Raul And Carlos De Gortari Essay, Research Paper

Salinas de Gortari scandal started?

How Lozano got involved

In recent weeks, Mexicans were glued to their televisions to watch a tale of drugs,

corruption and murder. It was a ?telenovela?, one of Latin America?s countless soap operas. But,

unlike most, this one, on the upstart Azteca channel, had heard of politics: to be exact, of the

intrigue around ex-president Carlos Salinas de Gortari and his brother Raul Salinas de Gortari. It

even started with the murder of an attorney-general, have displaced the ?telenovela?. President

Ernesto Zedillo dumped his attorney-general, Antonio Lozano, a lawyer from the right-wing

opposition PAN, The National Action Party.1

Lozano gets some evidence on Raul

Mr. Lozano?s bid to solve the later murder of Jose Francisco Ruiz Massieu, a top PRI

official, had done not that good. He surprised many by ordering the arrest in early 1995 of Raul

Salinas de Gortari, as the alleged mastermind, but failed to convict him. It looked as if he might

get the evidence he needed, when his men found a decaying corpse at a ranch owned by Raul. Mr.

Lozano tipped off reporters.2 His men suggested these were the remains of a missing

congressman, Raul?s supposed accomplice.

The finding of mysterious money on Raul

Could it be that, even in failure, Mr. Lozano had gone too far? Swiss investigators, and

others elsewhere later, turned up millions of dollars in secret accounts controlled by Raul Salinas

de Gortari.3 Just where had the money come from? Drugs? Influence-pedding? And if so, the

natural question was, influence with whom? The natural answer was not made natural by brother

Carlos Salinas de Gortari?s flight from the country after Raul?s arrest. The ex-president, by then

in Ireland, had to testify in the Colosio case; he may have to do it again about the other murder.

Mr. Zedillo often said Mr. Lozano had a free hand. None of this has reflected glory on the PRI.

Swiss prosecutors visited Almoya Prison in December 1995.4 There, the ex-president?s

brother described the techniques he used to conceal the ownership of accounts containing $100

million, and the role played by Citibank executives in setting up offshore companies and trusts.

In his zeal to avoid ?political scandal.? Raul Salinas de Gortari did everything possible for

six years to conceal ownership of bank accounts that eventually built up to the amount of $100

million. Confronting Swiss Federal Attorney Carla del Ponte, the brother of the Mexican

ex-President wove detailed tale of his financial acrobatics. In this odyssey he invented fictitious

persons, placed complete trust in Citibank, whose ranking executives engineered some of his

financial operations; set up paper companies with Swiss bank accounts took over trust funds

inherited by his wife and had dealings with four Swiss banks.5

REFORMA is in possession of a copy of the transcript of Salinas’s interrogation by Del

Ponte and Valentin Rorschacher, head of the Swiss Central Office for Drug Trafficking, which was

conducted at Almoloya de Juarez Prison in December 1995 as part of the investigation of Raul

Salinas de Gortari as an alleged participant in money laundering and drug trafficking operations.6

During the interrogation, Salinas detailed his Swiss accounts and the names under which they were

opened. According to his statement, his money was deposited in Banque Pictet, Citibank Zurich,

Julius Baer Bank and Banque Edmond de Rothschild. The accounts were opened under the

fictitious names of “Juan Guillermo Gomez Gutierrez” and “Juan Jose Gonzalez Cadena,” as well

as a company, Novatone, and the Trocca Limited and Dozart trusts.7

Chapter II

Raul Talks about his mysterious millions of dollars

Raul gets interrogated by Swiss prosecutors.

At the outset of the interrogation, Salinas expressed his admiration for the European

country that was now investigating his financial operations. “It is a country that we have loved and

respected for many years. My wife studied in Switzerland, I have taken part in equestrian

competitions in Lucerne, my nephews went to school there and two of my daughters are in school

there now.?8

Salinas requested the indulgence of the Swiss prosecutors before answering their questions:

“I also want to offer my apologies to the Swiss government and the country’s financial

institutions…and I’m going to explain why I acted as I did and assumed different identities,

basically, because at the time the accounts were opened under different names, I was unfamiliar

with the system Citibank proposed to me, so fictitious names were used to avoid creating a political

scandal; if I had known beforehand about Confidas, Citibank’s system, I wouldn’t have resorted to

fictitious names.?9

Authorities have identified Confidas as a Citibank subsidiary corporation, legally

domiciled in Panama and with offices in Switzerland. As of this date, officers of this banking

institution have repeatedly denied that its executives have engaged in any violation of ethical

behavior or financial regulations targeting money laundering.

The case against Raul Salinas has led US experts and officials to ask questions about gaps

in the legal machinery for detecting the laundering of money from sources other than drug

trafficking.

Doubts have also arisen concerning the actions of US banks which accept deposits from

foreigners incapable of justifying the source or size of their assets.

In the interrogation, conducted under terms of the mutual legal assistance treaty and

transcribed in 16 single-spaced pages, Salinas denies that the funds frozen in Switzerland were the

fruit of any unlawful activity.10 While continuing to suspect a connection with drug trafficking,

Mexican authorities also believe that part of the funds deposited in Switzerland and other countries

was obtained from corruption and devaluation of the Mexican Peso with the government headed by

his brother (ex-President Carlos Salinas de Gortari).11 Such commissions were believed to have

been pocketed even after Salinas stepped down from public office in 1992. Nonetheless, Salinas

also rejected this charge in the course of the interrogation.

“This money did not come from and has nothing to do with any activity related to my work

as a public official; in other words, it is not dirty money, it is completely lawful…there was never

any situation with the corruption in the devaluation of the Peso or abuse of power in the institutions

where I worked as a public official.?12 This was the explanation given by Salinas for the origins

of the 100-million-dollars.

According to Salinas, the plan was to bring together a group of businessman friends who

would put a “financial mass” together outside of Mexico, for reasons of safety and in order not to

remain aloof from the political toils of President Salinas’s term in office. Some people invested in

the form of loans, others as seed money for various projects.

One of the first questions: ” In whose name were these accounts opened?” Initially with

some confusion, then with greater clarity, Salinas began to provide facts and remember details of

the transactions. With his answers to a dozen questions on the same point, after thinking, repeating

himself and tendering a few names that were then supplemented with others, Salinas provided an

x-ray of his Swiss fortune.

At Banque Pictet, headquarters in Geneva, an account in the name of Juan Guillermo

Gomez Gutierrez. There was another before, now closed, under the fictitious name of Juan Jose

Gonzalez Cadena. There should be another under the name of Juan Manuel Gomez Gutierrez, a

real person.13 Margarita Nava Sanchez was one account holder for a group of accounts that

existed between 1989 and 1993.

An account at Julius Baer Bank in Zurich in the name of Raul Salinas de Gortari, and

another in the name of a company, Novatone.14 Applications to open these accounts were

submitted from Mexico. A number of accounts at Citibank, Zurich. Salinas could not say how

many account holders there were, or their names, because the application was made from Citibank

in New York through a Swiss subsidiary, Confidas. There is also a trust called Trocca Limited. A

trust named Dozart at Banque Edmond de Rothschild, “originally set up by my present wife’s first

husband with funds originating in the inheritance of her husband, Alfredo Diaz Ordaz.?15 There

should also be an account in the name of Raul Salinas de Gortari at that bank.

Citibank?s role in the operation

On a number of occasions during his conversation with the Swiss investigators, Salinas

mentioned Citibank, some of its ranking executives and its role in opening accounts in various

countries. For example, he stated that the Citibank Zurich accounts were opened in the name of

Trocca Limited, a trust set up through the intermediary of Confidas at the bank’s advice.16

Citibank — specifically, its New York office — devised the entire strategy with Ms. Amy Eliot, and

she knew the first investor who made transfers, and Ms. Eliot’s correspondent in Zurich was a

woman named Mailey Plange Rohner, who no longer works for the bank.17

Salinas also noted that accounts were set up in the US and England in accordance with this

strategy, and that Eliot was free to execute these movements, which included the opening of

accounts under names not stipulated by Salinas. “I don’t remember the number of the account, but

I remember the name. They were among the many handled through Citibank and Confidas officers,

as well as through some other bank, but they were opened by bank officers. I didn’t open them

directly. Even today I couldn’t tell you what names the officers used to open the accounts, because

I don’t have all the files,?18 Salinas replied.

Raul?s suspicions concerning Amy Elliot

Salinas was emphatic during his meeting with the Swiss officials. He was speaking in all

honesty, he said, because he had nothing to hide, not even the names of his businessmen

friends…although he would name them only in private. He could not understand why Switzerland

had lifted and violated banking secrecy, which had been one of the reasons he had chosen this

country for his investments.

“Paula Castanon de Salinas went to go withdraw the money only because she was

following my instructions, because we were sure that — since the money had nothing to do with

drug trafficking — the accounts hadn’t been frozen. If I had been at all concerned, because my

accounts had somehow been linked to drug trafficking or because of the money that was said taken

from the outcome of the devaluation of the Peso, I wouldn’t have gotten my wife involved. We

never expected that someone would have lied and that the accounts would be frozen for the crime

of drug trafficking. What we did know was that the Mexican authorities had learned of the

existence of a fake passport in the name of Juan Guillermo Gomez Gutierrez, and that the money

had to be moved.?19

“I removed the contents of the safe deposit boxes only because we knew that the fake

passport that the Mexican authorities were looking for was in that safe deposit box, along with

documents concerning Citibank, and if the Mexican authorities knew about the name Juan

Guillermo Gomez Gutierrez, they had to be removed from that safe deposit box. Moreover, Amy

Eliot advised my wife to move those funds. I suppose that Ms. Eliot wanted to keep Citibank out of

this problem, or had been advised of the accusation of drug trafficking, I don’t know, but she

helped lead my wife into that trap, since we had trust in Swiss banking secrecy. Two factors

contributed largely to the decision to move those funds: the fact that the Mexican authorities knew

about the existence of the fake passport, and Ms. Eliot’s advice.?20

Throughout the interrogation, Salinas denied that all the assets were his, asserting that he

simply managed the accounts. “I couldn’t say that I was the owner or beneficiary of the total

amount,” which is “on the order of $100 million,?21 he stated.

“The returns that I received for managing this group of accounts would have to be divided

into two parts, since the end goal was to generate business with this money…and I was to share in

the profits if and when this business was realized, depending on the structure and financing of each

deal…My consulting and promotional activity generated significant profits for me to make use of

(and which in fact I did make use of), all derived from the management and advice that I provided

for each of the investors.?22

With regard to a series of transaction in 1993, in which about $25 million was transferred

to another account, Salinas said: “I remember having ordered this transfer, which was done

through my wife, to a friend for a business deal. It was a lawful transaction; moreover, the total

amount to the recipient was higher (the $15 million wasn’t the total amount). It was just a part, and

there was nothing illicit about it… That $5 million was part of this block that was moved, and

various conduits were used; that’s the way the participants agreed to do it, and we agreed to do it

that way because that’s how the recipient wanted it, and I think it would be very easy for the Swiss

authorities to find out who the recipient was and to realize that the people involved have nothing to

do with drug trafficking. The $3 million are a continuation of the $15 million transfer. The $15

million and the $3 million were delivered to the same recipient.?23

Chapter III

Consequences to Mexico

The devaluation on the Mexican Peso.

It is believed that the mysterious millions of dollars found on Raul Salinas de Gortari had

to do something with the devaluation of the Mexican Peso. Nothing can be proven to this point to

where Raul and hid brother Carlos Salinas de Gortari can be accused of abuse of power and of

theft. But this has lead Mexico in great debt. Mexico’s devaluation came at a time when many

international investors, including U.S. mutual funds and pension plans, were beginning to test the

Mexican market. The enactment of the North American Free Trade Agreement (NAFTA) and

Mexico’s entrance into the Organization for Economic Cooperation and Development (OECD) led

investors to believe that Mexico had committed to a macroeconomic and fiscal conservatism that

would continue well into the future.24 Indeed, much of the new confidence that international

investors had in the Mexican economy was based on its continuity of macroeconomic policy.

Investment bankers by definition do not like surprises, and the devaluation was certainly a surprise.

For example, CS First Boston, a U.S. investment firm, believed in August 1994 that there was only

a 20 percent probability of Mexico enacting a maxi-devaluation.25 They arrived at this conclusion

by polling a number of investment bankers in New York and London. The majority of those polled

believed that Mexico would combat its high interest rates by gradually accelerating the pace of the

peso’s daily devaluation rather than by a one-time devaluation.26 The remainder of the bankers

thought that there was no imminent crisis and that the macroeconomic instability was merely a

temporary result of the volatile election campaign. Everybody looked at Raul and Carlos Salinas

de Gortari when this surprise came about.

The ?pueblo?s? low economic system

This affected all Mexican citizens. The devaluation of the Peso was a nightmare for the

rich and the poor. This economical crisis was specially affecting the people who lived of the

commerce system. The selling of industrial cars went down a 70%.27 More than 10,000 of the

stores in which people relied for financial support were closed and many were threatened by the

vicious circle or paralyzed selling and unpayable debts. More than one million person were fired,

and the the record of laid off people was reached of 13%.28 One didn?t have to do much to see the

crisis; every day you can see more and more women on the streets selling own made goods and

more people washing car windows on the streets. The statistics of assaults and thefts were

extremely high.

Conclusion

To conclude this research paper of Raul Salinas de Gortari?s Case I personally believe

that it wasn?t right what Raul Salinas de Gortari did to his own country. I believe that that is why

Mexico is not in a very high position today, it?s because of it?s week presidents. I think that we

can improve later on in history by being more carefull to who we choose as presidents and we can

also improve by us standing up for ourselfs and defending our rights and letting the government

know that we exist and that we deserve to be successful.

Bibliography

Annotated Bibliography

Atta, Van D., Mexican citizens unhappy and suffering. Readers Digest, volume 149,

pages 61-62. September 1996.

Atta tells in his article about the loss of more than 10,000 people.

Atta also says that more than 13% of the normal people were laid of because

of the economical crisis caused by Raul Salinas de Gortari. He finally tells

how the people are trying to overcome the crisis. Although this article is short,

it is a very informative article on the affects of the Mexican crisis on the

Mexican citizens.

Duffy, B., Citibank?s Mexican money troubles: R. Salinas de Gortari case. United

States News and World Report, volume 12, page 53-54. July 1, 1995.

Duffy puts together some facts of when Swiss prosecutors visited

Almoya Prison in December 1995. This article also has good information of

Citbank?s role in the operation. It tells some interesting facts of Raul Salinas

de Gortari?s declaration on behave of the ownership of accounts

containing $100 million.

Lake, G. B., Great devaluation of the Mexican Peso. National Revelation, volume 39

pages 40-41. July 3, 1995.

Lake puts together an article containing the information of the

devaluation of the Mexican Peso. It also talks about the international

investors that had investments in Mexico and the international investors do

not like surprises and certainly the devaluation came as a surprise to them.

This article has great information on the devaluation of the Mexican money.

Robinson,L.S., Mexico?s great Salinas soap. Economist, volume 341, page 39.

December 7, 1996.

Robinson puts together this magazine article which explains mainly

how the Raul Salinas de Gortari case got started. Robinson explains how Mr.

Lozano got involved in this case. Robinson also tells how Mr. Lozano got

some evidence to prosecute Raul Salinas de Gortari. This is an interesting

article that compares this case to a ?Mexican telenovela? (soap opera).

Smith, G., He put his trust in Switzerland and Citibank. Frontline, volume 114,

pages 15-20. October 25, 1996.

This article contains mainly most of the interrogation answers asked to

Raul Salinas de Gortari by the Swiss prosecutors. Smith gets some real good

information of how Raul Salinas de Gortari explained his millions of dollars in

fictious names on phony bank accounts. It also contains information of

Raul?s suspicions concerning Amy Elliot. This article contains the most

important facts of the Raul Salinas de Gortari case.