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Conspiracy Nation -- Vol. 8 Num. 20

("Quid coniuratio est?")


By Jeffrey Steinberg
(New Federalist 06/17/96)

June 12 (EIRNS) -- One week after Executive Intelligence Review [EIR] broke an exclusive story which pointed to probable witting collusion among the New York Federal Reserve, Citibank, and the brother of former Mexican President Carlos Salinas de Gotari, in a multimillion-dollar international drug-money-laundering scheme, major European and U.S. newspapers, including the Wall Street Journal and the Miami Herald, have jumped on the scandal. But in all cases they've avoided the Fed connection emphasized by EIR, and have gone out of their way to misrepresent the affair as a case of an isolated corrupt banker or two.

The fact is that the world banking system -- including Citibank -- is as addicted to drug money as a heroin addict is to smack, and the banks are far higher on the totem pole in Dope, Inc. than thugs like the Salinas brothers.

The U.S. Justice Department announced this week that it is investigating the role of Citibank in the Salinas scandal.

As reported in EIR, Raul Salinas is presently under indictment in Mexico on charges of murder-conspiracy and "illicit enrichment." The murder-conspiracy charges stem from his role in the September 1994 assassination of Jose Francisco Ruiz Massieu, then head of Mexico's ruling PRI Party. At the time of the murder, Raul Salinas's brother, Carlos Salinas de Gotari, was the President of Mexico.

In 1989-93, Raul amassed a fortune, which may total as much as $1 billion, through collusion, in part, with top officials in two of Mexico's narcotics cartels: Juan Garcia Abrego, head of the so-called Gulf Cartel, and Joaquin Guzman, head of the Sinaloa Cartel. The story first broke publicly, when, on Nov. 15, 1995, Raul Salinas's wife, Paulina Castanon, was arrested by Swiss authorities as she attempted to withdraw $84 million from an account at the prestigious private bank, Pictet & Cie, in Geneva.

This is where Citibank first surfaced in the scandal. The Pictet account, which was in a phony name, was reportedly set up for Raul Salinas by Amelia Grovas Elliot, the head, since 1981, of the Mexico team at Citibank's exclusive Private Bank. Private Bank is a bank within Citibank that holds an estimated $80 billion in assets, on behalf of a small, exclusive clientele.

On May 12, 1994, Elliot gave testimony for the prosecution in a money-laundering case brought against officials of American Express International Bank, in Brownsville, Tex. In her testimony, Elliot explained that all of her activities were cleared through three or four highers-up in the Citibank chain of command. At the time, prosecutors were using Elliot's testimony to demonstrate how a "clean" bank screens its clients before giving them VIP treatment.

When the Salinas case erupted, Elliot's testimony took on a very different character. It demonstrated that Citibank's role in helping Raul Salinas to launder what is now believed to be about a third of a billion dollars, was witting -- from the top down. That means Citicorp chairman John Reed. And it has important implications for the New York Fed.

-+- Fed Receivership -+-

In another exclusive that was long covered up by the financial press, EIR revealed back in 1992 that Citibank had gone bankrupt, and had been placed -- secretly -- into receivership by the New York Fed. This story, like the recent Salinas dope scandal, was later confirmed and reported widely in the Wall Street Journal and elsewhere.

In short, at the time that Elliot was helping wash millions of dollars in Mexican cartel loot through Raul Salinas's international accounts, Fed regulators were managing the day-to-day affairs of Citibank. Fed inspectors were micro-managing any transactions that passed the one-million-dollar mark! The Fed has never been forced to own up to its role in the Citibank-Salinas money-laundering scheme, although the U.S. Justice Department is now probing the entire affair, including the role of Citibank.

-+- Press Wakes Up -+-

Shortly after EIR published its exclusive on Salinas, the New York Times jumped in with its own detailed report. The Times quoted Raul Salinas, declaring that "Amy" Elliot had personally handled all of his international financial transactions.

The Wall Street Journal weighed in on the story on June 7, after Swiss authorities discovered yet another trust fund containing more than $240 million, which they traced to Raul Salinas. This time, the names of other Swiss banks, including Bank Julius Baer of Zurich, and Banque Edmond de Rothschild, were mentioned, along with Pictet, as managers of the Salinas cash. A spokesman for Pictet told the Journal that the bank had been approached by longtime associates (probably Citibank's Elliot), and therefore, had no reason to be suspicious. Swiss authorities are not so sure. They have since announced that they are probing four Swiss banks for possible violations of the country's money-laundering laws.

In its initial coverage -- and in every subsequent story -- the Wall Street Journal was forced to acknowledge that Carlos Salinas de Gotari, since retiring from the Presidency of Mexico, has been on the board of the Dow Jones Corporation, publishers of the Journal.

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