FRONTLINE Interviews
[From PBS/Frontline: "Money, Murder, and Mexico", April 8, 1997]
ANDRES OPPENHEIMER
ANDRES OPPENHEIMER IS THE AUTHOR OF BORDERING ON CHAOS, A BOOK
DETAILING POLITICS AND CORRUPTION IN MEXICO. HE IS THE SENIOR LATIN
AMERICAN CORRESPONDENT FOR THE MIAMI HERALD AND CO-WINNER OF A
PULITZER PRIZE FOR HIS REPORTING ON THE IRAN-CONTRA SCANDAL.
CARLOS SALINAS'S BEGINNINGS..... HOW DID HE COME TO POWER?
Carlos Salinas came to power in probably the most dubious election
in recent Mexican history. It was an election that the opposition
said was won with fraud. There were riots on the street. The
opposition, the leftist opposition candidate who at the time said he
had really won the election, staged riots all over the place, they
said it was a fraudulent election.
YOU SAY THE 1988 ELECTION WAS A CORRUPT ELECTION, A RIGGED ELECTION.
GIVE ME AN EXAMPLE.
The 1988 elections were the most dubious one in recent Mexican
history. After the voting the counting was stopped. Later the
ballots were burned. The opposition said he had won, the government
said it had won. Nobody knew what was going on.
BUT CARLOS SALINAS WON.
In the end the government put out a statement saying that Carlos
Salinas had won the elections . . . So Salinas came into power as a
pretty weak president. He needed support and to get that support he
went to the three places that previous governments had sort of kept
at a distance: the U.S. government, the Mexican Roman Catholic
church and the military and those were the sort of three pillars on
which he built up his presidency in the years to come.
AND THIS HAD NEVER BEEN DONE BEFORE?
Well you see, previous Mexican presidents had built their entire
ideological and political apparatus on the concept of nationalism.
So they kept the army at arm's length, they kept the church at arm's
length and more than anybody else, they kept the U.S. at an arm's
length. Salinas changed that all in part because of political needs,
because he needed a new source of support.
WHY EXACTLY DID HE JUST CHANGE THE WHOLE STRUCTURE AROUND?
Well we have to keep in mind that when Salinas took office, Mexico
was deeply, deeply in debt. It owed $98 billion to foreign banks. So
Salinas needed to do something and what everybody was telling him to
do and what he had to do and what he did was open up the economy. So
he sold state owned companies to the private sector, got the money
and used that money to pay off Mexico's debts and get the country
back on its feet, and he did it and quite successfully.
WAS HE BEING DICTATED TO, OR WAS HE HIS OWN MAN ON THIS? WAS HE HIS
OWN VISIONARY?
Well there is a beautiful anecdote that one of his aides told me
when President Salinas went to Davos, Switzerland to a world
economic summit; it was in 1990 and he went there to sell, to try to
attract investments to his country. He was at his office in his room
in Davos trying to give his speech, trying to attract foreign
businesses and foreign investments in Mexico and of course at the
same meeting were the Russians and the Poles and all these countries
that had just left behind communism. And Salinas found that nobody
was paying attention to him. The Wall Street and European investors
were in a neighboring room listening to the Russians and the
Hungarians and the Poles were doing. That's where the action was.
And he found himself, according to what his aides told me later in a
virtually empty room with very little interest for investors, and no
press. When he came back to Mexico he told one of his close aides
who told the story to me that what he had been doing at the
beginning wasn't working. He needed to do something bolder, he
needed to do something quick and he soon did it and that was to
begin laying the ground for the North American Free Trade agreement.
DO YOU THINK THAT WAS HIS BIGGEST CLAIM TO FAME?
I think that NAFTA will remain Salinas's biggest claim to fame in
the good sense. I mean he did many good things and many bad things.
That's certainly one of the things he did that will remain in place.
AND CAN WE SEE THE EFFECTS OF THAT FREE TRADE AGREEMENT NOW IN
MEXICO? ARE THE RESULTS OF THAT AGREEMENT OBVIOUS?
From a micro economic point of view yes, NAFTA has been good for
Mexico. The trouble is it has only been good for a very small
minority of Mexicans. Virtually the entire portion of the big jump
in Mexican exports to the U.S. is concentrated in perhaps 10, 15, or
20 big Mexican companies. It hasn't trickled down to the people yet.
So micro economically, NAFTA has been a big boon to the Mexican
economy. But it hasn't trickled down to the people and it hasn't
trickled down to all regions of Mexico because what we are seeing
now is that most foreign investors are setting up their
manufacturing plants in northern Mexico which is the industrial, the
most developed part of Mexico and very few are doing it in the
southern part of Mexico where the Indians live, where you have
higher levels of illiteracy and a rural, peasant society.
WAS THIS PART OF CARLOS SALINAS'S PLAN? DID HE HAVE IT IN MIND TO
GIVE THE BIG DEALS TO A CERTAIN PERCENTAGE--THE RICH BUSINESSMEN?
No of course not. I think Carlos Salinas wanted to turn Mexico, as
he said publicly, into a first world country and to do that he
opened up the economy. But when we are asking ourselves about his
motivations, we have to look back in history. Carlos Salinas, as
most of the young people of his generation, grew up with socialist
ideas. His brother Raul flirted for a while with Maoism, he went to
the southern states, he worked with the Indians. He was a socialist
revolutionary, quote, unquote organizer. And Carlos Salinas pretty
much was in that same circle of friends. Then he goes to Harvard, he
goes to the U.S. When he took office - I'm not sure that he planned
to do what he later did. When he took office, he probably did not
plan to open up the economy to the extent that he later did. But
because of the circumstances of the moment --the weakness of his
presidency because of the allegations of fraud in the elections
which took him to power, and because of his experience in his early
failures in trying to attract foreign investments into Mexico-- by
1990-91 he took a big turn and went ahead with revolutionary
measures like privatizing 18 banks which had been nationalized in
1982 by a previous president, like starting to talk about a free
trade agreement with Mexico. He did that about two years into his
presidency.
SO PRIVATIZATION WAS A POLITICAL MOVE ON HIS PART TO BUILD UP HIS
OWN BASE OF SUPPORT.
It was a decision made out of need to bring in money to pay off
Mexico's foreign debt and I think because Salinas, at that point,
was convinced that there was no other way to go.
TELL ME MORE ABOUT THE PRIVATIZATION. WOULD YOU SAY THAT IS ANOTHER
DISTINCTIVE MARK OF SALINAS?
Carlos Salinas privatized about 300 state owned companies. He did it
in part because he needed to sell off public companies to get money
to pay Mexico's huge foreign debt. He did it in part because Mexico
needed to open up the economy, to attract foreign investment. And he
did it in part because these state owned companies were sort of the
cells or the focus of corruption in Mexico. These were the companies
where, you know, ruling party bosses ruled at their will and
committed all kinds of things that were no longer well viewed all
over the world. And if he wanted to bring the U.S. into a free trade
agreement, he could not afford to have these political party bosses
with their pockets full of government money running around doing all
kinds of crazy things.
SO HE WAS DOING IT FOR THE RIGHT REASONS?
I think he did it for the right reasons. I think he didn't have much
of a choice. Mexico needed money to pay its huge foreign debt.
That's the thing people keep forgetting about. When Salinas took
office, it was not that he has this vision or this ideological urge
to become a crusader for free trade. He took office and he found
himself with a huge foreign debt, a $98 billion foreign debt. Where
was he going to get the money from? The only way, the quickest way
to get the money --considering that the bankers wouldn't lend more
money to add more good money to the bad money that they had already
lent-- the only way he could get that money was from selling
inefficient and very badly managed state owned companies and he did
it.
AT THE SAME TIME, HE SEEMS TO BE THUMBING HIS NOSE AT HISTORY. SINCE
THE REVOLUTION MEXICO HAS BEEN A VERY NATIONALISTIC PLACE, A PLACE
THAT HAS BEEN VERY INTENT ON KEEPING WHAT IS THEIRS, THEIRS AND
KEEPING ESPECIALLY THE U.S. AND OTHERS OUT. HOW DID HE MANAGE THAT?
He was very smart. He had a very good and efficient management of
the foreign press. And the way he managed it mainly is by what I
would call a boomerang effect. He seduced the Washington powers that
be - the president, President Bush, later President Clinton, the
U.S. Congress, Wall Street, the American press and that boomerang of
Mexico and suddenly the Mexicans on the streets opened up the daily
papers and said, President Bush says wonderful things about
President Salinas; President Clinton says wonderful things about
President Salinas. The big New York-Washington papers praised
Salinas. The Wall Street brokers praised Salinas and the Mexican
people said hey, if this guy gets these kinds of reviews in
Washington and Europe, he can't be that bad. So he created this
atmosphere and for a while it was legitimate praise because he did
things that were necessary and that no other president in recent
years had done and that no other Mexican president in recent history
had had the guts to do.
AND SO HE HAD BOTH THE U.S. AND HIS OWN PEOPLE ON HIS SIDE IN A
SPACE OF A COUPLE OF YEARS.
Whatever the Mexican people will tell you now, the fact is that by
the end of his presidency before the collapse, he was one of the
most popular presidents in Mexico history. People respected him. I
remember driving in cabs, talking with people on the street and
people respected him. And when I asked people, hey but isn't he
building a free economy on a pretty backward political system, they
sort of waved that off. They said, well yeah but you know, things
will come, and that was his big mistake.
EXACTLY WHAT WAS HIS BIG MISTAKE?
His big mistake was building a free open market economy with
backward, corrupt political system of which he was part.
AND HOW COULD YOU DESCRIBE THAT SIMPLY, THAT CORRUPT POLITICAL
SYSTEM? HOW DOES IT WORK?
Well, the Americans come to Mexico and see a free press and a
semi-free press and see people speaking out and what you see in
Mexico today is a pretty open society. Definitely much more open and
much more democratic than it was 10, 15 years ago. There's no
question about that, but there are still mechanisms of political
control with which the ruling party manages to win elections or to
do better than it would have in a level playing field.
PERHAPS YOU COULD GIVE ME AN EXAMPLE OF THE POLITICAL SYSTEM YOU'RE
ALLUDING TO WHICH HAS BEEN IN PLACE SINCE THE REVOLUTION, IS THAT
RIGHT?
Do you want me to tell you an anecdote? Let me tell you a story. A
few days before the 1994 election, I went downo the streets and
looked for a shoe shiner who I knew. And he wasn't there and neither
was any other shoe shiner in downtown Mexico. I couldn't find any.
So after the elections, I went to the one I knew and I asked him
where had he been. And he said, oh well for the elections and the
week before, we had all - we all were summoned to go to the ruling
party rallies, political rallies for the presidential campaign. So I
told him, come on, you're not a pro-government type. Why did you go?
So he explained me how it works. If you're a shoe shiner in Mexico
City, you need a license. To get that license you have to go to the
shoe shiners union which is tied to the ruling party. So when you
get that license, along with it you get a credential which makes you
a member of the ruling party. So you've got social benefits, you get
free lunches, you get free uniforms, you get a free burial when you
die. You get all kinds of benefits but on the other hand, you're
required to attend ruling party meetings. That's why when you go to
a . . . a political rally, you see tens of thousands of people. So I
asked him, well what happens if you don't go? And he says, well you
have to go because when you go you get a little stamped ticket that
says that you have attended the political rally. And the next day
when you go to work to your corner an inspector passes by and if you
don't show your receipt, your stamped piece of paper, you're
suspended for three days. So the system still has mechanisms of
political control which are not visible. They're traces of old
times, you know, dirty, authoritarian mechanisms of political
control in a society that indeed has become much freer and much more
open.
IS THE SHOE SHINER PART OF THE CORRUPT POLITICAL SYSTEM YOU'RE
TALKING ABOUT?
Mexico has become a more open society in recent years but it is
still an authoritarian democracy.
AND WHY DID SALINAS NOT BOTHER TO LOOK INTO THAT?
Because he had seen what was happening in the Soviet Union and he
reached a conclusion that it would be best for him to do perestroika
first and glasnost later, to do the economic reforms first and the
political reforms later. He felt he needed to have a political
system in place to get the support in congress and in public opinion
to push through his economic reforms. But that turned out to be his
big mistake as he is now recognizing because the very people who he
had around him were, in the end, defending political interests which
were not necessarily democratic or free enterprise.
AND YOU REALLY BELIEVED HE WANTED TO EMBARK ON THOSE POLITICAL
REFORMS?
I think once he plunged into the economic reforms and he began to
realize the praise he was getting overseas, in the U.S. especially,
he sort of became convinced of his own rhetoric and his own plan to
open up the economy.
BUT THIS IS THE MAN, TO COME BACK TO PRIVATIZATION, THAT DID SELL
OFF MANY OF THE STATE MONOPOLIES TO SOME OF HIS FRIENDS WHO HAPPENED
TO BE THE RICHEST PEOPLE IN MEXICO, ISN'T THAT RIGHT?
The trouble with Salinas's privatization plan was that he did indeed
sell inefficient, old, corrupt, state owned companies, but he sold
them in the end to a small clique of friends. What you wound up with
was a transfer of power from old, corrupt party bosses to new, in
some cases corrupt, private sector bosses.
SO HE WASN'T REALLY INTENT IN CLEANING UP THE CORRUPTION IN THE OLD
SYSTEM. HE WAS INTENT IN MAKING SURE THAT HE HAD THE APPEARANCE OF A
FREE MARKET.
I think he did it to get rid of inefficient, money losing companies,
to get money to help Mexico pay its foreign debts and to contribute
to a more dynamic economy.
WHO EXACTLY WERE THE BIG BENEFACTORS OF THIS PRIVATIZATION?
Well there's several billionaires who benefited from the sale of a
public company. Among them Carlos Slim who bought the telephone
company, the television baron, Emilios Caraga who got licenses of
regional television stations. You name it. Virtually all the people
who make up the list of the richest people in Mexico today, almost
all of them were close to the Salinas administration.
THERE WERE A LOT OF QUESTIONS BEING RAISED NOT ONLY TO THE EFFECT OF
WHO BENEFITED, THE FRIENDS OF SALINAS HIMSELF WERE THE BENEFACTORS,
BUT OF THE WHOLE PROCESS. IT WAS DONE RATHER HASTILY, TO SAY THE
LEAST, WASN'T IT?
Some more than others. There were some privatizations that raised a
lot of questions. You just mentioned the telephone companies. A lot
of critics at the time said that the process was apparently clean.
But the telephone company was sold to Carlos Slim and then 3 months
later, the Mexican people found out that the telephone rates went up
by enormous percentages and a lot of critics asked themselves
whether there was not some kind of secret deal whereby Salinas gave
- sold the telephone company to Slim with a secret understanding
that Slim would be allowed to raise telephone rates tremendously a
few months later.
AND THIS WAS THE GENERAL VIEW OF -
I think if you look at the privatizations, most of them, you won't
find any flagrant abuses. If there was some hanky-panky, it was
behind the scenes.
LET'S TALK ABOUT THE FAMOUS DINNER. A WHOLE CHAPTER OF YOUR BOOK IS
DEVOTED TO THAT DINNER. IN FEBRUARY '93, SALINAS HELD A PRIVATE
DINNER.
On February 23rd, 1993, there was a secret dinner party at the home
of Antonio Ortiz Mena, an old time government official. All the 30
biggest businessmen in Mexico, the wealthiest people in Mexico, all
men by the way, arrived in limousines and sat down. They had an
idea, but didn't quite exactly know what they had been summoned for.
AND AMONGST THEM WERE ALL THE PEOPLE THAT BENEFITED FROM
PRIVATIZATION . . .
Among them were, you know, Carlos Slim, Carlos Hank Rohn, Emilio
Azcarraga, all the big businessmen, billionaires as they call them
here who in some way or another, benefited from the privatization of
state owned companies. And at the dinner, they were asked to
contribute $25 million each to the upcoming presidential campaign,
$25 million each. That's a lot of money. That made together about
$750 million. It was like way, way, way beyond what any American
president ever got from the private sector or from anybody else and
this is from a country whose economy is about the size of that of
the state of Ohio.
AND THE REACTION WAS?
Well eventually the word leaked out and this made a big, big scandal
in Mexico because this was sort of a reflection of how the system
works. This was a secret meeting behind the backs of the people, and
it sort of illustrated the close relationship between some of the
richest people in this country and the government. It was all done
secretly behind the people's back without anybody knowing. And two
or three people who attended that dinner who told me how it went,
gave me the details about it, and explained to me that some people
were very uneasy about it. Some of these rich people said, hey, you
know, should we be in the business of bankrolling the presidential
candidate? But eventually the whole thing came out in the open and
the official word was that the whole thing was, you know, forgotten.
But insiders of the party say that most of them gave money under the
table afterwards.
$25 MILLION.
Each.
IS THIS A DEPARTURE FROM THE PAST -- THIS BEING SO CLOSELY, SO
OBVIOUSLY LINKED TO THE BUSINESS SECTOR?
No there has always been a relationship between the president of
Mexico and the industrial past. But remember for the past 30 or 40
years, Mexican governments claimed to be revolutionary, nationalist
and it wasn't chic to be seen, to be pictured with big businessmen.
So governments kept big business sort of at arm's length. When
Salinas takes office and privatizes 300 state owned companies,
suddenly he appears in photographs with the private sector, it's no
longer badly seen to open up the economy and to mix with big
industrialists. All over the world we are seeing that. So that
changed.
AND AGAIN HE'S DOING IT FOR SO-CALLED DEMOCRATIC REASONS IN THE
SENSE THAT HE NO LONGER WANTS HIS PARTY TO BE FUNDED BY GOVERNMENT
FUNDS. THAT WAS ONE OF THE REASONS WASN'T IT?
Well the reason, as it was explained to me by the person who hosted
the dinner, was that they did it for democratic reasons. They
wanted, for the first time in Mexico's history perhaps, to stop the
funnel of money from the government to the ruling party.
Traditionally, one of the reasons the ruling party won almost every
election, state, local and national since the 1920s is that they
enjoyed incredible amounts of money that were funneled under the
table from the government. So the Salinas people said, this has got
to end, among other things because now we have the International
Monetary Fund, the World Bank, the U.S. Treasury, all our creditors
looking at our finances so we have to come up with new ways of
funding the ruling party. So they turned to the industrialists and
said, we've got to stop this funneling of money out from the
government into the ruling party, you help us. And they did.
AND AT THE SAME TIME, BECAUSE THEY THINK THEY'RE DOING A GOOD THING
THEY DON'T REALIZE THAT THIS MIGHT CREATE A CONFLICT OF INTEREST.
THAT YOU CAN'T JUST TURN AROUND AND ASK FOR $25 MILLION FROM A
COMPANY AND NOT EXPECT TO HAVE SOME KIND OF FAVOR ASKED FOR IN
RETURN.
You see in Mexico, until very recently, there wasn't really a
concept of conflict of interest. It simply didn't exist. It happened
to me when I interviewed some of these billionaires. One of them was
the fund raiser for President Zedillo's campaign, while he was
chairman of one of the biggest companies in Mexico, and I asked him,
isn't there something wrong with this? Won't some people say that if
the President gets elected he will owe you a lot of favors? And he
looked at me sort of with blank eyes and couldn't understand quite
what I meant. Until very recently, there was no concept of conflict
of interest in the Mexican law and if there was, nobody knew about
it or paid any attention to it.
WHAT YOU HAVE DESCRIBED SO FAR IS THAT THE PEOPLE WHO USED TO BE
INVOLVED IN THE INSTITUTIONAL CORRUPTION OF THE PRI --THE BIG
BUSINESSMEN WHO WERE TIED TO IT, THEN WOUND UP WITH THE PRIVATIZED
COMPANIES, ALMOST LIKE NOTHING REALLY CHANGED.
Most of those who benefited from the privatizations were in some way
or another close to the presidential family. That's a fact.
SO WAS IT, IN A WAY, SUBSTITUTING ONE FORM OF CORRUPTION FOR
ANOTHER?
No because don't forget that by giving - passing on these companies
to the private sector, the state was getting rid of money losing
operations. So I think in Salinas's mind he thought, okay I better
give this company to so and so because the company keeps losing
money, and then it becomes his problem not mine. So I don't think he
implemented that part of his economic plan out of any greed or
corruption. We may learn - let me ...
THE DESCRIPTION IS THAT GONZALES, MINISTER OF TOURISM, BECOMES A
BILLIONAIRE WHILE HE'S IN GOVERNMENT. HE'S THE OLD STYLE GUY. BUT
WHEN PRIVATIZATION COMES, HIS SON STARTS BUYING UP PRIVATIZED
COMPANIES. IT SOUNDS LIKE THE SAME SYSTEM.
Well Salinas didn't change the basis of the system which is that
there are no rules of conflict of interest, very little
accountability and very little focus on corrupt practices. He didn't
do that.
NOR DID HE APPARENTLY STOP HIS BROTHER FROM TAKING ADVANTAGE OF
PRIVATIZATION. WHAT WAS HIS BROTHER'S ROLE IN ALL OF THIS?
It was an open secret in Mexico that Raul was in cahoots with many
of the private sector businessmen, that he was engaged in influence
peddling, and was friends with business people who eventually got
government contracts. Raul Salinas was known at the time, at least
in political circles, in business circles, as Mr. Ten Percent.
WHAT WAS THE SIGNIFICANCE OF THE ARREST OF RAUL SALINAS AFTER CARLOS
LEFT OFFICE?
The arrest of Raul Salinas opened up the window to something
everybody knew but nobody could put his finger on which was the
institutionalized corruption in government circles in this country.
Until the arrest of Raul Salinas, it was an open secret to everybody
that every president of Mexico since the days of the revolution,
ended up incredibly rich, that their families ended up with lots of
money etc. etc. It was an open secret but it was sort of a fact of
life. Nobody had ever seen a check, nobody had ever seen a cable,
nobody had ever seen evidence of that happening. When Raul Salinas
was arrested, suddenly the Mexican people woke up and read in the
papers that he had an $84 million bank account in Switzerland. They
saw copies of the wire transfers. They saw that he had a $23 million
bank account in London and people began to say, holy cow, how come?
This was the first time that they saw that in black and white. So it
created a shock in Mexico. For the first time, the Mexican people
could face, could see in black and white, evidence of corruption
within their ruling elite.
.... you've got to remembe when it happened, Raul Salinas was
arrested in February 1995. r his wasonly two months after the worst
depression in Mexico's history, no matter what economists on Wall
Street will call it. It was a huge depression. Mexico's economy sank
by 7%.
SEVEN PERCENT?
7% in 1995. That's the worst year since the Mexican Revolution. So
here you have a massive devaluation of the peso in December 1994.
WHEN YOU SAY THE ECONOMY SLIPPED 7% AND THAT IS A MASSIVE
DEVALUATION, GIVE ME AN EXAMPLE OF WHAT THAT MEANS.
If an average Mexican on December 20, 1994, had 10 pesos in his
pocket, a week later or two weeks later he had half of that or less.
The money suddenly wasn't worth anything. And here you have the
worst economic depression in this country's recent history. Tens of
thousands of - millions of people, over the next year it would be
more than one million people, were laid off from their jobs. For
rent signs were all over Mexico City. I remember walking on the
streets in December and January and suddenly seeing for rent, for
rent, businesses going under. And two months later in the midst of
this incredible depression, Mexicans wake up and read in the papers
that they've found $84 million in the ex-president's brother's bank
accounts in Switzerland. And then the next day they find out that
another $23 million was found in Britain and another 30 million in
France and on and on and on. And people just were flabbergasted.
HOW DID HE GET THE MONEY?
He got the money from leading industrialists in Mexico who are, some
more than others, very close to the ruling party. One of them,
Carlos Peralta, gave him $50 in 2 or 3 or 4 installments, through
U.S. banks, by the way. Others were Carlos Hank . . .
CARLOS PERALTA GAVE HIM HOW MUCH MONEY, THROUGH WHAT U.S. BANK, AND
WHY?
Carlos Peralta transferred about $50 million in four installments
through various U.S. banks mainly Citibank in New York over a couple
of months in - I don't remember what year.
WHY?
When I found that out and I called Carlos Peralta on the phone he
told me that it was not a bribe, not a pay-off for anything but
money he had given Raul Salinas to invest in a fund, an investment
fund that Raul Salinas was setting up in Switzerland with several
other friendly businessmen.
WAS THIS A PARTNERSHIP? I MEAN DID HE HAVE A CORPORATION? WAS THERE
A NAME?
Carlos Peralta says, and Raul Salinas says that it was a fund that
both of them and several other friends were setting up and Raul
Salinas was managing for a later investment in various enterprises
allegedly in Mexico. Now the question is why would a smart,
intelligent, successful businessman like Carlos Peralta and the
others give that kind of money to somebody who didn't have any
experience in managing money. It should be the other way around.
DID THEY HAVE A WRITTEN AGREEMENT?
They didn't have a written agreement.
DID HE HAVE A RECEIPT?
He said he didn't have a written receipt. Carlos Peralta says that
it was a gentleman's agreement, that the money was given to Raul for
an investment fund and friends are friends.
WHO ELSE GAVE RAUL MONEY?
According to Mexican investigators, the other people who gave money
to Raul Salinas were Carlos Hank Rohn . . .
WHO IS CARLOS HANK ROHN?
Carlos Hank Rohn is the son of Carlos Hank Gonzales, one of the
legends of this country's political system. A very charming man, a
very smart politician who has been in various government jobs for
the past 30 years and whose latest job was agriculture minister for
Carlos Salinas.
SO WHAT DOES HE DO, AND HOW MUCH MONEY DID HE GIVE?
Carlos Hank Rohn, according to people who were at that party,
participated at the dinner where the ruling party raised $25 million
from each of the 30 richest people in Mexico.
AND HE GAVE RAUL MONEY FOR HIS PRIVATE BANK ACCOUNT AS WELL?
What Mexican investigators have said and to the best of my
knowledge, Carlos Hank Rohn has not denied, is that he contributed
$15 million to this alleged investment fund that Raul Salinas was
setting up in Switzerland.
AND AGAIN NO RECEIPT, NO AGREEMENT THAT WE KNOW OF.
According to investigators, no receipt, no nothing.
AND WHAT DID CARLOS HANK ROHN GET FROM PRIVATIZATION?
I can't remember.
HE GOT A COUPLE OF PRIVATIZED BANKS. WHO ELSE INVESTED IN THIS
INVESTMENT FUND IN SWITZERLAND?
Ricardo Salinas Pliego, owner of the second largest television
network in Mexico; Adrian Sada, a leading industrialist; Carlos Hank
Rohn, and others who say they were asked to contribute money such as
Roberto Gonzales, the owner of Maseca but who as I understand it
says he was asked but never contributed to the fund.
SO THIS IS A LITTLE STRANGE ISN'T IT?
It's very weird when you see these very successful businessmen,
billionaires, giving their money to a presidential brother who
doesn't have much experience in business affairs to manage it. It
should be the other way around. These people are consummate
businessmen. They know more than Raul Salinas or any of us, about
how to turn money into more money. Why would they have to send money
to Raul Salinas for him to manage their money?
THE U.S. AMBASSADOR TOLD US, LOOK, ALL PRESIDENTS HAVE PROBLEMS WITH
THEIR BROTHERS. NIXON HAD PROBLEMS; JIMMY CARTER'S BROTHER.
IS THIS SIMILAR?
Well you see, the U.S. government, and this goes both for the
Republican and Democratic administrations, has a tendency to turn a
blind eye on anything that sounds bad about Mexico. It's a see no
evil, hear no evil attitude which in the end hurts America and hurts
Mexico.
SO COULD YOU PUT THAT ANSWER IN CONTEXT?
This is on a different scale than anything we would have seen in the
United States is what you're saying, as far as we know.
YOU MENTIONED CARLOS HANK GONZALES. WHO IS HE? SOME PEOPLE SAY HE'S
THE PROTOTYPE OF WHAT?
Carlos Hank Gonzales is seen in Mexico as the symbol of the old
system, of the authoritarian system that people would like to
change. He's a man who was, as he himself told me, was born poor,
never inherited a penny, worked all his life in the state government
sector. He never worked in the private sector and according to
Forbes magazine ended up with a fortune of $1.6 billion. Now you
have to remember the culture in Mexico. For all we know he may not
have done anything illegal because in Mexico there's no law, at
least there wasn't any law during his years in government,
prohibiting influence peddling or stating rules against conflict of
interest.
OR MONEY LAUNDERING.
We don't know.
BUT I MEAN THERE WAS NO LAW AGAINST IT IN MEXICO.
There was no law against money laundering.
YOU SAY THAT RAUL SALINAS WAS --IS "BAGMAN" THE RIGHT WORD -- THE
CORRUPT SIDE OF THE SALINAS FAMILY DURING THE REGIME, RIGHT?
Right.
WHEN WAS IT PUBLIC KNOWLEDGE IN MEXICO AND WHEN WOULD THE U.S.
GOVERNMENT HAVE KNOWN ABOUT IT?
This was known as early as in 1991. There were stories in the
Mexican press. There was a story in the Mexican press in June 1991
saying that Raul Salinas was involved in some dirty deal at the
Mexico City racetrack. Then a year later in 1992 there were several
stories in the magazine Proceso, even in the L.A. Times. On the
other hand, U.S. embassy officials who were at the U.S. embassy at
the time tell me that they had discussed within embassy meetings the
fact that Raul Salinas was involved in shady businesses. And then in
1992, Raul Salinas was quietly sent into exile into California with
some kind of a fellowship which everybody in Mexico knew at the time
was the president's way of sort of keeping him away.
SO -
It was known at the time that Raul Salinas was involved in shady
business deals.
SO WHEN A CITIBANK VICE-PRESIDENT WHO IS IN CHARGE OF MEXICO, AND
SPECIFICALLY RAUL SALINAS'S ACCOUNT, SAYS THAT SHE DIDN'T NEED TO
CHECK ON THE ORIGIN OF THE MONEY BECAUSE IT WAS LIKE MONEY FROM THE
ROCKEFELLERS, IS THAT BELIEVABLE?
Nobody could have said in 1993 or 1994 that it was a surprise to him
or her that there were allegations of corruption's against Raul
Salinas. If somebody did that, he or she turned a blind eye to
reality because in Mexico City the only thing you had to do is to
you know, go out, and have a coffee with any politician, any
diplomat, or read the press. It was all there.
AND YOU SAY THE U.S. GOVERNMENT KNEW? THE AMBASSADOR ACTUALLY TOLD
US THAT HE EVEN HAD INFORMATION ABOUT RAUL BEING TIED UP WITH DRUG
MONEY.
I think there is a see no evil, hear no evil policy towards Mexico
that in the end hurts the U.S. and hurts Mexico.
WHAT WAS CITIBANK'S ROLE IN THE RAUL SALINAS SAGA?
Citibank acted as Raul Salinas's private banker. According to
investigators, Citibank took Raul Salinas's money and helped him
invest it in foreign trust funds all over the world. So they
basically acted as his private banker and . . .
CITIBANK TOOK HIS MONEY BUT THIS WAS NOT A NORMAL TRANSACTION, IT IS
NOT LIKE HE WENT INTO THE BANK HERE IN MEXICO CITY AND HE SAID
HERE'S MY MONEY, INVEST IT FOR ME. WHAT HAPPENED? DID HE OPEN A BANK
ACCOUNT AT CITIBANK IN MEXICO CITY?
Raul Salinas was introduced to Citibank by a close friend of his,
Carlos Hank Rohn who tells him they will show you the way to hide
your money in foreign bank accounts which is, by the way, a normal
practice for businessmen all over the world. Except that banks have
in their guidelines policies about not to taking money from
politicians or members of political families, not to take large sums
of money from them.
IT'S NOT UNUSUAL FOR A MEXICAN POLITICIAN OR A WEALTHY MEXICAN TO GO
TO CITIBANK IS IT?
Citibank has a long, long relationship with Mexico. It was the first
foreign bank in Mexico, the most successful one, the one that
survived several administrations where other foreign banks were
kicked out of Mexico and a lot of Mexican industrialists and,
according to what you hear in political circles, a lot of Mexican
politicians had bank accounts at Citibank. After the whole story
broke out we learned that several of them had bank accounts at
Citibank.
SO CARLOS HANK ROHN--WHO GAVE RAUL SOME OF THE MONEY THAT HE'S GOING
TO GET, WHO IS PART OF THIS POWERFUL FAMILY--TOOK RAUL TO CITIBANK
TO, YOU SAY, TO HIDE THIS MONEY. HOW DOES CITIBANK DO THAT FOR HIM
AND WHY?
Well Raul Salinas, from what investigators tell me, told Citibank
that like many other wealthy Mexican businessmen he was worried
about kidnappings, and government persecutions in later years etc.
etc. And because he didn't want anybody to find out that the brother
of a former Mexican president had hundreds of millions dollars in
foreign bank accounts he needed a safe place to keep his money . So
Citibank set up trust funds in Switzerland, in London, and in
several other places that would basically hide his name under
several layers of secrecy.
HOW DID THEY MOVE THE MONEY?
According to Mexican investigators, a woman who later they say
turned out to be Raul Salinas's wife, took checks to a Mexico City
brokerage house which in turn transferred the money to New York
where the money was sent to Swiss, British, and other European bank
accounts.
SO THIS WASN'T DONE OPENLY. THIS WAS DONE -
This was done secretly.
DO YOU BELIEVE THAT RAUL SALINAS REALLY IS BEHIND THE MURDER OF
FRANCISCO RUIZ MASSIEU?
No.
SO THEN WHAT - WHERE DO ALL THESE PSYCHICS COME FROM, THESE
MISTRESSES WHO SAY THEY HEARD THESE THINGS, THESE BODIES THAT NO ONE
IS CLEAR WHAT BACKYARD THEY CAME FROM. WHAT'S THIS ALL ABOUT?
This is part of a judicial system that the Mexican president will be
the first to admit has been doing awkward, dubious, shady things
forever. The tradition in Mexico is for a prosecutor if he's
convinced that his witness is telling what is true, to go out of his
way to, you know, produce evidence to prove his case. Over the two
years that I've been following this story it has changed 5 times. So
the conclusion is that you can't believe anybody. You can only
believe the basics where all sides agree and you have to narrow them
down to 1 or 2 little things and make your judgment from those.
THE ARREST OF RAUL SALINAS HAS GIVEN US A SORT OF WINDOW INTO ALL
THESE INVESTIGATIONS. TODAY THE PROSECUTORS HAVE BEEN FIRED. IN
FACT, THE PROSECUTOR MAY IN FACT BE PROSECUTED. WHAT'S GOING ON?
This is a game of shadows, you know. You never see the real thing.
You see the shadows on the wall. Today's heroes are tomorrow's
villains. Tomorrow's villains are yesterday's heroes. What's clear
in this story, what seems to be clear, what everybody agrees on so
far is that the people they arrested after the murder of Jose
Francisco Ruiz Massieu, have named Raul Salinas. That seems to be a
fact.
OKAY.
It also seems to be a fact that Raul Salinas was very close to the
man who hired the gunman to kill Jose Francisco Ruiz Massieu. Those
two seem to be facts. From that point on, it's a comedy of errors.
NOW WHAT ABOUT THE MONEY? IS IT CLEAR THAT RAUL ACTUALLY GOT THE
MONEY?
It's a fact that Raul Salinas has --even if everything else is
fantasy-- it is a fact that Raul Salinas has $100 million in
Switzerland, $23 million in London, maybe $30 million in France, $5
million in Canada and who knows how much he has in dozens of U.S.
bank accounts all over the U.S. That's a fact.
IN MEXICO THIS WHOLE COMEDY OF ERRORS, THAT SURROUNDS THE MURDER
INVESTIGATION, THIS THEATER OF THE ABSURD THAT SEEMS TO BE GOING ON
WITH PSYCHICS AND SO ON, IT IS UNIQUE. HOW CAN WE UNDERSTAND WHAT IS
GOING ON? IT SEEMS SOMETHING LIKE PLATO'S CAVE.
Mexico is a country of shadows, a country of make-believe. This
system has a long history of misinformation. It's not like in some
totalitarian regimes where the government doesn't put out
information. It's the contrary. They flood you with information, so
much so that by the end there's no telling what's true and what's
not -- where the people are, who they're supposed to be, whether
they're acting for the reasons they claim to be acting.
IT'S A MYSTERY INSIDE AN ENIGMA.
It's - it's a country where things are not what they seem to be.
Until they set a system in place with checks and balances and the
government's ability to circulate the information it wants without
any accountability, without any checks, is corrected, it will
continue being that way.
YOU SAY THAT THE ARREST OF RAUL SALINAS WAS A WATERSHED IF YOU WILL,
A TRAUMA IN THE HISTORY OF MEXICO. WHAT HAPPENED AROUND THAT ARREST?
It was a very dramatic scene because in those days and we should
give credit to the government, to the current government for having
done that. It was mind boggling that the system would turn against
one of its own. And what happened was that the attorney-general went
to the president, according to the attorney-general's account of the
story, and he said Mr. President, we have reason to believe that
Raul Salinas murdered this person. And President Zedillo said, well,
do whatever the law commands. So the attorney-general sent his
troops to arrest Raul at his sister's home here in Mexico City. And
then Raul Salinas called his brother's bodyguards and told them, you
know, they're coming to arrest me. And for a while, for 10 minutes
or 20 minutes that day you had two armies, the new government's army
and the old government's army rushing to the place where Raul
Salinas was staying and for a couple of minutes it seemed like
there was going to be a clash between the old government and the new
government, who by the way belonged to the same party and to the
same political elite. And in the end, the orders came from the
presidential house saying there's a formal arrest warrant against
Raul Salinas. And Carlos Salinas's bodyguards turned back and went
home. It was a watershed moment in Mexico's history because although
previously there had been big names, big politicians arrested, the
head of the oil workers union, former president of the oil company,
etc. etc., this was a member of the presidential family in a country
where the president used to be a king. This was a big deal.
TODAY, GIVEN EVERYTHING THAT'S GONE ON SINCE THEN, WHAT'S THE FUTURE
LOOK LIKE IN THIS COUNTRY NOW?
There's no question that Mexico is a more open, a more democratic
country than it was 10 or 15 years ago and there's no question that
in recent years both under President Salinas and President Zedillo
there have been important democratic reforms. However, the problem
is that you still have an authoritarian democracy in place. You
still don't have a level playing field for opposition parties to win
the presidency. It's a daily struggle. One day it looks like the
forces of evil are winning. The next day it looks like the good guys
are winning. The trouble I see today is that we're building a whole
new house of cards on very shaky political ground. In 1997 we are
seeing a young U.S. educated Mexican president, very well
intentioned, talking about democratization. We see the American
president praising him, we see Wall Street praising him, we see the
American press praising him. We see investors coming back to Mexico
investing billions of dollars into Mexico. We see the Mexican stock
market go up, we see brokers on Wall Street saying how great Mexico
is and telling their customers to invest in Mexico and we are seeing
that some important political reforms are not being carried out. So
I'm afraid that the danger now is that President Zedillo may make
the same mistake President Salinas made 3 years ago which was
putting off political reforms until the economy gets better. And
what I'm afraid of is that if he doesn't do the political reforms in
the 3 years he has left in office this whole new house of cards will
collapse just as it did in 1994.
BEFORE YOU WERE TALKING ABOUT SHADOWS AND THINGS. I ASSUME YOU WERE
TALKING ABOUT ALL THESE MURDERS, I MEAN YOU'VE GOT A DEAD COLOSIO,
YOU'VE GOT A DEAD CARDINAL, YOU'VE GOT A DEAD HEAD OF THE PRI AND
YOU'RE NOT SURE WHO'S DONE WHAT TO WHOM AND WHEN.
Look at the investigation, first it was a lone gun man. Then the
government said it was a conspiracy of three gun men. Then it was
four gun men, then it was back to one. This is a country of shadows.
You know, putting the whole thing in perspective. What you are
seeing here every six years or so is a government with very little
accountability spending more than it should, and going bankrupt,
going to America or to Canada or to the Europeans begging for money,
being told that to get the money they have to impose drastic
economic reforms, and then a new president takes office, promises to
release economic reforms, does them, but does not do the political
reforms necessary and then the system goes on, they spend more than
they should, they go bankrupt and it's the same story over and over.
So until they implement a system of checks and balances with real
accountability, this story will repeat itself . . .
BUT HOW CAN THEY DO THAT IF THE PRESIDENTIAL CANDIDATE GETS
ASSASSINATED, THE CARDINAL IN A MAJOR CITY GETS ASSASSINATED, THE
HEAD OF THE RULING POLITICAL PARTY GETS ASSASSINATED, EVERY POLICE
COMMANDER AND PROSECUTOR WHO TRIES TO GO AFTER A NOTORIOUS DRUG
CARTEL GETS ASSASSINATED IN BROAD DAYLIGHT, AND THE GOVERNMENT
DOESN'T SEEM TO BE ABLE TO DO ANYTHING?
Because that may be a system of the transition Mexico is going
through. What you're seeing now, all these murders you're talking
about, this is not Mexico 1910, this is Chicago 1930. What I mean by
that is that it's not a revolution, what you're seeing here in
Mexico is not a people's uprising against the government, that's not
happening, I don't think it will happen. What you're seeing is a
fight among families or tribes or clans within the ruling elite that
are fighting among one another for a shrinking piece of the
political pie they used to have. So it's not the Mexican revolution
of 1910, this violence we are seeing here is not a people's uprising
-- it's a bloody fight among political mafias who were then the
ruling elite that are fighting one another for a shrinking political
and economic pie. And that's good in a sense...
IT'S GOOD?
It's a symptom that they're losing power, so what we are now seeing,
the violence and the bloodshed and death --what makes the headlines
and the stuff we are writing about and everybody's focusing on--is a
symptom of a healthy change Mexico is undergoing, because these
people are losing power. Otherwise they wouldn't be fighting to keep
the shreds of it. Is that clear?
DO YOU THINK THE PAN IS GOING TO WIN - AND WHAT WILL IT MEAN FOR
MEXICO IF THEY DO?
I think there's a chance they could win the capital but I don't
think they're going to allow them to win the congress, because you
see congress is the one that has committees that look into
corruption and . . . and you know, government secret funding for the
ruling party etc. etc., so I think they'll win Mexico City but not
congress.
AND WHAT DOES THAT MEAN, WINNING MEXICO CITY?
It means two things, winning the biggest political job in Mexico
after the presidency and sort of creating a candidate for the year
2000, or making their job level so difficult that it'll be an
embarrassment for the PAN for the year 2000. Maybe the PRI will
allow the PAN to win in order to embarrass their win because it is
an impossible job.
WHAT DID CARLOS SALINAS ACHIEVE IN YOUR MIND THAT IS STILL STANDING
AND POSITIVE TODAY?
On the positive side, for the first time in Mexico's history he
allowed for some states to go to the opposition party. He opened up
the economy. He sort of ended the old-time taboos that trading with
the U.S. was bad or was against nationalism and that sort of thing.
And he put in writing what was already an existing fact.
More than 90% of Mexico's foreign trade before NAFTA was with the
U.S. So what it did was institutionalize a situation that was
already there but by doing that he brought greater confidence to
foreign investors.
AND ON THE NEGATIVE SIDE?
Well Salinas failed to do the basic economic reforms that would have
helped Mexico to become a more efficient, open economy. Let me
explain this. You privatize state owned companies, you invite
foreign investors. You get headlines all over the world that Mexico
is opening up. But at the same time, you have an authoritarian
system where there was no accountability. So for instance, the
government issued statistics, financial statistics, and there was no
way of knowing whether they were right or wrong because there was no
independent auditing commission in Congress, let's say, to look at
the government figures. Congress was, and continues to be, in the
hands of the ruling party. The central bank was managed like a
puppet by the central government so the elections were you know if
not heavily fraudulent, I mean not that fair--or at least the
process leading towards the election. So you had a government that
functioned without accountability. So it's very hard to build an
open economy without a system of checks and balances where investors
can know where they put their money and what the real figures are.
And basically that's what Salinas did. He opened up the economy
without creating a system of checks and balances in a democratic
system which would have allowed people to know what the real
situation was and which would have helped prevent the economic
collapse of 1994.
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