DRUG REPORT TAINTS SUMMIT

Diplomacy: New corruption allegations against Mexican officials surface as a
key conference with the United States nears.

Mexico City-New drug corruption allegations against some of Mexico's
prominent political figures are chilling U.S. Mexico relations on the eve of
a key diplomatic conference.

With Secretary of State Madeleine Albright, Attorney General Janet Reno and
White House drug czar, Barry McCaffrey due to arrive today for a round of
meetings, diplomats from both countries say a U.S. intelligence report
linking Mexican billionaire Carlos Hank Gonzalez to the agenda. As Mexican
officials see it, hardliners in the Clinton administration leaked the report
to embarrass the Mexican government.

"We don't like it," said one Mexican diplomat. "These leaks are very
damaging. They do not help the overall bilateral relationship at all."

Countered a former DEA special agent, "It's about time that this kind of
stuff comes out."

The "stuff" he's referring to includes allegations that Hank Gonzalez, a
former Mexico City mayor, and his two sons are tied to the
multibillion-dollar narcotics trade. The National Drug Intelligence Center,
a U.S. Department of Justice agency, detailed those accusations in a
confidential report dated last month.

It is not the first time U.S. law-enforcement officials have made serious
accusations against the Hank Gonzalez clan. A confidential May 1997 Customs
Service report alleged that one of Hank Gonzalez's sons, Carlos Hank Rhon,
had ties to the late cocaine baron Amado Carrillo Fuentes.

Further, the report alleged, a Hank family company, Tran-sportacion Maritima
Mexicana, "is involved in bringing cocaine from South America via its
vessels and then transporting the cocaine through Mexico into the U.S. via
its tractor trailers."

Carlos Arguelles, a spokesman for Hank Gonazalez, said Wednesday that such
allegations are mean-spirited and "absolutely false."

"This family has never had the slightest connection to these dirty affairs,"
he said. "Here in Mexico, everyone knows this family. ... Nobody believes
this story."

Other Mexicans are upset about a second set of accusations that surfaced
this week against another prominent figure, Jose Liebano Saenz, private
secretary to President Ernesto Zedillo.

Some U.S. law-enforcement officials privately suspect that Saenz has aided
drug traffickers.

Mexican authorities say they began investigating Saenz at his own request in
May 1997 after he voluntarily turned over a mysterious envelope. It
contained a had-written police report claiming Saenz had received a gift - a
house in Mexico City - from Carrillo Fuentes, a smuggler who died after
botched plastic surgery in July 1997.

The purported author of the report was Gen. Jess Gutierrez Rebollo, then
head of Mexico's anti-drug agency. The general is now in prison on charges
that he took payoffs from Carrillo.

Mexican attorney general's officials say they closed the Saenz investigation
Jan. 22 "because there was no crime to pursue."

Witnesses who alleged Saenz had drug ties turned out to be unreliable,
Mexican officials said.

U.S. officials point out that one of the witnesses, a bodyguard named Jose
Jaime Olivera, was murdered in Mexico City in September.

The Saenz case should be reopened, some Drug Enforcement Administration
officials say, citing the killing and the reassignment of Samuel Gonzalez,
who headed the organized-crime unit of the Attorney General's Office.
Gonzalez was abruptly removed from his post in Spain last year.

Attorney general's officials say they moved Gonzalez because of threats
against his life.

Meanwhile, Mexican diplomats awaiting the arrival of the American VIPs say
they resent the talk about drug corruption, especially when there are other
important issues to discuss.

The continual public focus on drug-related corruption only adds tension to
such meeting and highlights what would seem to be an inconsistent stance
toward Mexico, a Mexican diplomat said.

Even within the DEA, there are sharp differences of opinion on Mexico.

Asked about the country's newest federal police agency, one senior DEA
official grumbled, "It's like I tell everybody else - same dog, new fleas."

A second DEA official, who touts the progress Mexico's counternarcotics
forces have made, shook his head in disagreement.

"If the Mexicans walk on water, people at DEA headquarters say, 'Well,
that's because they don't know how to swim.' It's not fair to the Mexicans."

In any case, former DEA Special Agent Phil Jordan said he believes that the
airing of accusations against such "untouchables" as the Hank Gonzalez
family can only boost the anti-drug fight.

"You see the Amado Carrillos in the headlines, but the Hanks and other
families are the ones who keep the drink stirred," he said.