MEXICO TO PROSECUTE UNDERCOVER U.S. CUSTOMS AGENTS

MEXICO CITY -- Mexico has advised the United States that it will prosecute
U.S. Customs agents and informers who carried out an undercover
money-laundering operation on Mexican soil and will seek the agents'
extradition to face criminal trial here.

In a meeting on Monday in Caracas, Venezuela, Foreign Secretary Rosario
Green of Mexico handed Secretary of State Madeleine Albright a list of
Mexican laws that the customs agents violated, according to preliminary
results of Mexican investigations.

Mexico is preparing to accuse the agents of entrapment, engaging in
money-laundering and usurping the authority of Mexican law enforcement, Ms.
Green said in news interviews.

``Our legal action is going forward and that's final,'' Ms. Green told a
Mexican radio interviewer on Tuesday.

The three-year undercover operation, code-named Casablanca, was described
by officials of the U.S. Customs Services as the largest and probably the
most successful in U.S. law enforcement history. According to indictments
in Los Angeles stemming from the investigation, employees of 12 Mexican
banks laundered at least $110 million for drug organizations based in
Colombia and Mexico.

But the operation has badly shaken the close relations that the Clinton
administration built with Mexico. U.S. officials embarrassed their Mexican
counterparts by not informing them about the secret operation until hours
before its results were announced publicly in Washington on May 18. Mexican
officials have come under a barrage of criticism here for being cowed by
the United States.

The indictments in the case make it clear that several customs agents and
confidential informers who did not work for the U.S. government met with
bankers and narcotics dealers inside Mexico.

The operations centered on a painstakingly constructed sting, a front
company run by customs called Emerald Empire Corp. based near Los Angeles.
Through this company, undercover customs agents received instructions from
Colombian and Mexican traffickers and relayed them to bankers in Mexico.
Customs also used elaborate ruses to lure Mexican bankers suspected of
money-laundering out of Mexico so they could be arrested in the United
States.

Sting operations are illegal under Mexican law.

At a meeting of the Organization of American States in Caracas, Ms.
Albright acknowledged that ties with Mexico had been damaged. ``Obviously
there needs to be better cooperation,'' she said.

But Ms. Green said Ms. Albright issued a straightforward apology in the
private meeting. Mexico's foreign minister said Ms. Albright was angry that
she, too, had been left in the dark about the operation.