SWISS WON'T CHARGE SALINAS IN MEXICO MONEY LAUNDERING

MEXICO CITY -- After years of threats, Swiss authorities decided not
to press money-laundering charges against Raul Salinas, the older
brother of Mexico's former president.

The Swiss said Tuesday that they have frozen accounts of Salinas
totalling about $115 million, arguing that the money is linked to
narcotics trafficking. The government said it would keep the funds
"for the benefit of the state." Salinas is appealing to the Swiss
Supreme Court to recover the funds.

Swiss officials in Geneva said they were dropping money-laundering
charges because Salinas faces murder charges in Mexico. Salinas,
though never been convicted of a crime, remains imprisoned outside
Mexico City.

Some analysts suggest that the Swiss decision might help to restore
the family's influence in Mexican politics. Carlos Salinas, the former
president of Mexico, is in self-imposed exile in Ireland after his
political support crumbled in 1994 with the devaluation of the Mexican
peso.

Attorneys in Mexico City for Raul Salinas rebuked the Swiss
authorities, accusing them of pursuing the case in an effort to
illegally keep the money and to sully the reputation of Mexico as a
"narcostate."

Eduardo Luengo Creel, one of Salinas' lawyers, said Swiss
investigators had relied on information from informants of the U.S.
Drug Enforcement Administration. He said the DEA had paid informants
to provide incorrect information about his client.

"Everything here is fantasy," Luengo said.

The decision not to pursue money-laundering charges clearly caught
some Mexican officials by surprise.

News reports in American newspapers, some apparently based on leaks by
Swiss government officials, had indicated strong links between Raul
Salinas and narcotics traffickers.

American and Swiss investigators have said that Raul Salinas used the
power of his brother's office to secure hundreds of millions of
dollars in bribes from drug traffickers in return for protection from
arrest and prosecution.

Carlos Salinas, however, has not been linked to the drug
trade.

Raul Salinas has maintained his innocence, indicating the money in the
Swiss accounts came from business associates who gave him money to
invest.

In an open letter to the public, widely reported in Mexico City
newspapers on Tuesday, he again proclaimed his innocence. "The only
reason (for the investigation) is to illegally seize the money,"
Salinas said. "They invented an unbelievable story of
narco-fiction."

Swiss investigators were tipped off to the Salinas fortune in 1995
after Paulina Castanon, the wife of Raul Salinas, was caught trying to
withdraw more than $80 million using a false passport. Raul Salinas
had deposited some of the millions in accounts under other names.
Asked why his client would do that if the money was earned
legitimately, Luengo said only that Salinas felt bad about those
actions and that "he accepts responsibility. . ."

Earlier this month, authorities in Mexico announced they had uncovered
another $119 million in bank accounts belonging to Raul Salinas in
Mexico and elsewhere around the world. The announcement fed
speculation that additional charges would be filed.

Luengo reminded reporters that his client was a wealthy man before he
took over as head of a food-distribution program during his brother's
presidency.

Since Carlos Salinas left office in September 1994, allegations of
malfeasance have dogged the Salinas family. Once a favorite of
international financiers, Carlos Salinas fell out of favor with the
collapse of the peso in December 1994, which plunged Mexico into
economic chaos.

Raul Salinas has been held in jail since his arrest in February 1995
on charges of "illicit enrichment" and masterminding the assassination
of Jose Francisco Ruiz Massieu, his former brother-in-law and No. 2
official in the ruling Institutional Revolutionary Party. Charges of
money-laundering in Mexico were dropped in May.

The murder charges against him have also begun to unravel. Last year,
the chief prosecutor was arrested for fabricating evidence. Also, a
former member of Congress whom police say was a key player in the plot
to murder Ruiz Massieu has been missing for years and, presumably,
would be unavailable to testify at a trial.

Joel Estudillo, an analyst with the Mexican Political Studies
Institute, said the Swiss government's decision not to pursue charges
suggested it could not build a strong case.

Unless the authorities in Mexico file additional charges, Estudillo
said, it was possible that Salinas could be released, perhaps not
immediately, but in two or three years. "Every day, he gets a step
closer to freedom," Estudillo said.

He said the Salinas family may try to rebuild its reputation, blaming
its woes on political enemies and on agencies like the DEA.

"I think they are searching for the prestige of the family," he said,
"to restore the family name."

Checked-by: Patrick Henry