audacious. In the 1960s, when he had amajor job at Conasupo, Hank securedthe agency's contract toship grain fora trucking company hefounded. As Mexico City's |||HHmayor in the 1970s, he wascriticized by the Mexicanmedia for being the impre-sario of sweetheart deals —between unions and statecompanies, between stateagencies and private sup-pliers. A toll road he had ^built when mayor between iMexico City and Toluca was 'nicknamed by Mexicans the"Hank Highway," a snidereference to the pesos thatHank was rumored to haveskimmed off the construc-tion contracts.

But it was during the free-for-allsell-off of state-owned companiesunder President Salinas, when hundreds of government-owned corporations were privatized —including telephone companies, airlines andbroadcasting outlets — that the Hankfamily catapulted from being a majorforce in Mexican business into a significant international commercialpresence, with increasing interestsoverseas and partnerships with foreign firms, including Volkswagen,Mercedes-Benz, BellSouth and,recently, the Virginia-based power-plant company AES Corp. The latterwas a joint venture announced duringClinton's 1997 state visit to Mexico.

The Hanks benefited hugely fromthe privatizations with a series of successful bids that left them with a massive share of Mexico's telecommunications industry, now consolidated inBellSouth Mexico, of which the engineer-trained Carlos Hank is the chairman.

Since the early 1980s, law-enforce-ment sources say, the Hank family also

Carlos Hankskillfully mergedpolitics andbusiness, cuttingdeals with thosewho were seekingcontracts with thecity and state governments he ran.

Dead baPOliMmado Carillo Fuentes'(far left) shipping company delivered3,000pounds of cocaine to San Diego.

Posadas when, investigative reportssay, "Carlos Hank Rhon and JorgeHank Rhon began providing protectionto the Arellano Felix brothers."

Department of the Treasury investigative files first document a tie-in in1982, when drug kingpin Juan Espar-rogoza Moreno, nicknamed "El Azul"("The Blue One"), transported in his oiltrucks petroleum products owned byHank. And during the years, U.S. investigators monitored snowballing connections between the Hanks and Mexico's cocaine kings. Leaked U.S.investigative files cite as an examplethe TMM shipping company. In October 1990, at Otay Mesa, the commercialport of entry just south of San Diego,nearly 9,000 pounds of cocaine wasdiscovered in a TMM propane-gastruck. In August 1997,1,144 Mograms(2,517 pounds) of cocaine was seized byMexican authorities from the TMM-

owned vessel Jalisco. In February

has had multiplying commercial and 1998, the DEA believes a 2,000-poundsocial ties with known and convicted cocaine shipmentwas crft-loaded in the

TMM is part-owned by CarleHank, and the late drug baron AmadCarilloFuentes was a major investoThe companyrecently acquired somU.S. rail carriers, including KansaCity Southern. The government filestate: "It has been reported that members of the Colombian cartels havalso invested in TMM. TMM is documented as being used by traffickers tsmuggle narcotics into the Unite(States and other parts of the world..,Recently it acquired Gran ColombianjShipping, which is also documentecforitsinvolvement indrug smugglingTMM manufactures itsown cargocontainers. The significance of this is thathey can now control all aspects 0:Ishipping and transporting

narcotics without outsideinterference."

U.S. law-enforcemeniagencies also point to eHank-Carillo Fuentes tie-inwith Hank-founded Taesaairline, whose ownershiprecently has been shroudedin mystery. According to anofficial report: "Confidentialsources have provided information that Carillo-Fuentes

^ was the major investor in: Taesa, which was owned byi theHankfamily andisheav-i ily utilized by major drug-

smugghng organizations inMexico. Recent information is thatTaesa was sold to Alberto Angel Abed-Schekaiban, who has been employedover the years as a private pilot for theHank family. Sources state that Abedcould not afford to buy an airline ofthis size, that Abed is owner in nameonly and that Carlos Hank is still incontrol of the company. DEA intelligence reports have indicated thatlarge seizures of narcotics in Mexicowere made from a number of commercial aircraft registered to Taesa.There have also been seizures fromindependent airplanes that were beingoff-loaded at airstrips under the control of Taesa. Because of theseseizures and the U.S. law-enforcement's interest... the Hanks decidedto distance themselves from the company."

Attempts to distance themselvesnow may prove more troublesome. OneU.S. investigative file leaked to Insightreports: "Drug trafficking in Mexicoflourishes because Mexico's elite benefit from it." U.S. drug warriors are outto demonstrate that in the future thatwon't be the case.

Neither the Hanks nor their business offices returned Insight's tele^

I phone calls.fns/ght • 31