REPORT FAULTS CITIBANK FOR MEXICAN TRANSACTIONS

WASHINGTON (Reuters) - Citibank secretly transferred up to $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, the
Washington Post reported Friday, citing a new congressional report. The
General Accounting Office, the investigative arm of the Congress, will
release a report Friday concluding that the second-largest U.S. 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 Post report.

Congressional officials told the paper the report was likely to lead to
congressional hearings on Citibank next year and could prod the Justice
Department to speed up its probe of the bank's handling of Raul Salinas'
money and whether Citibank broke any criminal laws.

Citibank is now part of the banking and insurance giant Citigroup Inc.

Raul Salinas is the older brother of Carlos Salinas de Gortari, who was
president of Mexico from 1988 to 1994.

The GAO report said a Citibank representative had explained that the bank
believed Salinas's funds were obtained legally-- partly from the sale of a
construction company he owned.

But congressional investigators noted that the bank knew no details about
the construction company, including its name or who had purchased it.

Salinas was arrested in Mexico in early 1995 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

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.

To prove criminal wrongdoing, prosecutors would have to show that an
institution was "willfully blind" to the fact that funds come from an
illegal source, lawyers said.

Checked-by: Richard Lake