Source: San Jose Mercury News (CA) Contact: http://www.sjmercury.com/ Pubdate: Sat, 21 Mar 1998 Author: James F. Smith - Los Angeles Times DRUG SYNDICATE'S SHADOW FALLS ACROSS MEXICAN ELITE MEXICO CITY -- A series of accusations this week linked Mexico's most notorious drug cartel to money-laundering scams that touch the highest levels of the nation's political, financial and labor elite. First, it emerged that the laundrymen of the Juarez cartel tried to buy a controlling share of a struggling bank. Then it was reported that they tried to go into business with President Ernesto Zedillo Ponce de Lesn's brother. And on Friday, a newspaper said the head of the largest national labor federation and a union-linked bank were being probed for suspected money-laundering ties. Prosecutors confirmed that the cartel attempted to purchase the Anahuac financial group but said they halted the sale in 1996 when they became suspicious of the funding source. And Rodolfo Zedillo, the president's brother, said his attorneys warned him in time to back off a proposed partnership with entrepreneurs who turned out to be alleged money launderers. Labor's denial The chief press officer for the labor movement said Friday's allegations against federation chief Leonardo Rodr(acu)guez Alcaine and Banco Obrero (Workers Bank) were malicious and false. Yet even jaded Mexicans have been shocked by the apparent attempts by the drug bosses to infiltrate the top tiers of business and politics. At the same time, some analysts say the reports show the system is now working against a scourge that long went undetected. They say more-vigilant Mexican investigators are armed with powerful new money-laundering laws and investigative tools, allowing them to achieve real breakthroughs. A chastened Rodolfo Zedillo said in an interview: ``It is obvious that the cartels have no respect for rank or hierarchy; they are definitely increasing their areas of influence. But our institutions are responding well.'' The national attorney general's office said Thursday night that it had identified several suspects involved in the attempted purchase of the struggling Anahuac financial group on behalf of the Juarez cartel, which was led by Amado Carrillo Fuentes until he died during plastic surgery last July. The prosecutor's office said one suspect -- Juan Alberto Zepeda Novelo, a top executive in Mexico's second-largest construction company -- was arrested Wednesday in the case. Biggest probe yet The investigation appears to be the largest since Mexico adopted stricter money-laundering laws last year. Mexico has long been suspected not only as a major transit route for drugs headed to the American market but also as a primary laundering channel for profits filtering back to the drug cartels. In this week's allegations, a common suspect is Jorge Fernando Bastida Gallardo, identified as the main money launderer for the Juarez cartel. Newspapers in Mexico City and Guadalajara said Bastida led the negotiations to invest at least $12 million in Anahuac on behalf of the cartel in 1995 and 1996. However, national banking authorities said they froze that transaction before it took effect because they were suspicious of the origin of the money. But federal prosecutors are investigating charges that Bastida laundered more than $80 million of the Juarez cartel's money through Anahuac in 1995 and 1996, El Universal newspaper in Mexico City reported Friday. Later in 1996, regulatory authorities seized control of the Anahuac group in connection with a separate fraud allegation. El Universal also said prosecutors were investigating whether Rodr(acu)guez Alcaine, the labor federation leader, and the union-linked Banco Obrero had been involved in money laundering along with Bastida.