May 26, 1998
ANTI-DRUG EFFORTS: OPERATION CASABLANCA--WHAT WERE U.S. MOTIVES?
Observers in Latin America and Italy commented on Washington's announcement last Monday of the culmination of a three-year undercover operation that resulted in the indictment of officials from 12 of Mexico's biggest banks, accused of laundering drug money for the Mexican Juarez and Colombian Cali cartels. Perhaps not surprisingly, the investigation--dubbed "Operation Casablanca"--prompted a big wave of critical commentary in the Mexican press, with many analysts there imputing U.S. political motives to the operation. Editorialists elsewhere focused on the problems many nations face in attempting to deal effectively with illegal drug trafficking and money laundering. Following are salient themes in the commentary:
MEXICO RAILS AGAINST U.S.: A majority of the major newspapers in Mexico City strongly protested the U.S. handling of the money-laundering "sting." Most egregious, in the view of a majority of opinionmakers, was that Washington undertook the mission without the knowledge of the Mexican government, thus severely damaging U.S.-Mexican bilateral relations. Left-of-center La Jornada said: "The U.S. has undermined compliance with the principles of equality, respect, and bilateral cooperation." The press dismissed recent reported statements by Attorney General Reno that the operation was not intended to accuse the entire Mexican banking system. Traditionally pro-PRI Excelsior said that "this rectification will have little effect. The damage has already been done [to Mexico's international image.]" Observers went on to criticize the results of the operation, contending that the "$110 million allegedly laundered" was "insignificant to drug traffickers." Others wondered about the role of U.S. banks, and why they were not included in the investigation. Nearly all Mexican analysts questioned the U.S. motives behind the operation, contending that the investigation was carried out for political ends. Some charged that Washington was determined to force down the values of Mexican bank stocks, making it "easy for the large financial consortia of New York to acquire our banks, as they have long desired." Independent Reforma pointed out that the investigation's results were known "just a few days after Mexico signed an important trade agreement with the EU. Is the U.S. perhaps sending messages of the 'risks' European investors could face in Mexico?" Official government Nacional saw in all this a U.S. move to discredit Mexico's anti-drug initiatives. Several papers urged the Mexican government to retaliate, and "brandish" its "will for autonomy" by expelling U.S. DEA agents from Mexican soil. Notably, other media voices in Mexico, while not necessarily embracing the U.S.' management of the investigation, clearly condemned the failure of Mexican banking officials and safeguards. They expressed deep concern that "the American authorities don't trust the Mexicans...that bank regulations to prevent this kind of thing don't work...[and that this is] the worst banking scandal in our history." OTHER PLAYERS: In Italy, dailies noted their country's cooperation with the U.S. on Operation Casablanca. Meanwhile, in a related development, papers in Caracas lamented that a Venezuelan banker was charged in a money-laundering case in a federal court in Los Angeles. Influential, liberal El Nacional did not inveigh against the U.S. action, but instead stressed that
the U.S. government would not have taken such a step "without good evidence."
This survey is based 27 reports from 5 countries, May 19-24.
EDITOR: Diana McCaffrey
|  LATIN AMERICA AND THE CARIBBEAN  | |  EUROPE  |
LATIN AMERICA AND THE CARIBBEAN
MEXICO: "Clear Rules For Bilateral Cooperation"
The lead editorial in top-circulation El Universa said (5/24): "The so-called Operation Casablanca, in which the U.S. government tried to deactivate a money laundering network, is an example of the need to be able to count on clear rules that promote bilateral cooperation based on mutual respect.... It is important to point out that it is not with words which the United States sees itself obliged to respect our legal requirements, but with facts that show the capacity of Mexican authorities to act with firmness, honesty and efficiency in solving problems as serious as narcotics trafficking."
"'Washington Trying To Repair Damage"
Traditionally pro-PRI Excelsior held (5/24): "After encountering a tempest of adverse public opinion over the way in which Operation Casablanca was managed, Washington is trying to repair the damage. Attorney General Janet Reno said that it was not intended to accuse the entire Mexican banking system, only corrupt employees who had committed crimes.... But the way in which the operation was announced and the international repercussions it has had have caused great damage to our international image. This rectification will have little effect. The damage is already done."
"No Bilateral Communication"
Sergio Sarmiento wrote in top-circulation, independent El Norte of Monterrrey (5/22): "If the United States was searching for a way to generate a political and economic shock to Mexico, they found the right method, no doubt. The announcement of Operation Casablanca has affected Mexico's markets and political life. Investors are not concerned by the supposed money laundering of Mexican banks. Whoever deals with investments internationally is aware that banks all over the world, not only in Mexico, are involved in these kind of operations. The concern is that the United States has decided to confront the Mexican government openly on money laundering. It was clear that the United States did not inform the Mexican government on Operation Casablanca while it was on (because it was an undercover operation). But it is very peculiar that there was no communication to inform Mexican authorities, not even an hour before the press conference took place announcing the operation."
"We Should Not Defend Delinquents--Mexican Or Not"
Ricardo Rojas wrote in top-circulation, independent El Norte of Monterrey (5/24): "We are upset. This investigation (Operation Casablanca), we say in Mexico, interferes in our affairs; besides, the United States should first take care of its own problems. But, under the eyes of an exaggerated nationalism, we should not defend delinquents, even though they are Mexicans and are being accused by foreigners. We should support the information gathered by the United States and allow the accused to be sanctioned. It is not convenient for anybody to have delinquents working in the banking system. Operation Casablanca is good, but it only attacks a very limited side of the problem. It does not go to the origin of the issue."
"How Is U.S. Attitude Justified?"
Daily political gossip column Templo Mayor in independent Reforma (5/21) noted, "If Mexican authorities were to decide to lead an undercover Operation Los Pinos in the United States, they would uncover little. A major scandal has been made over $110 million laundered by Mexican bank employees but what about the fact that $300 million is laundered annually? That information doesn't come from whistle blowers; far from it.
"It simply comes from Under Secretary of the Treasury Raymond Kelly, who informed the House of Representatives of that figure on July 24, 1997.... How is the U.S. attitude justified when such exorbitant figures are reached in the United States? If what is good for the goose is good for the gander, Alejandro Carrillo Castro (head of international affairs at the Mexican Office of Immigration) should follow directions by expelling DEA agents (from Mexico)."
Ricardo Aleman held in large circulation El Universal (5/22): "It is clear that Operation Casablanca has evident political ends and that it's ridiculous results--ridiculous because in the biggest operation in the history of the United States to uncover money laundering, it has barely uncovered $35 million--is a good excuse to show the world that the United States has lost confidence in Mexico. If not, why did Robert Rubin and Janet Reno make no reference to Citibank, the U.S. bank that is under investigation for laundering money belonging to Raul Salinas, amounting to $132 million? Why didn't they provide information about DEA and FBI investigations of laundering of narcotics money?"
Traditionally pro-PRI Excelsior opined (5/22): "Several hypotheses have arisen about the intentions of this investigation thrown onto Mexico's shoulders. If the values of Mexican bank stocks go down, as occurred after Janet Reno's revelations, it would be easy for the large financial consortia of New York to acquire our banks, as they have long desired. On the other hand, it could be that an attempt to pressure Mexico to enter quasi-military Latin American organizations, supposedly to combat narcotics trafficking, but which really are intended as a screen for U.S. interventionism (remember Cuba, Panama and Santo Domingo). Mexico has resisted such pressures until now and this could be the right moment to brandish our will for autonomy."
"Self-Satisfaction In Face Of Scandal"
The lead editorial in left-of-center La Jornada asserted (5/21): "One of the most notorious results of Operation Casablanca is the persistent effort (of Mexican authorities) to wash their hands of or de-emphasize the levels and implications of criminal activity. Of greatest concern is that the investigation, undertaken without the knowledge of Mexican authorities, was summarized yesterday by those very authorities in official declarations that sought to excuse them and minimize their role.... In that way they have sought to convert a problem that places Mexico in a weak and discredited position in relation to its northern neighbor and the international community into a mere incident of law enforcement. This event should be considered an affair of state of great importance. Those comments distract the attention of Mexicans from the serious aspects of the announcement of Operation Casablanca: on the one hand, the lack of official controls over private banking...seem to have been given the understanding and the eternal benevolence of the authorities. On the other hand, the United States has undermined compliance with the principles of equality, respect, and bilateral cooperation."
Political gossip column "Templo Mayor" in independent Reforma observed (5/21): "The so-called investigation has resulted in sound and fury signifying nothing. Following the event in Washington announcing the results of this operation, analysts worked hard on the figures given by U.S. authorities. Analysts agreed that the $110 million allegedly laundered are insignificant to drug traffickers. The money invested in this operation has not been justified by the number and rank of the persons involved and arrested....
"Some analysts believe that the announcement of Operation Casablanca was a great publicity event by the Clinton administration. The U.S. government could be seen as taking a great step in the program against international organized crime announced by President Clinton a week ago. Others say more pragmatically that Attorney General Reno had to justify the $30 million spent over the last three years on this operation....
"One should not overlook other U.S. motives behind this political-banking-criminal blow. Only a few weeks ago, Secretary Rubin was praising the possibility of foreign investment in Mexican banks. But two of the banks allegedly involved in illegal activities count on foreign capital that does not come from the United States: Serfin from the Shangai Hong Kong bank; and Bancomer from the Bank of Montreal. Is this a mere coincidence? What about the timing? The results of Operation Casablanca were known just a few days after Mexico signed an important trade agreement with the European Union. Is the United States perhaps sending messages of the 'risks' European investors could face in Mexico?"
"Failure In Bilateral Cooperation"
The lead editorial in traditionally pro-PRI Excelsior asserted (5/21): "Operation Casablanca, carried out by specialized U.S. agencies, has had great results from a law enforcement point of view. But it has been a terrible failure for bilateral cooperation. It has demonstrated that the U.S. government can act with absolute independence of its commitments to Mexico and that the United States disdains the mutual support it has agreed to in many accords. There is a third negative aspect: U.S. interference in our domestic issues and violation of our sovereignty. The strong drop in Mexican stock values and the slight devaluation of the peso are two negative impacts on the Mexican economy resulted from this investigation. But the worst is still to come. The lack of reciprocity in investigative operations and distrust in our institutions and government will surely damage bilateral cooperation."
An editorial in official government El Nacional observed (5/21): "It is essential to fight corruption by bank employees and money brokers in Tijuana and Guadalajara. But Operation Casablanca does not call into question the integrity of the Mexican banking system as a whole.... It is important to remember that the United States is the main drug consuming country in the world. As a result, drug-money is used mostly in U.S. territory. It is difficult for the United States to recognize how money is laundered there and how those funds enter U.S. banks. Mexico does not produce dollars, so the drug-money that is laundered in Mexico comes from the United States. Why were U.S. banks not included in this investigation? One of the most important elements of bilateral cooperation in fighting drug trafficking and money laundering is the exchange of information. If communication between both governments is insufficient, it can affect bilateral cooperation.
"There are also some dubious coincidences in this case. Operation Casablanca ended three weeks before the UN General Assembly extraordinary session is scheduled. During this UN session, Mexico's initiative on drug-related problems, drug trafficking and money laundering issues will be discussed. It is also important to stress that the results on Operation Casablanca were announced just a few days before the U.S.-Mexico binational committee meeting is scheduled to take place in Washington. International cooperation is needed to fight drug trafficking and money laundering because it is an international problem and must be widely discussed during the upcoming UN General Assembly extraordinary session."
Independent Publico of Guadalajara maintained (5/21): "If the U.S. government had informed Mexico or asked for help during the Casablanca investigation, it would surely have failed. Somehow, the information would have gotten back to the narco-traffickers. The high level of infiltration by organized crime into Mexican law enforcement threatens any investigation that requires secrecy.... The investigation leaves a lot of questions. In the first place, were higher officials in the banks involved in money laundering? Is it possible that bank directors were ignorant of the suspicious movement of money? It's also curious that the U.S. investigation didn't catch any Americans involved in money laundering."
Nationalistic Occidental of Guadalajara advised (5/21): "The Casablanca investigation shows once again the urgency of returning to a state of laws before its too late. Or before a Mexican Fernando Marcos or Soeharto shows up."
"And The Gringo Bank Employees?"
Nationalistic Occidental ran this opinion piece (5/21): "The success of the DEA, Customs and the other U.S. agencies has to be recognized. However, the results raise the question: What about the bankers and employees of banks in the United States? It's not yet clear how the 'corrupt' Mexicans send drugs to the United States, sell them on the streets to the addicts, earn enormous quantities of money, and then send it all back to Mexico. It seems that U.S. drug addicts are just consumers, and it's not their fault that millions of dollars end up in the pockets of the drug dealers."
"What About The Other $50 Billion?"
Nationalistic Occidental of Guadalajara held (5/20): "Conservative estimates are that the annual value of the drug trade in the United States is around $50 billion. After a three year investigation, Attorney General Janet Reno and the secretary of the treasury, James Rubin, have tracked down $150 million. Which is to say that at this rate they'll find all of the money in about 10 light years. So, while we have to congratulate the U.S. authorities for the success of Operation Casablanca, we might as well sit down while we wait to find out where in the world they're laundering the rest of the $50 billion."
In the view of conservative Ocho Columnas of Guadalajara (5/20): "There are several interesting points about the Casablanca investigation. One is that Mexican banking and tax officials were not only not aware of the money laundering problem, they weren't even aware they were being investigated. Another is that the trustworthiness of these officials is so low that the U.S. federal authorities had to carry out the investigation without breathing a word to them. One has to seriously question whether it is really possible to launder millions of dollars through a Mexican bank without the bank's officials being aware of it. And what of the U.S. bankers involved? We understand that some 50 employees are being charged. But is it possible that U.S. bank officials also weren't aware of the problem?"
"U.S. Playing Politics"
Independent Publico of Guadalajara held (5/20): "It is clear that by playing politics with a criminal investigation, the United States wanted to show the degree of corruption in Mexican financial institutions in order to lower their prestige and show that only foreign ownership of the banks can save them."
"Bank Safeguards Aren't Doing The Job"
Nationalistic Occidental of Guadalajara commented (5/19): "Even though the Mexican banks assure us that those involved were only minor officials, they were making major deals with the drug cartels. After learning about the scandal, the appropriate Mexican authorities quickly offered to cooperate to get to the bottom of the matter. It's a shame they didn't already do that. The really worrisome thing is not that some thug opened a bank account undetected--it's almost impossible to know where the money comes from at first--but when an account starts to grow like magic in the middle of an economic crisis that is shrinking everyone else's assets, it's obvious that the safeguards in place aren't doing the job."
"Worst Banking Scandal In Our History"
Independent Publico of Guadalajara observed (5/19): "For the moment, things are still a little unclear. We know for certain three things: that this is the worst banking scandal in our history; that the American authorities don't trust the Mexicans; and that bank regulations to prevent this kind of thing don't work. Adding to the confusion is the enormity of the information offered by the Americans, and the silence of Mexican banking officials. The National Commission on Banking and Taxes hid its head like an ostrich. The procurator's office, which did show its face, seemed stunned by the announcement and limited itself to saying that it wanted to cooperate in the investigation. No one doubts the U.S. findings. But there are a lot questions. For example, if this laundering operation was so large, why is there only $85 million? Also, how much responsibility do individual employees bear, and how much their supervisors?"
ARGENTINA: "We Lack Adquate Legislation To Fight Money Laundering"
Leading Clarin commented (5/22): "The discovery of an enormous money laundering network tied to drug trafficking in Mexico unveiled the importance reached by this criminal action, that has become one of the strategic security concerns of the big powers. It also showed, in contrast, that our country lacks adequate legislation to fight this kind of crime.
"In Argentina, this kind of crime is relatively smaller than in other countries but it might have increased during the past years. In this sense, the DEA...has allegedly detected considerable financial operations in our country, which consisted in changing low denomination bills presumably coming from drug trafficking. But our country does not have the adequate legal instruments to penalize laundering....
"The reason for this deficit is that the local authorities preferred not to impose restrictions that could discourage the entry of investments. Congress is in the process of studying a bill that is similar to the one implemented in the United States, but its passing has been delayed for the past two years. This deficit inhibits our ability to fight an increasing crime that will have harmful consequences over our institutional and social system."
JAMAICA: "A Serious Risk"
The business-oriented, centrist Daily Observer held (5/20): "Not very long ago this newspaper joined independent and opposition members of the legislature as well as private sector groups in opposing measures that would require banks and other financial institutions to report the names of people from whose accounts tax on interest income has been deducted.... We are naturally wary of intrusive government and the capacity of those in authority to use sensitive information as a basis of control and an extension of power.... We are fearful of what could happen if myriad officials and petty bureaucrats have such access to confidential information, especially in an environment in which we sense a strong cynicism on the part of the government towards the private sector as well as official vindictiveness.
"Our second reason for concern is that forcing banks to disclose information would lead to capital flight. This, of course, is linked to the first point. It is not that people necessarily have anything to hide.... It is just that the distrust of the government is too great for people to be sanguine about the confidentiality of information which reaches the eyes of officialdom. We have made these points to underline why we would suggest to the government to reject any pressure from the United States to tighten the reporting procedures for financial transactions. Banks now have to report lodgements above US$10,000, making them into a kind of policeman looking for 'suspicious transactions'.
"Once we begin to put banks in the invidious position of watchmen, we run a serious risk of harassing and warding off legitimate businesses. We must be careful, as the saying goes, of cutting off our noses to spite our faces."
PANAMA: "International Efforts Should Continue And Double"
Conservative El Panama America ran this inside editorial (5/21): "The illegal drug producers' cartels in Colombia and other South American countries have the courage to keep themselves in this dangerous business.... We have seen the complete cycle in Panama.... In the Dominican Republic the ingredients could mix themselves to convert it into the newest transshipment center to the United States....
"Mexico, another important transshipment center, has become one of the highest cost and risk countries for the drug barons.... The international efforts to combat the traffic and consumption of drugs, as well as money laundering, should continue and double.... With U.S. support, the local authorities in the different transshipment countries must be able to count on the resources to combat them. The fight against drugs will continue until this transnational problem is stopped by multinational attacks."
ITALY: "FBI And Carabinieri: Crackdown Against Narco Traffickers"
Leading leading Italian media (5/20) cover widely the success of Operation Casablanca, noting that the two hundred American agents who were involved in this major crackdown for three years worked closely with their Italian Carabinieri police colleagues to successfully infiltrate Mexican and Colombian drug organizations. All reports quote the announcement made by Attorney General Janet Reno and Treasury Secretary Bob Rubin presenting the operation as the world's biggest crackdown ever made against the recycling of narco-dollars. Headlines (5/20) included: "U.S.-Mexico-Italy: Narco Traffickers Hit at Heart" (La Repubblica); "FBI and Carabinieri: Crackdown Against Narco Traffickers" (Il Messaggero) "Narco-Traffic: Tentacular Ring Routed" (L'Unita')."
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