MEXICAN MILITARY HELPS DRUG TRAFFICKERS, U.S. REPORT SAYS

WASHINGTON -- For a year the Clinton administration has presented the
stunning arrest of Mexico's drug-enforcement chief as proof of that
government's strong will to fight corruption. But now U.S. analysts have
concluded that the case shows much wider military involvement with drug
traffickers than the Mexican authorities have acknowledged.

According to an extensive classified report by the Drug Enforcement
Administration and other intelligence assessments, the arrest last year of
the former official, Gen. Jesus Gutierrez Rebollo, followed secret meetings
between Mexican army officers and the country's biggest drug mafia,
officials say.

Exactly what transpired remains unclear. But the officials say there is
growing evidence that military officers discussed a deal to let the drug
gang operate in exchange for huge bribes, and that some such arrangement may
have been in place before the gang's leader, Amado Carrillo Fuentes, died
after extensive plastic surgery last year.

The Gutierrez Rebollo case initially raised fears that he might have passed
sensitive intelligence to members of Carrillo Fuentes' gang. But U.S.
officials say it now points to the possible collusion of military officials
who are central to U.S. drug-enforcement efforts in Mexico.

"The bottom line is that all this goes a lot deeper than we thought," said
one senior official who, like others, would discuss the report only on
condition of anonymity.

If the indications of wider military involvement with traffickers are borne
out, another official said, "it points to much of our work in Mexico being
an exercise in futility."

Some intelligence officials have questioned aspects of the report, officials
said, describing them as speculative. But drug-enforcement officials still
presented it to Attorney General Janet Reno and other senior officials Feb.
6, one year to the day after Gutierrez Rebollo was arrested on the orders of
the Mexican defense minister.

Beyond that, officials say the report has been very closely held, because of
the sensitivity of the intelligence and the volatility of the politics that
surround it.

With strong U.S. support, President Ernesto Zedillo brought the military
into law enforcement in 1996 because it was seen as the only alternative to
the country's deeply corrupt police.

A month ago, as part of its annual evaluation of narcotics-control efforts
abroad, the administration assured Congress that Mexico was "fully
cooperating." But a Senate discussion of two resolutions to overturn that
endorsement could begin as early as Thursday.

U.S. officials have been reluctant to confront Mexican leaders with their
new assessment. In part, they say, their unease has to do with
still-significant gaps in the story. But they also fear that such a
challenge could imperil largely secret anti-drug programs with which both
the CIA and the Pentagon have been trying to build closer ties to a
neighboring army that has long been deeply suspicious of the United States.

The director of White House drug policy, Gen. Barry McCaffrey, said in an
interview that he would not discuss the intelligence reports other than to
confirm that they had been scrutinized very closely.

"It is my view that the Mexican military's actions, both internally and
publicly, have been to resist attempts to penetrate them, intimidate them
and corrupt them," he added.

Mexican Defense Ministry officials have angrily denied the few sketchy
reports that have surfaced so far about negotiations between generals and
traffickers. After Gutierrez Rebollo testified at his trial last September
that such meetings had taken place, military officials acknowledged that
several generals did indeed meet with a top lieutenant of Carrillo Fuentes,
but they insisted that the man had used an alias and that the officers did
not know he was a trafficker.

"The claim that there were any other meetings is false," Gen. Tomas Angeles
Dauahare, a top aide to the Mexican defense minister, said in an interview.
He described the allegations as "lies, slander and infamy" generated by
Gutierrez Rebollo in an attempt to save himself by implicating others.

Until his arrest, Gutierrez Rebollo was one of the Mexican military's most
prominent and respected commanders. A gruff, bald commander with a thick-set
frame and a bulldog face, his presence suggested a take-no-prisoners style.

After he was plucked from a regional military command and named by Zedillo
to head the National Institute for the Combat of Drugs, he was described by
McCaffrey as a soldier "of absolute, unquestioned integrity."

But early last year, just two months after his appointment, an anonymous
caller to the Defense Ministry -- later identified as Gutierrez Rebello's
driver -- reported that the general was living in a luxurious Mexico City
apartment that had been occupied by Carrillo Fuentes, the trafficker.

Gutierrez Rebollo may have fought vigorously against some trafficking gangs,
the driver and other officers testified later, but he carefully avoided
Carrillo Fuentes. In return, they said, the traffickers gave the general
armored cars and encrypted cellular telephones and paid off some of his
subordinates.

Confronted by the defense minister, Gen. Enrique Cervantes, and several of
his aides, Gutierrez Rebollo angrily denied having done anything wrong. His
daughter, Teresa de Jesus Gutierrez, said he was then forcibly sedated and
bundled off to the Central Military Hospital.

Twelve days later, Cervantes assembled his commanders for an extraordinary
televised address. Denouncing the drug-enforcement chief as a turncoat, the
minister said Gutierrez Rebollo had suffered a heart attack when confronted
with evidence of his treason.

In a separate statement, Zedillo said the arrest confirmed the government's
"unshakable determination to pursue and punish drug trafficking and combat
corruption."

Initially, Mexican officials announced that more than 30 military officers
and civilians had been detained. Over the past year, the armed forces cited
the prosecution of more than half a dozen generals on drug-related charges
as proof of their intolerance of corruption.

Yet U.S. intelligence and law-enforcement officials have remained deeply
troubled by the Mexican government's handling of the case.

In several early assessments, they identified contradictions in the
military's account of what was known about Gutierrez Rebollo's contacts with
the traffickers and why he was arrested. Later, they collected a
considerable body of intelligence indicating that despite Mexico's denials,
several senior military officers met not once but three times with the
traffickers.

U.S. law-enforcement officials have found that a series of murders last year
have a common characteristic: the victims were said to have acted as
intermediaries between drug smugglers and the military. Some U.S. officials
say that when Gutierrez Rebollo was arrested and hospitalized, the military
intended to kill him and then announce that he had died of diabetes or heart
trouble. Others, including some intelligence officials, discount that.

Although the analysts still have only partial theories about the results of
the reported negotiations between the traffickers and the military, two
officials said the intelligence reports had turned up nothing to refute a
chilling account they heard from an informant even before Gutierrez
Rebollo's arrest: that the officers were negotiating for a bribe of $60
million or more, in return for the protection of Carrillo Fuentes' drug
operations.

According to these officials, the intelligence reports say Gutierrez Rebollo
attended the first such meeting in the fall of 1996, shortly before he took
charge of the nation's anti-drug effort. Others present reportedly included
two senior generals and Carrillo Fuentes' lieutenant.

A second meeting took place in Mexico City in early January 1997, the
officials said, and the military representatives again included the two
senior officers and the army's powerful chief of staff, Gen. Juan Humberto
Salinas Altes.

U.S. officials say a third meeting, on Jan. 12, was the one that Defense
Ministry officials have acknowledged took place at their headquarters
between Eduardo Gonzalez Quirarte, who is Carrillos Fuentes' lieutenant, and
four generals and a colonel. Mexican military officials said the encounter
was set up by two private lawyers; an attorney for Gutierrez Rebollo said
the lawyers actually worked for Zedillo's military staff, an allegation the
government denies.

In his testimony at his trial last fall, Gutierrez Rebollo said the third of
three meetings actually took place Jan. 14. And last summer the Mexico City
news magazine Proceso published a military intelligence document with that
date that appears to refer to Carrillo by his initials.

"A.C. does not intend to surrender," the document reads. "A.C. wants to
negotiate with the government, to make a pact."

It goes on to list the conditions under which "A.C." will help the
authorities wipe out "unorganized narcotics trafficking": he would sell his
drugs exclusively in Europe and the United States, not in Mexico, and "act
like a businessman, not like a criminal."

Two officials cite recent evidence that they say corroborates another piece
of the seemingly implausible original story -- that at the last meeting
Gonzalez Quirarte made a down payment of $6 million or $10 million on a
bribe that was intended to be 10 times more.

Mexican government officials vehemently denied having taken any money from
the traffickers and, like their military counterparts, attributed the claims
to a wild effort by Gutierrez Rebollo to implicate others.

How Gutierrez Rebollo ran afoul of his comrades also remains a subject of
internal U.S. debate.

Officials say there is some evidence for his claim -- and that of several of
his former subordinates -- that Gutierrez Rebollo clashed with another
powerful general because of the drug czar's aggressive pursuit of the
Arellano Felix brothers, a drug cartel based in Tijuana and Carrillo
Fuentes' most bitter rivals.

That second officer, Gen. Guillermo Alvarez Nara, is now the head of
Mexico's federal police force.

U.S. officials say there are also hints of a deal between Carrillo Fuentes
and suspicious killings that followed his death.

One victim was a former congressman who had been an aide to Gen. Juan
Arevalo Gardoqui, a former Defense Minister and current adviser to the
ministry. The congressman was the partner of a Mexican money launderer in
two foreign-exchange offices that moved military officers' money out of the
country, U.S. officials said.

Four days after the death of the former congressman, gunmen in Guadalajara
killed a former local beauty queen who had been intimate with military
officers and with major drug traffickers for years.

But U.S. officials said the most disturbing victim was Tomas Colsa McGregor,
whom they identified as an accountant for Carrillo Fuentes who paid the
bribes to military officers.

Shortly after Carrillo Fuentes' death in a Mexico City hospital, agents of
Alvarez Nara's federal police force arrested Colsa and began to question
him. At one point, they even allowed him to be interviewed by United States
law-enforcement officials.

When Colsa was next seen, however, he was dead. U.S. officials said he had
been bound, gagged and brutally tortured.

Copyright 1998 The New York Times Company