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FRONTLINE Show #1510
Air date: April 8, 1997

MURDER, MONEY, & MEXICO

ANNOUNCER: Tonight on FRONTLINE, an investigation into corruption in Mexico during the Salinas years. Correspondent Lowell Bergman follows a trail from Carlos Salinas, exiled in Ireland, to Switzerland in search of his brother, Raul's, secret millions.

Dr. VALENTIN ROSCHACHER, Swiss National Police: I can't tell you if the amount was $200 million, $300 million, $400 million or $500 millions, but I think everything is possible in this case.

ANNOUNCER: And to Mexico, to a country and a family undone by accusations of kickbacks and murder.

PAULINA CASTAÑON, Wife of Raul Salinas: Raul, my husband, he made a lot of mistakes, but he_ he's not a murderer.

ANNOUNCER: Tonight on FRONTLINE, "Murder, Money and Mexico."

NARRATOR: Dublin, Ireland: Last spring, after a year of wandering, he came here to find a quiet place of exile. He is the former president of Mexico, Carlos Salinas de Gortari, once the friend of presidents, the architect of NAFTA. He is now the man most hated by his people, who left behind a nightmare of violence and political assassination; of economic collapse, revolutionaries and scandal; of dollars and decadence, and of unprecedented corruption.

JORGE CASTEÑADA, Political Analyst: Corruption has been a fixture of Mexican life at least since the Spanish got here, but there had never been anything like the Salinas corruption.

NARRATOR: Once they were known as the Kennedys of Mexico: a political family, comfortable in the public eye. Today they are embattled, isolated, hiding from the press, a family drawn together by tragedy and an avalanche of allegations. It's a complicated tale. Adriana is Carlos's sister. Her ex-husband, her daughters' father, was a powerful politician, Ruiz Massieu. He was gunned down in the street, assassinated.

But the tragedy for the family was compounded when the authorities named their chief suspect, her oldest brother, Raul Salinas de Gortari. This is the story of how Raul Salinas's arrest has exposed a legacy of corruption and scandal that has shaken the Mexican establishment and laid open the dark side of his brother's presidency, and how Raul Salinas benefited from their close relationship. For over two years Raul Salinas has been held in isolation in a prison built by his brother, Carlos. His family insists that Raul is not guilty, the victim of politics, and character assassination.

CLAUDIA RUIZ, Niece of Raul Salinas: We don't have any doubt about my uncle_ my uncle Raul's innocence because, first of all, we know him and we know he's incapable of_ of the things_ of murdering anyone, and least of all someone he liked and our father.

LOWELL BERGMAN, FRONTLINE Correspondent: There's no chance or possibility in your mind that he might be guilty.

DANIELLA RUIZ, Niece of Raul Salinas: No.

CLAUDIA RUIZ: No, not at all.

NARRATOR: The family says the Raul Salinas vilified in the Mexican press is not the man they knew. At their home in Mexico City, FRONTLINE correspondent Lowell Bergman met his wife, Paulina Castañon.

PAULINA CASTAÑON, Wife of Raul Salinas: Most of the time he was at home. He liked very much to be at the house with the family. And we read books. We saw Mexican movies. We played canasta, him and me, and just a very quiet life. I know Raul, my husband, he made a lot of mistakes -- a lot of mistakes -- but he_ he's not a murderer. Not at all. That's very different. Like, human beings, we can make a lot of mistakes. Sometimes he wasn't a very good husband.

NARRATOR: But Raul Salinas' mistakes -- his mistresses and mysterious millions, his love of the fast life_ filled the front pages of Mexico's newspapers and provided real-life melodrama, like this secret video of his mistress extorting money from his wife, Paulina. It was a soap opera and that's what it became: "Nothing Personal," the most watched broadcast on Mexican Television.

But in the case of Raul Salinas, the truth regularly left fiction far behind, including a psychic accusing him of another murder and leading police to what turned out to be a planted body buried in his backyard. All wildly entertaining to the media, but not for the family.

ADRIANA SALINAS, Sister of Former President: [through interpreter] Look, it has been very hard for the family to understand because we are in the middle of it and it is tough for us when people treat it like soap opera. For us it's a daily drama that we have to live with in this house, so it is not cheap entertainment to us. It is not a soap opera. It is humiliating.

NARRATOR: Humiliating for the family, but for the country, Raul Salinas's case has become a key moment in modern Mexican history.

ANDRES OPPENHEIMER: 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.

NARRATOR: Andres Oppenheimer is a foreign correspondent for the "Miami Herald" and a consultant for FRONTLINE who has dug deeply into the Salinas scandal. His book, "Bordering on Chaos," is a best-seller in Mexico.

ANDRES OPPENHEIMER: It was an open secret to everybody that every president of Mexico since, you know, the days of the revolution ended up incredibly rich. Until the arrest of Raul Salinas, nobody had ever seen a check, nobody had ever seen a cable, nobody had ever seen evidence.

NARRATOR: For almost 70 years Mexico has been, in effect, a one-party state and the party, the Institutional Revolutionary Party_ the PRI_ has stayed in power by institutionalizing corruption. The current president of Mexico, Ernesto Zedillo, promised to root out that corruption, so for the first time in Mexican history, he appointed a member of the opposition, Antonio Lozano, as attorney general. he would wind up investigating Raul Salinas.

ANTONIO LOZANO, Former Attorney General of Mexico: [through interpreter] We found a house supposedly owned by a Mr. Gomez Gutierrez, but our investigation revealed that Gomez Gutierrez was actually Mr. Raul Salinas de Gortari. And he had a fake passport under that name, but with his picture in it and his signature. This is how we discovered that he had a false identity. Later we discovered he had three or four fake identities. Then we discovered he had several businesses and, finally, we found he had accounts under this false name in Switzerland, London and other places.

NARRATOR: This is what Lozano found: a collection of luxury homes scattered around Mexico, ranches, horses, and banks accounts with millions of dollars in Mexico, all belonging to a man whose main official job was as a civil servant in charge of national grain distribution-- a civil servant who liked to go on

safaris with his wife, his fourth, Paulina Castañon; a bureaucrat who put his wife's name on a Swiss bank account totaling $84 million. She says she asked him about that money.

PAULINA CASTAÑON, Wife of Raul Salinas: He wanted to explain me exactly where the money came, everything. And I told him "You know, the only thing I want to know, is this legal money or no?" And he wanted to explain me, but I don't know_ I don't want to know about that money. Who gave it_

LOWELL BERGMAN: What do you mean, you don't_ you put your name there.

PAULINA CASTAÑON: The only thing I want to know is if it's legal or not. He told me, "Yes, it's legal."

"Okay. You're going to prove it?" "Yes, I'm going to prove it." "Okay." I don't want to know who is the money, for what is the money. No. I've never asked questions. Mexican_ not all the Mexican women, because now they are changing, but we don't ask questions to our husbands.

LOWELL BERGMAN: You're trying_ you want us to believe that your name is on a bank account with over $80 million in it and you had no idea how much money was in the account? You had no idea where it came from?

PAULINA CASTAÑON: No, I knew how much money was on the account. I knew. Not exactly the_ but I_ I almost knew. I didn't have to ask where, why. I trust my husband.

NARRATOR: That trust, she says, led her to accept a request from her imprisoned husband to go to Switzerland to pick up a passport in a safe deposit box.

LOWELL BERGMAN: Did he tell you it was in a different name?

PAULINA CASTAÑON: Yes. He told me was Juan Guierrmos. And he's my husband, I love him. And I don't know if you're married. If your wife ask you something like, "Please go and pick it," you go and pick it up.

LOWELL BERGMAN: Switzerland is a long way to go. Weren't you suspicious?

PAULINA CASTAÑON: Suspicious of what?

NARRATOR: Paulina Castañon, accompanied by her brother, flew to Zurich and then they took the train to Geneva. she had errands to run, money to move and documents to pick up. What she did not know was that she was expected. In Bern, at the headquarters of the Swiss national police, Dr. Valentin Roschacher was interested in the same documents and accounts at a private bank.

Dr. VALENTIN ROSCHACHER, Swiss National Police: We got information from the law enforcement agencies in Europe, informants, U.S. law enforcement agencies in Europe, informants, U.S. law enforcement agencies, from DEA that the former Mexican President's brother could have accounts here in Switzerland under wrong names.

NARRATOR: What Paulina did not know when she arrived at the Bank Pictet was that they had been told to alert the police if anyone came inquiring about certain accounts.

PAULINA CASTAÑON: I asked to go to the safe deposit and they told me there was something electrical and I couldn't go in. So I say "Okay, that's it. Good-bye," and we went to the train station to go back to Zurich.

Dr. VALENTIN ROSCHACHER: We did not know who she was, who was the guy in her company, and what she's planning to do. We didn't know. Then we saw her. You

know, she_ we shadowed her, of course.

PAULINA CASTAÑON: And we were in train station, my brother and me, and they arrested us. First, I thought it was like a kidnapping. First, I was in shock. Shock.

NARRATOR: Paulina Castañon was detained and questioned for a month, then released as the Swiss investigation continued.

Dr. VALENTIN ROSCHACHER: I'm convinced that we will know maybe very soon the whole truth. But you know, she_ right now, she's not guilty and I don't know how deeply she was involved, you know? She said, "I love my husband because I trust him." It's beautiful, you know? That's the way it should be.

NARRATOR: Even when they were young, the Salinas brothers had their share of scandal and politics. Their father was a long-serving member of the ruling elite and at one time a contender for president. The scandal came when Carlos was 3 and his brother, Raul, was 5. In a game with another child, they accidentally shot and killed a 12- year-old housemaid with a 22-caliber rifle.

Growing up, Raul was the protector, Carlos the brainy one. Raul became an engineer. Carlos went to Harvard, where he earned a doctorate in political economy. Even when he was young he had his eye on the presidency. When he finally ran, it was for his first elected position. He had gathered a team around him_ the Salinistas. They had a mission: to modernize the Mexican economy and open up the political process.

Prof. JOHN WOMACK: I'm sure that there has been a deep political war for the last 10 to15 years.

NARRATOR: Harvard professor John Womack has been an intimate of Carlos Salinas since his student days.

Prof. JOHN WOMACK: The Salinas group was one of the few that_ if not the only_ that had a real strategic vision of where it was going and what it_ how long it would take and what kind of battles it wanted to fight.

NARRATOR: And if he ran into a fight he had his older brother, Raul, to back him up.

Prof. JOHN WOMACK: I think Raul and a few others were basically the reform group's muscle and money raisers. They weren't sweeties and softies and creampuffs. They weren't the kind of guys who would sit and write a book denouncing the traditional bosses. These were the guys who could go into the room and stare down the other guys.

NARRATOR: Carlos Salinas de Gortari assumed the presidency in 1988 with what many charged was a rigged election. His promise to modernize Mexico began with the economy: selling off old state-owned monopolies, opening the marketplace to foreign investors and deregulating.

Prof. RUDI DORNBUSCH: A very, very striking and surprising and ambitious agenda. The modernization of Mexico, of course, is a very delicate thing because any brick you pull out, the rest shakes.

NARRATOR: Prof. Rudi Dornbusch of MIT is a free market advocate. He was an adviser to Carlos Salinas and remains an admirer.

Prof. RUDI DORNBUSCH: Well, I think you'd have to say that he is superbly intelligent, that he's a strategist, that he keeps thinking about concepts and how to implement them_ both. He is a very, very strong manager. If he ran a corporation, you'd buy the stock.

NARRATOR: And we did.

Pres. GEORGE BUSH: I raise my glass to a great leader, President Carlos Salinas de Gortari and to Mexico.

NARRATOR: The United States government was enthusiastic about doing business with this modern Mexican president and wound up doing a deal called NAFTA, opening the Mexican market for the first time with its 95 million customers.

ANDRES OPPENHEIMER, "Miami Herald": He said, "Use Washington." He said, "Use the powers that be-- the president, President Bush, later President Clinton." The Wall Street brokers praised Salinas and the Mexican people say, "Hey, if this guy gets these kinds of reviews inWashington and Europe, he can't be that bad." Whatever the Mexican people will tell you now, the fact is that by the end of his presidency he was one of the most popular presidents in Mexico history

JOSE MARIA IMAZ: We believed that

we were going to the first world, as Carlos Salinas told us.

NARRATOR: Jose Maria Imaz had a small business teaching the language of NAFTA, English.

JOSE MARIA IMAZ: We were working like crazy people, working all day. We had_ we increased from four teachers that we started this business, we went up to 250 people working in this school. It was incredible.

NARRATOR: With privatization, more than 200 state-owned companies were put on the block. from banks to airlines, from telephone company to garbage collection. The profits were enormous and with the new materialism came a new sense of confidence.

JORGE CASTEÑADA, Political Analyst: This was part of the Salinas attitude that, "Boom! It's good to be rich. Let's all be rich. We're all going to be rich. We're entering the First World. Nothing to be ashamed of." Wealth in Mexico used to be discrete. It used to be not ostensible. The very wealthy were careful not to show off too much because they knew that the gaps between rich and poor were so great in this country that if you rubbed it in and you sort of kept showing the poor how poor they were and how rich you were, one day the poor were going to get mad and it was better for them not to get mad. That changed, under Salinas. It became fashionable and acceptable to flaunt wealth.

NARRATOR: And flaunting it meant every excess, from private planes and personal museums to private zoos.

LOWELL BERGMAN: Is this privately maintained for the public or_

JORGE HANK RHON: No, it's

privately maintained for me. The thing is I'm pretty much more worried about the animals much more the humans. So I take care of the animals. The humans, they can take care of themselves.

NARRATOR: The lover of rare animals is Jorge Hank Rhon, the gambling king of northern Mexico.

JORGE HANK RHON: I've become a very successful man because I love success and I love being happy.

NARRATOR: And he should be happy. He is part of one of the most wealthy, arguably the most powerful, family in Mexico, key backers of the Salinas presidency. His father, Carlos Hank Gonzales, was a billionaire politician and his brother, Carlos Hank Rohn, is the manager of the family empire.

JORGE HANK RHON: My father became a very good politician because-- well, he's a very good guy. And my brother became a very wealthy man in Mexico because he worked a lot. He loves to work.

NARRATOR: His father, secretary of agriculture in the Salinas cabinet, is famous for saying, "A politician who is poor is a poor politician."

ANDRES OPPENHEIMER, "Miami Herald": 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, never worked in the private sector, and who, according to "Forbes" magazine, ended up with a fortune of $1.6 billion.

NARRATOR: During the Salinas years, the number of Mexicans who made the "Forbes" list of billionaires grew from 1 to 24_ men like Carlos Slim, who bought the Mexican national phone company at a bargain price. He likes Rodin sculptures and now has the world's largest private collection; Roberto Gonzáles Barrera, a godfather to the Salinas family, now known as "the tortilla king" because he wound up with a virtual tortilla monopoly in Mexico; and Carlos Peralta, who got a cell phone franchise which turned out to be worth more than a billion dollars.

ANDRES OPPENHEIMER: 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.

Prof. RUDI DORNBUSCH, Mass. Institute of Technology: I think that's just nonsense. I think the privatization was a process with maximum transparency, maximum integrity, and rich Mexicans borrowed a lot of money to buy those assets and they took big risks, like Carlos Slim, and they got very rich on it. I don't see any trouble with that. And I'm not aware of corruption in the privatization process.

NARRATOR: But there was trouble with that cell phone franchise which Carlos Peralta bought. He turned around and sold a minority interest to Bell Atlantic for more than a billion dollars. According to a confidential document from inside Bell Atlantic, they were advised that the Peraltas were Mexican "robber baron[s]" who have always_quote_ "had top level collaborators in the Mexican government"_ close quote.

In the middle of his deal with Bell Atlantic, Carlos Peralta wired, according to these documents, $50 million cash to accounts belonging to Raul Salinas. Bell Atlantic insists they knew nothing about the payments made by Carlos Peralta.

LOWELL BERGMAN: Why did Carlos Peralta give Raul Salinas $50 million?

ANDRES OPPENHEIMER: Carlos Peralta says and Raoul 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.

LOWELL BERGMAN: Did they have a written agreement?

ANDRES OPPENHEIMER: They didn't have a written agreement.

LOWELL BERGMAN: Did he have a receipt?

ANDRES OPPENHEIMER: He said he didn't have a written receipt. Carlos Peralta says that it was a gentlemen's agreement.

NARRATOR: By now, Raul was making a lot of money. He needed help handling it all, so on the advice of a friend he went to New York and entered the exclusive world of private banking. At CitiBank, as this account application shows, Raul Salinas's references were waived because he was_ quote_ "referred by a very reliable client of long standing"_ close quote_ Carlos Hank Rohn.

Raul's personal banker was CitiBank vice president Amy Elliot, who would use a special CitiBank system called Confidas to transfer Raul's millions out of Mexico. Raul's wife, Paulina, never questioned the arrangement.

PAULINA CASTAÑON: I didn't ask him. I didn't ask him.

LOWELL BERGMAN: You didn't ask him when he said"Deliver these cashier checks"? You didn't ask him?

PAULINA CASTAÑON: To CitiBank? I_ maybe, maybe I would ask him_ I told you_ if it was a smaller bank or something, that I think is something fishy. Why I didn't trust him? It was CitiBank. It was Amy Elliot. It was open. It was his name, Raul Salinas.

NARRATOR: And it was Raul Salinas's accounts that interested the Swiss, including the ones set up by Amy Elliot of CitiBank. Since Paulina's arrest, the Swiss have examined at least 100 suspect accounts and thousands of transactions in seven countries.

Dr. VALENTIN ROSCHACHER, Swiss National Police: It's really a huge case. I can't remember if there was a case like this before.

LOWELL BERGMAN: How much money is involved?

Dr. VALENTIN ROSCHACHER: We blocked about a little bit more than $100 million U.S. in Switzerland. It could be a lot more. And part of the money came into Switzerland and went out, so it's more than we blocked and probably it's a lot more, but I have proofs for a little bit more than $100 millions and the bigger amount I saw passing different countries. But I can't tell you if the amount was $200 million, $300 million, $400 million or $500 millions, but I think everything is possible in this case.

NARRATOR: When Paulina Castañon was arrested back in November of 1995, she was told that the reason for her arrest was a Swiss suspicion that some of the money was connected to drug trafficking.

PAULINA CASTAÑON: Laundering money and something about narcotics. And I was shocked. Shocked. After a year that I was arrested, that everything began, I haven't seen any document or any people who said that it was drug money or laundering money. No documents, nothing.

NARRATOR: The documents the Swiss have on Paulina Patricia Castañon and her husband Raul are in a room in the Swiss national police headquarters called "the Mexico room." What these files contain has led Valentin Roschacher to a startling conclusion.

Dr. VALENTIN ROSCHACHER: We are more convinced than when we started the case that this money is drug money, or the biggest part of it or_ I don't know if every dollar here on every Swiss account is a drug_ is a narco-dollar, but we think that we're on the good way to prove that the money is all drug proceeds.

LOWELL BERGMAN: You have live witnesses?

Dr. VALENTIN ROSCHACHER: Yeah, live witnesses and I hope they are still alive.

LOWELL BERGMAN: What do you mean?

Dr. VALENTIN ROSCHACHER: You know, it's dangerous for a witness to say, "Okay, this guy and this guy was involved in drug trafficking or gave protection to drug traffickers." That's not-- that's not an easy thing to say, even if it's the truth, you know?

LOWELL BERGMAN: What were the drug traffickers paying Raul Salinas for?

Dr. VALENTIN ROSCHACHER: We are talking about protection, you know?

LOWELL BERGMAN: Protection in Mexico?

Dr. VALENTIN ROSCHACHER: In Mexico.

LOWELL BERGMAN: From the government?

Dr. VALENTIN ROSCHACHER: From people that worked for the government, from the police.

NARRATOR: Officially, the police and the government under Carlos Salinas had committed themselves to an all-out war on drugs. With international pressure on Colombia, Mexico had become the major drug pipeline into the United States. But Carlos Salinas defended his government's efforts.

CARLOS SALINAS, Former President of Mexico: In Mexico in the last 16 months during my administration, we have seized 55 tons of pure cocaine. The street value of that cocaine is equivalent to one and half times the external debt of Mexico. Is it enough? Well, we will continue hitting them by seizing the drugs, destroying it and putting in jail whoever participates in drug trafficking.

NARRATOR: Despite his promises, Mexican drug lords like the Arellano-Felix brothers and Amado Carrillo operated with impunity. They flew jet plane-loads of narcotics into the country by paying off the police, the army and officials at every level of the government.

Dr. VALENTIN ROSCHACHER: When I started this case and I heard about the rumors and what the people are telling how it works in Mexico, who's protecting who, and who gives money and the drug loads of 10 tons of cocaine, 50 tons of cocaine passing Mexico, coming from Colombia, going over the Rio Grande into the U.S.-- you know, for a Swiss cop or a Swiss judge, it sounds unbelievable.

U.S. LAW ENFORCEMENT OFFICIAL: What we have here ladies and gentlemen, is the largest seizure of cocaine in the world.

NARRATOR: And the profits are unbelievable_ huge, multi-ton loads of cocaine poured north across the border. Mexico's drug cartels became the most powerful narco-traffickers in the world. Charles Intriago is a former federal prosecutor and an expert on money laundering.

CHARLES A. INTRIAGO: The profits are astounding. if a quarter of that money that the U.S. estimates is made in this country goes to or comes from Mexico, you're talking about $20 billion a year, a massive amount on a daily basis, so that it's not big surprise to me that_ of these allegations of massive amounts in payoffs_ $150 million to this public official, another $10 million to this guy, $40 million a month to these people. There are allegations in FBI documents that are now coming out that there was $150 million a month in payments to Mexican public officials. That doesn't surprise me. That is peanuts.

NARRATOR: The Swiss investigation into Raul Salinas's accounts follow a complex trail through banks in many countries. If any of that money proves to be drug-related, it could have serious consequences, especially for the U.S. banks involved.

NICHOLAS PICTET, President, Pictet Bank: I have my name on the door and, frankly, we hate be associated with something of that nature. We have been striving for 200 years to build a reputation that's not to destroy in two minutes because someone has opened an account with us. So we have been cheated and we feel very cross about it. They did not come from funny places. They were bank transfers or checks drawn on very known banks.

NARRATOR: Banks like CitiBank, which under U.S. law could face serious penalties.

CHARLES A. INTRIAGO, Money Laundering Expert: The implication, as far as U.S. financial institutions go, is that if_ if it is proved by those_ by that evidence that the money had an origin in narcotics proceeds, it could subject the financial institutions in the United States that handled that money to prosecution for money laundering.

LOWELL BERGMAN: What are the penalties?

CHARLES A. INTRIAGO: The penalties could be very severe for a U.S. financial institution and for its employees who are involved in those transactions. For a financial institution, there's a_ there's a "death penalty," so-called, in the U.S. law that could actually subject an institution to forfeiture of its license.

NARRATOR: For over a year CitiBank and Raul Salinas have been under investigation by the U.S. attorney in Manhattan and the FBI for possible violations of money-laundering laws. The bank says it is cooperating with the investigation and quote "We have looked into this matter ourselves for any possible violations of the law and, in this case, we have found no reason to believe there [have] been any"_ end quote. Vice President Amy Elliot has testified in her deposition that she had no reason to question the source of Raul Salinas's funds.

CHARLES A. INTRIAGO: In her deposition, she supposedly said when Raoul Salinas came to her on the recommendation of another customer of her bank and started engaging in transactions in the $50 million to$70 million to $80 million range, first of all, she said that she cleared it with her superiors, but secondly, she said she didn't need to explore the source of his money because it would be the equivalent of asking the Rockefellers where they get their money and she was satisfied with his answer that his money came from the sale of a construction company.

NARRATOR: The truth about where Raul Salinas got all his money will have implications not just for the banks down the line or any of the individuals involved. It will finally come home to Mexico and to his relationship with his brother, Carlos, and to Carlos's political legacy.

Prof. JOHN WOMACK, Harvard University: What's at stake, I think, politically in Mexico is whether this reform group that emerged in the '80s will be entirely destroyed.

LOWELL BERGMAN: You're saying if the narco-trafficking connection is made, that's the end of the Salinas group.

Prof. JOHN WOMACK: I would say so. If the U.S. government proves that Raul was involved in it andthat Carlos Salinas was involved in it, I think that would put an end to the Salinas group.

NARRATOR: While Raul was filling his overseas bank accounts, his brother, Carlos, was accumulating political capital. To keep his party in power and his own long-term influence within it, he would need cash_ a war chest. So on February 23, 1993, with elections approaching, an invitation was extended for dinner.

ANDRES OPPENHEIMER: All the 30 biggest businessmen, billionaires, who in some way or another benefited from the privatization of state-owned companies, the wealthiest people in Mexico_ all men, by the way_ arrived in their limousines. They had an idea of what it was about, but didn't quite exactly know what they had been summoned for. And at that 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.

NARRATOR: Among the billionaires who contributed to the fund were Carlos Slim, and Carlos Hank Rohn. Not all the billionaires were invited to that dinner. Juan Sanchez-Navarro has always been politically independent. He says even if he had been invited, he would not have gone.

JUAN SANCHEZ NAVARRO, Mexican Businessman: [through interpreter] I was lucky! I have to thank God that they did not invite me to the banquet because I would feel very bad. It was a clear example of the intimate relationship, I would say perverse relationship, between the economically powerful and the national political system. That dinner really laid bare the connection between some businessmen, and the government. I consider it an absolutely corrupt system.

NARRATOR: And how corrupt is the system?

JUAN SANCHEZ NAVARRO: [through interpreter] The whole system is a legacy of corruption that certainly, in some aspects, got worse under Salinas, but this is a system based on the belief that a single political party will a dominate the elections, elections that are never really clean. It is a system designed to serve a certain ruling class, a very specific political elite, and ensure that they determine the destiny of the country and the people are never heard.

NARRATOR: In the Mexican political tradition, Carlos Salinas picked his successor, another technocrat and a reformer, Donaldo Colosio, but Colosio may have been more than Salinas had bargained for. A popular candidate who began to talk about real political reform, he was also a threat to the old party bosses, or perhaps a target for the narco-traffickers.

Colosio's assassination was a defining moment for Carlos Salinas. He lost control of the succession. He wound up handing over the presidency to a political neophyte, Ernesto Zedillo, a man he neither respected nor admired. Perhaps he could still wield his influence from behind the scenes. But there was to be more bad news.

Carlos Salinas had put off devaluing the peso, and so when it happened, there was panic. There was an economic meltdown. Remember Jose Maria Imaz and his language school? Once devaluation hit, his business loan's interest rate went from 15 percent to 97 percent, wiping him out.

JOSE MARIA IMAZ: I would say that we bought the gold dream and we awakened to a real nightmare. What happened was a nightmare, but it was real. The other one was a dream.

NARRATOR: Jose Maria has joined a growing movement of debtors who say the banks have literally taken the shirt off their backs. For ordinary Mexicans the crash has been worse than the great depression and they blame Carlos Salinas. Political analyst Jorge Casteñada:

JORGE CASTEÑADA: He really, in my opinion, did more damage to this country than any president in recent times because of his mistaken economic policies, because of his corruption that he encouraged and participated in, perhaps in his government, because of the authoritarian way he ran the country for six years. Mexicans believe that he is responsible for all of the disasters that the country befallen. They're largely right. They believe that he tricked them, that he fooled them and that he ran off with the money.

NARRATOR: Demonized by the public and, he says, made a scapegoat by his successor, Carlos Salinas was to face still another crisis: the murder investigation of his brother-in-law, Ruiz Massieu, by the new attorney general had uncovered a new prime suspect_ his brother, Raul.

ANDRES OPPENHEIMER, Miami Herald: It was a watershed moment in Mexico's history. This was a member of the presidential family in a country where the president used to be a king. This was a big deal. The attorney general sent his troops to arrest Raul at his sister's home here in Mexico City.

ADRIANA SALINAS, Sister of Former President: [through interpreter] There were more than 100 people around the house. They were clambering over the walls. My daughter, Daniella, come down the stairs. She was very scared because she saw them through the windows.

DANIELLA RUIZ, Niece of Raul Salinas: I told them that there were lots of people outside with machine guns and that I didn't understand what was happening.

NARRATOR: And then Carlos sent his own bodyguards to his sister's house to protect Raul.

ANDRES OPPENHEIMER: For awhile, for, like, 10 minutes or 20 minutes that day, you had two armies, virtually, the new government's army and the old government's army, going-- rushing to the place where Raoul Salinas was staying. And for a while, for a couple of minutes there, it sounded like there was going to be a clash between the old government and the new government. 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 back home.

NARRATOR: Raul Salinas was sent to jail, charged with masterminding the murder. But what was the evidence? The killer had been caught and he implicated Raul, as did others. But what was the motive?

ANTONIO LOZANO, Former Attorney General of Mexico: [through interpreter] We have evidence from witnesses there was both a personal and political feud between Raul Salinas and Mr. Ruiz Massieu, and evidence that it was Raul Salinas who gave orders to contract a killer to assassinate of Jose Francisco.

NARRATOR: But Lozano's investigation would fall apart with a media circus of psychics, buried bones and fabricated evidence. He was fired, his chief prosecutor became a fugitive and his deputy went to jail. Long before that, in shock over Raul's arrest and fearing that he himself would be charged with conspiring to murder Donaldo Colosio, Carlos Salinas fled the country.

The new government is putting on its best face, proud that it has paid back the billions the U.S. government pumped into Mexico to save it. Jose Angel Gurria is the secretary of foreign relations, the number-two man. He knows the United States is worried that his government is under threat, that drug money is flooding into an already established system of corruption.

LOWELL BERGMAN: We are being told that some of that money is reaching all the way into Los Pinos, to the presidential palace.

JOSE ANGEL GURRIA, Foreign Minister of Mexico: I think I would disagree totally. I don't think there is any proof of that.

LOWELL BERGMAN: Under Salinas, under Carlos Salinas.

JOSE ANGEL GURRIA: I would_ again, I don't think there is any proof of that. I would challenge anybody who said that because I think it's a very serious allegation. I would say generally that the level of accountability of public servants in the last few years has increased exponentially and that there are

now many ways in which we can both identify and track instances of corruption. We have not rooted it out. We still have it at lower levels and we're working on it.

NARRATOR: Not enough, apparently. At a high level meeting with the U.S. drug czar, Secretary Gurria introduced his new chief of drug enforcement, General Gutierrez Rebollo.

GENERAL BARRY R. McCAFFREY: And we also are delighted to meet for the first time General Gutierrez Rebollo. We know his reputation for focus, for integrity_

NARRATOR: But the U.S. endorsement became an embarrassment when it was revealed that Gutierrez Rebollo was in the pay of the drug cartels.

LOWELL BERGMAN: You must have been shocked. I mean, you publicly vouched for his integrity.

Gen. BARRY McCAFFREY, Director of National Drug Control Policy: Well, of course, I don't publicly vouch for anybody's integrity. What I do is deal with the representatives of foreign powers and it was our view then, based on our own intelligence, that he was what the Mexicans thought he was, was an honest, hard-driving field operative, which they_ who they brought up into their senior ranks and who turned out to be a crook.

NARRATOR: Not just a crook. According to sources in the FBI and DEA, before he was uncovered General Gutierrez Rebollo had betrayed high-level informants, who paid with their lives. But the evidence of high-level corruption keeps mounting, like this deputy attorney general for narcotics during the Salinas regime who, it turns out, was in the pay of the drug cartels at the rate of $1.5 million a month; and this deputy attorney general under Carlos Salinas, the brother of the murdered Ruiz Massieu, found by a Houston jury to have been paid $8 million by the drug cartels.

So the question is: What did Carlos Salinas know about the corruption around him and, more importantly, how could he have not known of the possible involvement of his brother Raul?

LOWELL BERGMAN: You were very close to Carlos Salinas, were you not? You were familiar with him. You were friends.

JOSE ANGEL GURRIA: I was a deputy minister during his administration.

LOWELL BERGMAN: Right. And you were familiar with Raul Salinas, as well.

JOSE ANGEL GURRIA: Much less so because he was not a member of the administration except for a fairly short period of time.

LOWELL BERGMAN: It's been reported that members of the government went to Carlos Salinas on a number of occasions and said, "Your brother is corrupt. He is taking money." Why didn't he do anything about it?

JOSE ANGEL GURRIA: I was in charge of Mexico's foreign debt, so I was not privy to that_ to those visits or those statements.

LOWELL BERGMAN: You weren't aware of it?

JOSE ANGEL GURRIA: I have read in the papers the same information you have and I think that's a question which should be asked to Mr. Salinas, rather than to me.

NARRATOR: And that's why we went to Dublin, only to find that Carlos Salinas would meet with reporter Lowell Bergman, but he wouldn't give us an interview. He's adept at handling the media, so he tried to give us his side of the story without going on the record.

He would only confirm what he has said before, that he believes that all of these charges, including those against his brother Raul, are part of a conspiracy to stop the reforms he started, that he and his family have been made scapegoats and that the charges of involvement in drugs and money are unbelievable fabrications. He has said publicly that he wishes he'd kept a closer eye on his brother, Raul.

Raul Salinas's family talk to him on the telephone from his prison cell.

RAUL SALINAS: [on the telephone] [subtitles] I can touch the walls of my cell with my fingers when I extend both arms. They have the light on all night long.

NARRATOR: He is in solitary confinement, under constant video surveillance. The family says he is a political prisoner, the victim of Carlos's enemies.

ADRIANA SALINAS: [on the telephone] [subtitles] We are going to complain to the human rights people again. [through interpreter] We have been defending my brother against this murder charge because we believe he is innocent, totally innocent, and we are going to continue to defend him. As for the other charges on the money, well, I think that has to be proven and Raul is the only person who can explain it.

NARRATOR: In addition to the murder, Raul has been charged with tax evasion and "inexplicable enrichment." And this past week he was questioned in prison by Valentin Roschacher of the Swiss national police. heir investigation continues, but Raul's wife, Paulina Castañon, believes in the end, the Swiss will prove her husband's innocence.

PAULINA CASTAÑON: I've seen them, how they are, how they investigate_ very meticulous, very word-by-word, sentence-by-sentence. You know, I like the way they do it.

LOWELL BERGMAN: And you'll respect their decision?

PAULINA CASTAÑON: I trust them. I trust the Swiss authority.

Dr. VALENTIN ROSCHACHER: You know, I do not care if there is a brother of a former president, if there is a brother of an acting president, or a movie star or who else. I don't care about names or positions or levels or whatever. If somebody is a crook and I can prove that he is a crook, I will do that. End of the story.

ANNOUNCER: Check out FRONTLINE online to dig deeper. More of FRONTLINE's exclusive interviews with Salinas's family and advisers; profiles, photos and maps of the drug cartels; a chronology and documents on Mexican narco-power; special reports, Mexican news coverage and more at www.pbs.org.

Next time on FRONTLINE, it's a story you can't get away from. But who are the people behind the headlines who have hustled their way into the White House? Get the inside story on these small-time political operators who have reaped big rewards from saying they're friends of Bill. "The Fixers'' next time on FRONTLINE.

Now your letters. Most of your comments on our program about the spiritual counseling of death row inmates by Sister Helen Prejean took a hard line against her and for the death penalty.

VIEWER [name withheld] [Baton Rouge, Louisiana]: Dear FRONTLINE, I am concerned, though, that FRONTLINE couched this issue along purely religious lines. Next time, you might consider naming the episode "Menace on Death Row,'' as this would be more in line with what mainstream America thinks about this important issue.

JOHN McDONALD [Arlington, Virginia] : Dear FRONTLINE, Very simply put, an organized society must protect its members, be it from a rabid animal or a human gone wrong. The thought of revenge is what gives people pause, but in reality, execution should be an act which protects those in society who follow the codes. Celebrities who want the rest of us to support a prisoner for life, when we know the outrageous costs to do so, should volunteer the proceeds from their films to the prison system.

DUKE CARTER [Beaumont, Texas]: Dear FRONTLINE, I had to write to say this nun is wrong. If she wants to try to save the killer's soul, well, that is good. If the soul is saved, that is good. But if a killer is executed, that, too, is good. If his soul is saved, then he can bask in eternity in God's glory. If not, he can burn in hell for eternity, where he belongs.

JENNY HOWARTH [El Paso, Texas]: Dear FRONTLINE-- I'm of the Jewish faith and have a real problem with the portrait that you presented of the death row inmates. The only thing I can liken this to is the Jewish forgiveness of the Nazis. These men committed heinous

crimes against their fellow men and since their

committal to death row have shown only the other side of their character, not the beasts that committed the crimes. The Torah and the Bible both say, "An eye for an eye and a tooth for a tooth.''

ANNOUNCER: Let us know what you thought about tonight's program by fax [(617) 254-0243], by e-mail [FRONTLINE@www.pbs.org] or by the U.S. mail [DEAR FRONTLINE, 125 Western Ave., Boston, MA 02134].

MURDER, MONEY, AND MEXICO

PRODUCED BY
Neil Docherty

CORRESPONDENT
Lowell Bergman

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Declan Hill
Adrienne Bard

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Sylvestre Guidi

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A FRONTLINE coproduction with the Canadian Broadcasting Corporation

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