RAUL SALINAS GOT DRUG MONEY

The Brother Of Mexico's Former President Says The Funds Came From
Legitimate Investments.

Almost from the moment detectives in Switzerland discovered a
huge, hidden fortune that belonged to Raul Salinas, a brother of
Mexico's former president, Salinas has said the money belonged to an
investment fund that he had assembled with big Mexican
entrepreneurs.

Now, however, investigators in Switzerland have arrived at a different
explanation. They say although some of Salinas' millions did come from
executives, much of that was drug money that he had laundered with
help from an old friend who is one of Mexico's richest men.

In a secret report, the Swiss police suggest that the friend, Carlos
Peralta, helped hide protection money that they assert drug
traffickers had paid to Salinas. Salinas is the elder brother of
former President Carlos Salinas.

"The transactions described by Carlos Peralta were designed in their
entirety for one purpose only, namely, the laundering of money," the
report states. A partial copy of the 369-page document was obtained by
The New York Times.

The case was bolstered this month when the Mexican authorities
announced that they had linked Raul Salinas to an additional $119
million in a maze of Mexican and foreign accounts.

Officials in Mexico also said they will try to interview the witnesses
developed by Swiss and American investigators, raising the possibility
that they might add drug-trafficking accusations to the murder and
graft charges on which Salinas has been jailed there since 1995.

But the investigative report and other documents suggest that the
Swiss explanation of the money may have problems of its own.

Peralta, 46, the heir to an industrial and telecommunications
conglomerate, denied the allegations against him as outrageous. And
lawyers for Raul Salina describe the Swiss accusations against the
industrialist as one of the most obvious fictions among what they say
are a litany of unsustainable claims against their client.

"The money of Carlos Peralta is absolutely legitimate," Raul Salinas'
lead attorney, Eduardo Luengo, said in an interview. "We have
demonstrated its movement from start to finish. But the stance of the
Swiss prosecutor and the police is to ignore any evidence that
contradicts their theory."

Based on the investigators' report, the Swiss authorities are expected
to confiscate the more than $100 million they have kept frozen in
Salinas' 15 accounts there. Once that happens, Salinas' lawyers say
they will go to the country's Supreme Court to sue for its release.

The Swiss report quotes a series of witnesses who recount meetings at
which Raul Salinas and other Mexican politicians purportedly cut deals
with drug traffickers and picked up suitcases filled with cash. Most
of those informants appear to be convicted drug traffickers themselves
or former aides, security guards or associates of the Salinas
brothers, and nearly all of them are identified only by pseudonyms.

The report itself offers accounts of Raul Salinas' purported dealings
that are often general and sometimes vague. There is little
explanation of how he might have exercised influence with police and
military agencies to allow the smugglers to operate freely.

The case of Peralta is something of an exception. That part of the
report quotes a convicted drug trafficker named Marco Enrique Torres
as saying he gave the industrialist a kilogram of cocaine - 2.2
pounds, or about $20,000 worth on the New York wholesale market - as a
Christmas gift from Raul Salinas in 1993. Torres said he handed the
drugs to Peralta on Dec. 25 "in front of the restaurant Casserola at
Pasoe de la Reforma in Mexico City."

The restaurant, however, is in a different part of town. And travel
documents provided to the Swiss by Peralta appear to show that he was
on vacation in Florida from Dec. 19 until Dec. 26, when he took off
with relatives on a weeklong Caribbean cruise.

On the Swiss' larger claim, that Raul Salinas gave Peralta $50 million
to hide the fact that it came from drug traffickers, the Swiss do not
appear to have any hard evidence.

Peralta said he had loaned the money to Salinas for future
investments, and the report raises a series of doubts about that
explanation. For example, it notes that a loan agreement was not drawn
up until October 1996 - 21/2 years after the funds were
transferred.

The report takes no note, however, of the roughly 500 pages of
documentation that Peralta's lawyers presented to the Swiss
authorities. Among other things, that evidence indicates that Peralta
received the $50 million he sent to Salinas from the sale of stock in a
cellular phone company to Bell Atlantic Corp., and that he paid about
$10 million in taxes on the money in Mexico.

Checked-by: Patrick Henry