CITIBANK CRITICIZED FOR SECRET TRANSFERS OF ALLEGED MEXICAN DRUG MONEY

WASHINGTON - A new congressional report criticizes Citibank
for secretly transferring about $100 million in alleged drug money for
the brother of the former Mexican president without examining the
source of the funds or his financial background.

Citibank, the nation's second-largest bank, failed to follow its
own procedures against money-laundering and "facilitated a
money-managing system that disguised the origin, destination and beneficial
owner
of the funds," according to the General Accounting Office report,
which was to be released today. The GAO is the investigative arm of
Congress.

Congressional officials said the report, entitled "Raul Salinas,
Citibank and Alleged Money Laundering," is likely to lead
to congressional hearings on Citibank next year and could prod
the Justice Department, which for three years has been
investigating Citibank's handling of Salinas' money, to speed up its probe
into whether the bank broke any criminal laws.

Raul Salinas is the eldest brother of Carlos Salinas, the Harvard-trained
economist who was once the darling of U.S. business and political leaders
when he held the Mexican presidency from 1988 to 1994. But there were
repeated rumors that Raul Salinas, known
for living lavishly on a $190,000 civil-service salary, had dubious sources
of income and was linked to drug lords.

Yet, when Raul Salinas came to Citibank's private banking unit in 1992, few
questions were asked, the report said. Many large banks have established
these units, which cater to the very wealthy and specialize in making the
kind of complicated financial transactions that Citibank performed for
Salinas to hide the source and destination of funds. Often, the
transactions are performed for legitimate purposes.

From 1992 to 1994, Salinas' wife, Paulina, hand-carried checks to Citibank
Mexico, allowing Citibank to funnel millions of dollars from Mexico to
Switzerland through a complex series of transactions through New York, the
Cayman Islands and London that hid the paper trail of the funds.

But with the collapse of the Mexican economy in late 1994, just after
Carlos Salinas left office, the brothers' world came crashing down.

The peso crisis destroyed Carlos Salinas' economic reputation - and
he now lives in Ireland. In early 1995, Raul Salinas was arrested in Mexico
on charges
of masterminding the killing of a top ruling-party official. He is still in
prison and his nearly two-year-long trial is expected to conclude in the
next two weeks. A judge earlier this year dismissed Mexican
money-laundering charges, citing lack of evidence.

In October, Swiss officials said they have amassed enough evidence after a
three-year investigation to prove that Raul Salinas' money came from
Mexican and Colombian drug lords, who the Swiss say paid Salinas in
exchange for government protection as they shipped drugs through Mexico
into the United States.

Raul Salinas has denied that his fortune was illegitimate, saying he had
received the money from rich Mexicans for the establishment of an overseas
investment fund.

Checked-by: Patrick Henry