UNCLASSIFIED E216 PTQ9412 RELEASED IN FULL CONFIDENTIAL PTQ9412 PAGE 01 ACTION ARA-01 MEXICO 02873 01 OF 03 2022342 INFO LOG-00

ACDA-08 ACDE-00 INLB-01 AID-00 ACQ-01 COME-00 INL-01 DINT-00 DOEE-00 SRPP-00 DS-00 EB-00 OIGO-01 E-00 FRB-00 H-01 TEDE-00 INR-00 I0-00 LAB-01 L-01 ADS-00 NRRC-00 OMB-01 OPIC-01 PA-00 PM-00 PRS-00 USIE-00 P-00 ASDS-01 CIO-00 PMB-00 SP-00 DSCC-00 SSO-00 PRM-10 STR-00 PRME-01 T-00 DRL-04 .G-00 SAS-00 /034W ------------------29DE33 202234Z /38 P 202225Z MAR 98 FM AMEMBASSY MEXICO TO SECSTATE WASHDC PRIORITY 2601 INFO TREASURY WASHDC DOL WASHDC NSC WASHDC CIA WASHDC WHITE HOUSE WASHDC SECDEF WASHDC DIA WASHDC JCS WASHDC DIRFBI WASHDC DOJ WASHDC

USCINCSO MIAMI FL UNCLASSIFIED C O N F I D E N T I A L SECTION 01 OF 03 MEXICO 002873 DEPARTMENT PLEASE PASS TO USCONS MEXICO DEPARTMENT PASS AID/LAC/SAM TREASURY FOR RICH JOHNSTON E.O. 12958: DECL: 3/20/2008. TAGS: PGOV, MARR, KCRM, SNAR, EFIN, ELAB, MX SUBJECT: MEXICO POLITICAL ITEMS MARCH 15-20, 1998 CLASSIFIED BY MINISTER COUNSELOR FOR POLITICAL AFFAIRS VALENTINO MARTINEZ. REASON 1.5 (D). 1. (U) THE FOLLOWING ITEMS ARE COVERED: ZEDILLO'S BROTHER DENIES MONEY LAUNDERING ANAHUAC SCANDAL LEADS TO CTM INVESTIGATION ALLEGED EPR LEADER ARRESTED PAN ASSEMBLY TO SELECT NATIONAL COUNCIL MEXICO MAY CREATE NATIONAL GUARD COLOSIO ASSASSINATION PROBE: A DRY WELL MORELOS GOVERNOR: GOING,GOING . . . ? ZEDILLO'S BROTHER DENIES MONEY LAUNDERING 2. (U) AS PART OF THE FALL-OUT FROM DISCLOSURE THIS WEEK THAT THE JUAREZ DRUG CARTEL (AMADO CONFIDENTIAL CONFIDENTIAL PAGE 03 MEXICO 02873 01 OF 03 202234Z CARRILLO FUENTES ORGANIZATION) HAD FRAUDULENTLY BOUGHT A LARGE INTEREST IN THE ANAHUAC FINANCIAL GROUP, PRESIDENT ERNESTO ZEDILLO'S BROTHER RODOLFO, AN ARCHITECT-AND PROPERTY DEVELOPER, DENIED THAT HE HAD ANY INVOLVEMENT WITH MONEY LAUNDERING. HE ACCUSED JORGE BASTIDA, A PROMOTER SUBSEQUENTLY CHARGED WITH MONEY LAUNDERING BY THE FEDERAL ATTORNEY GENERAL'S OFFICE (PGR), OF TRYING TO GET HIM TO USE HIS FIRM (INTEGRACION Y SISTEMAS UNCLASSIFIED

UNCLASSIFIED SIFTED PARA CONSTRUCCION, INTENCONSA) FOR MONEY LAUNDERING. .3. (U)'RODOLFO ZEDILLO SAID THAT WHEN HE ASKED A LAW FIRM TO CONDUCT A BACKGROUND CHECK ON BASTIDA, WHO HAD OFFERED TO ENTER INTO A DEAL IN LATE 1996 FOR FINANCING THROUGH THE ANAHUAC GROUP FOR CONSTRUCTION OF A HOTEL IN MEXICO CITY, BASTIDA DISAPPEARED, AND NO MONEY FROM THAT SOURCE EVER ENTERED THE VENTURE (THE HOTEL WAS SUBSEQUENTLY FULLY FUNDED BY THE SOL MELIA HOTEL GROUP OF SPAIN.) "THEY LAID A TRAP FOR ME," ZEDILLO CLAIMED. HE ADDED THAT HE WAS NOT AWARE OF ANAHUAC'S LINKS TO MONEY LAUNDERING WHEN HE WAS NEGOTIATING WITH BASTIDA, AND DENOUNCED DRUG MONEY CORRUPTION IN THE TOP LEVELS OF BUSINESS. 4. (U) NEWSPAPERS HAVE REPORTED THAT FORMER PRESIDENT MIGUEL DE LA MADRID'S SON FEDERICO AND NEPHEW JORGE HURTADO WORKED AT ANAHUAC GROUP DURING THE PERIOD WHEN DRUG INTERESTS WERE PENETRATING THE FINANCIAL GROUP. IN FACT, HURTADO CONFIDENTIAL CONFIDENTIAL PAGE 04 MEXICO 02873 01 OF 03 202234Z WAS PRESIDENT OF ANAHUAC BANK. ANOTHER SON, ENRIQUE DE LA MADRID, WAS A HIGH-LEVEL OFFICIAL OF THE NATIONAL BANKING AD SECURITIES COMMISSION AT THE TIME. ANAHUC SCANDAL LEADS TO CTM LEADER INVESTIGATION ------------------------------------------------5. (U) THE ANAHUAC SCANDAL HAS ALSO SPREAD INTO THE LABOR AREA. TWO WEEKS AFTER HIS ELECTION AS LEADER OF MEXICO'S LARGEST LABOR CONFEDERATION (CONFEDERATION OF MEXICAN WORKERS, CTM), LEONERADO RODRIGUEZ ALCAINE AS WELL AS SEVERAL REAL ESTATE COMPANIES AND THE BANCO OBRERO (WORKERS' BANK) ARE REPORTEDLY UNDER INVESTIGATION BY THE PGR ON SUSPICION OF MONEY LAUNDERING CARRIED OUT THROUGH THE ANAHUAC FINANCIAL GROUP. BETWEEN 1995 AND 1996, 80 MILLION U.S.DOLLARS WERE REPORTEDLY UNCLASSIFIED

UNCLASSIFIED LAUNDERED ON BEHALF OF AMADO CARRILLO BY JORGE . BASTIDA, WHO WAS A LONG-TIME MEMBER OF RODRIGUEZ' ELECTRICAL POWER UNION (SUTERM) AND REPORTEDLY ADVISED RODRIGUEZ ALCAINE ON FINANCIAL CONFIDENTIAL NNNNPTQ9413 CONFIDENTIAL PTQ9413 PAGE 01 ACTION ARA-01 MEXICO 02873 02 OF 03 202234Z INFO .LOG-00 ACDA-08 ACDE-00 INLB-01 AID-00 ACQ-01 COME-00 INL-01 DINT-00 DOEE-00 SRPP-00 DS-00 EB-00 OIGO-01 E-00 FRB-00 H-01 IM-01 TEDE-00 INR-00 LAB-01 L-01 ADS-00 NRRC-00 OME-01 OPIC-01 PA-00 PM-00 PRS-00 P-00 CIO-00 SP-00 SSO-00 STR-00 T-00 USIE-00 ASDS-01 PMB-00 DSCC-00 PRM-10 PRME-01 DRL-04 G-00 SAS-00 /035W V ------------------29DE36 202234Z /38 P 202225Z MAR 98 FM AMEMBASSY MEXICO TO SECSTATE WASHDC PRIORITY 2602 INFO TREASURY WASHDC DOL WASHDC NSC WASHDC

DIA WASHDC JCS WASHDC DIRFBI WASHDC DOJ WASHDC EPIC EL PASO TX DIRNSA FT MEADE MD DIRONDCP WASHDC DEAHQS WASHDC ATF WASHDC CUSTOMS WASHDC UNCLASSIFIED CONFIDENTIAL CONFIDENTIAL PAGE 02 MEXICO 02873 02 OF 03 202234Z USINS WASHDC IRS WASHDC USCINCSO MIAMI FL C O N F I D E N T I A L SECTION 02 OF 03 MEXICO 002873 DEPARTMENT PLEASE PASS TO USCONS MEXICO DEPARTMENT PASS AID/LAC/SAM TREASURY FOR RICH JOHNSTON E.O. 12958: DECL: 3/20/2008 TAGS: PGOV, MARK, KCRM, SNAR, EFIN, ELAB, MX SUBJECT: MEXICO POLITICAL ITEMS MARCH 15-20, 1998 TRANSACTIONS. (NOTE: BASTIDA IS THE SAME . INDIVIDUAL DISCUSSED IN PARA 2. END NOTE.) THE CTM HAS DENIED ANY INVOLVEMENT. 6. (C) COMMENT: IT IS UNCLEAR FROM MEDIA REPORTS WHETHER RODRIGUEZ IS BEING INVESTIGATED IN HIS OWN RIGHT OR IN HIS FORMER CAPACITY AS CHAIRMAN OF THE .BOARD FOR THE BANCO OBRERO IN THE EARLY 90'S. IT WAS DURING HIS TENURE THERE THAT THE BANCO OBRERO BECAME INSOLVENT, WHICH LED TO ALLEGATIONS OF FINANCIAL MISMANAGEMENT. ALTHOUGH IT HAS BEEN ASSERTED PREVIOUSLY THAT RODRIGUEZ HAS USED HIS UNION POSITION FOR ILLICIT ENRICHMENT, THIS WOULD BE THE FIRST TIME HE HAS BEEN LINKED TO DRUGRELATED MONEY LAUNDERING ALLEGATIONS. BOTH THE UNCLASSIFIED

UNCLASSIFIED BANCO OBRERO AND THE ANAHUAC FINANCIAL GROUP NO LONGER EXIST. END COMMENT. CONFIDENTIAL CONFIDENTIAL PAGE 03 MEXICO 02873 02 OF 03 202234Z ALLEGED EPR LEADER ARRESTED ------------- ------------7. (U) ON MARCH 18, THE OAXACA STATE'S ATTORNEY OFFICE ARRESTED ALBERTO ANTONIO ANTONIO, A ZAPOTEC INDIAN WHOM IT CALLED "HIGH COMMANDER AND FOUNDER OF THE POPULAR REVOLUTIONARY ARMY (EPR)." THE SUSPECT IS ACCUSED OF HAVING PARTICIPATED IN THE ATTACK ON THE TOURIST AREA IN HUATULCO BAY ON AUGUST 29, 1996 DURING WHICH ELEVEN PEOPLE WERE KILLED. ACCORDING TO THE STATE'S ATTORNEY, ANTONIO FOUNDED THE EMILIANO ZAPATA ORGANIZATION OF INDIGENOUS ZAPOTEC PEOPLES (OPIZ-EZ) DURING THE MID-1980'S, WHICH IS TIED TO THE CLANDESTINE WORKERS' REVOLUTIONARY PARTY - UNION OF THE PEOPLE (PROCUP) WHICH SOME CONSIDER THE POLITICAL WING OF THE EPR. ANTONIO IS ALSO ACCUSED OF BEING THE "INTELLECTUAL AUTHOR" OF ROUGHLY ONE HUNDRED KILLINGS OF PRESUMED TRAITORS AGAINST THE EPR AS WELL AS HAVING PARTICIPATED IN SEVERAL ROBBERIES USED TO FINANCE THE REBEL GROUP. 8. (C) COMMENT: IF ANTONIO IS AS IMPORTANT AS THE AUTHORITIES CLAIM, HIS ARREST WOULD STRIKE A HEAVY BLOW TO THE EPR. ON THE OTHER HAND, THE EPR SEEMS TO HAVE A CELL-BASED STRUCTURE TO LIMIT THE IMPACT OF ANY SINGLE ARREST. END COMMENT. PAN NATIONAL ASSEMBLY TO SELECT NATIONAL COUNCIL -----------------------------------------------CONFIDENTIAL UNCLASSIFIED

UNCLASSIFIED CONFIDENTIAL PAGE 04 MEXICO 02873 02 OF 03 202234Z 9. (SBU) ON MARCH 21-22 THE NATIONAL ACTION PARTY (PAN) WILL HOLD A NATIONAL ASSEMBLY TO SELECT 250 OF THE 300 MEMBERS OF THE PARTY'S RULING NATIONAL COUNCIL. THE REMAINING 50 MEMBERS OF THE NATIONAL COUNCIL ARE EITHER LIFE-TIME MEMBERS (FORMER PARTY PRESIDENTS) OR PRESIDENTS OF THE PAN'S 32 STATELEVEL ORGANIZATIONS. ACCORDING TO PAN CONTACTS, THE ASSEMBLY IS NOT EXPECTED TO PRODUCE ANY MAJOR POLICY SHIFTS AND SHOULD BE TRANQUIL, IN CONTRAST TO THE ONGOING NATIONAL ASSEMBLY OF THE PARTY OF THE DEMOCRATIC REVOLUTION (PRD). NONETHELESS, THE MAKEUP OF THE PAN'S NEW NATIONAL COUNCIL WILL BE IMPORTANT, SINCE IT WILL DETERMINE A YEAR FROM NOW WHETHER CURRENT PARTY PRESIDENT FELIPE CALDERON HINOJOSA SHOULD BE REELECTED OR REPLACED. MEXICO MAY CREATE NATIONAL GUARD 10. (C) A POLITICAL ADVISOR IN THE SECRETARIAT OF 'GOVERNMENT ("GOBERNACION") TOLD POLOFF THAT THE GOM IS CONSIDERING CREATING A NATIONAL GUARD. CONFIDENTIAL NNNNPTQ9414 UNCLASSIFIED

UNCLASSIFIED CONFIDENTIAL PTQ9414 PAGE 01 MEXICO 02873 03 OF 03 2022342 ACTION ARA-01 INFO LOG-00 ACDA-08 ACDE-00 INLB-01 AID-00 ACQ-01 COME-00 INL-01 DINT-00 DOEE-00 SRPP-00 DS-00 EB-00 OIGO-01 E-00 FRB-00 H-01 TEDE-00 INR-00 LAB-01 L-01 ADS-00 NRRC-00 OMB-01 OPIC-01 PA-00 PM-00 PRS-00 P-00 CIO-00 SP-00 SSO-00 STR-00 T-00 USIE-00 ASDS-01 PMB-00 DSCC-00 PRM-10, PRME-01 DRL-04 G-00 -SAS-00 /034W ------------------29DE3A 202234Z /38 P 202225Z MAR 98 FM AMEMBASSY MEXICO TO SECSTATE WASHDC PRIORITY 2603 INFO TREASURY WASHDC DOL WASHDC NSC WASHDC CIA WASHDC WHITE HOUSE WASHDC SECDEF WASHDC DIA WASHDC JCS WASHDC DIRFBI WASHDC DOJ WASHDC EPIC EL PASO TX DIRNSA FT MEADE MD DIRONDCP WASHDC DEAHQS WASHDC ATF WASHDC CUSTOMS WASHDC CONFIDENTIAL CONFIDENTIAL PAGE 02 MEXICO 02873 03 OF 03 202234Z USINS WASHDC IRS WASHDC USCINCSO MIAMI FL C O N F I D E N T I A L SECTION 03 OF 03 MEXICO 002873 DEPARTMENT PLEASE PASS TO USCONS MEXICO UNCLASSIFIED

DEPARTMENT PASS AID/LAC/SAM TREASURY FOR RICH JOHNSTON UNCLASSIFIED E.O. 12958: DECL: 3/20/2008 TAGS: PGOV, MARR, KCRM, SNAR, EFIN, ELAB, MX SUBJECT: MEXICO POLITICAL ITEMS MARCH 15-20, 1998 SUCH A PARA-MILITARY FORCE WOULD BE ORGANIZED AT THE NATIONAL LEVEL AND BE SUBJECT TO MILITARY DISCIPLINE, HE SAID, BUT WOULD BE USED FOR INTERNAL SECURITY MISSIONS, INCLUDING COUNTER-DRUG OPERATIONS AS WELL AS OTHER SUPPORT TO LAW ENFORCEMENT. THE ADVISOR SAID THAT THE CONSTITUTION ALREADY AUTHORIZES SUCH A FORCE, BUT NO GOVERNMENT HAS WANTED TO CREATE ONE IN RECENT DECADES. HE NOTED THAT THERE IS SOME OPPOSITION TO THE IDEA IN THE GOM FROM THOSE WHO FEAR THAT SUCH A FORCE MIGHT "SUFFER FROM THE INDISCIPLINE OF THE POLICE FORCES BUT CARRY THE WEAPONRY OF THE ARMY." HE ADDED THAT THERE ARE UNRESOLVED QUESTIONS SUCH AS WHAT RELATIONSHIP THE FORCE WOULD HAVE WITH STATE GOVERNMENTS. 11. (C) COMMENT: OTHER CONTACTS HAVE MENTIONED THIS IDEA, BUT WE HAVE SEEN NO EVIDENCE THAT THE CONFIDENTIAL CONFIDENTIAL PAGE 03 MEXICO 02873 03 OF 03 202234Z IDEA HAS PROGRESSED BEYOND THE CONCEPTUAL PHASE. END COMMENT. COLOSIO ASSASSINATION PROBE: A DRY WELL 12. (U) AFTER FOUR YEARS OF INVESTIGATION, LUIS RAUL GONZALEZ PEREZ, THE CURRENT SPECIAL PROSECUTOR IN THE ASSASSINATION CASE OF PRESIDENTIAL CANDIDATE FOR THE INSTITUTIONAL REVOLUTIONARY PARTY (PRI), LUIS DONALDO COLOSIO, CONCEDED AT A MARCH 19 PRESS CONFERENCE THAT HE HAD NO CONCRETE PROOF THAT WOULD LEAD TO THE INTELLECTUAL AUTHOR(S) OF THE CRIME. HOWEVER, HE CLAIMED SEVERAL THEORIES SUGGEST THAT COLOSIO, WHO UNCLASSIFIED

UNCLASSIFIED WAS SHOT ON MARCH 23, 1994, FELL VICTIM TO A CONSPIRACY. 13. (C) COMMENT: WHETHER THROUGH INCOMPETENCE, DESIGN, OR BAD LUCK, IT IS BECOMING EVER LESS LIKELY THAT THE PGR WILL GET TO THE BOTTOM OF COLOSIO'S ASSASSINATION. END COMMENT. MORELOS GOVERNOR: GOING, GOING . --------------------------------------14. (U) SOURCES IN THE MORELOS STATE SECRETARIAT OF GOVERNMENT TOLD REPORTERS MARCH 19 THAT THE NEW SECRETARY GENERAL OF GOVERNMENT, HUGO SALGADO CASTANEDA, HELD A MEETING WITH HIS CLOSEST AIDES TO ADVISE THEM THAT SALGADO, AS FIRST IN LINE OF CONFIDENTIAL CONFIDENTIAL PAGE 04 MEXICO 02873 03 OF 03 202234Z SUCCESSION, MIGHT BE TAKING OVER THE STATE GOVERNMENT (REF. MEXICO 2631, MEXICO 2478 AND PREVIOUS). MEANWHILE, SPECULATION WAS FUELED BY REPORTS THAT GOVERNOR JORGE CARRILLO OLEA MET WITH PRESIDENT ZEDILLO AND LATER WITH OTHER MEMBERS OF THE PRI. 15. (C) COMMENT: GIVEN THE DRUMBEAT OF FIRE FROM THE NATIONAL AND STATE HUMAN RIGHTS COMMISSIONS AS WELL AS FROM CIVIC GROUPS, THE RESIGNATION OR FIRING OF AT LEAST 22 STATE OFFICIALS, AND THE GOVERNOR'S OWN MEDIA INTERVIEWS (AT LEAST THREE IN THE LAST SIX DAYS) PREDICTING "CHAOS" SHOULD HE LEAVE OFFICE, CARRILLO'S POSITION APPEARS TO BE DETERIORATING. CARRILLO IS, HOWEVER, A STUBBORN AND POWERFUL MAN WHO HAS SHOWN HIMSELF READY TO FIGHT FOR HIS JOB AND WHAT REMAINS OF HIS REPUTATION. END COMMENT. BRAYSHAW UNCLASSIFIED