DRUG SYNDICATE'S SHADOW FALLS ACROSS MEXICAN ELITE

MEXICO CITY -- A series of accusations this week linked Mexico's most
notorious drug cartel to money-laundering scams that touch the highest
levels of the nation's political, financial and labor elite.

First, it emerged that the laundrymen of the Juarez cartel tried to buy a
controlling share of a struggling bank. Then it was reported that they
tried to go into business with President Ernesto Zedillo Ponce de Lesn's
brother. And on Friday, a newspaper said the head of the largest national
labor federation and a union-linked bank were being probed for suspected
money-laundering ties.

Prosecutors confirmed that the cartel attempted to purchase the Anahuac
financial group but said they halted the sale in 1996 when they became
suspicious of the funding source. And Rodolfo Zedillo, the president's
brother, said his attorneys warned him in time to back off a proposed
partnership with entrepreneurs who turned out to be alleged money
launderers.

Labor's denial

The chief press officer for the labor movement said Friday's allegations
against federation chief Leonardo Rodr(acu)guez Alcaine and Banco Obrero
(Workers Bank) were malicious and false.

Yet even jaded Mexicans have been shocked by the apparent attempts by the
drug bosses to infiltrate the top tiers of business and politics.

At the same time, some analysts say the reports show the system is now
working against a scourge that long went undetected. They say more-vigilant
Mexican investigators are armed with powerful new money-laundering laws and
investigative tools, allowing them to achieve real breakthroughs.

A chastened Rodolfo Zedillo said in an interview: ``It is obvious that the
cartels have no respect for rank or hierarchy; they are definitely
increasing their areas of influence. But our institutions are responding
well.''

The national attorney general's office said Thursday night that it had
identified several suspects involved in the attempted purchase of the
struggling Anahuac financial group on behalf of the Juarez cartel, which
was led by Amado Carrillo Fuentes until he died during plastic surgery last
July.

The prosecutor's office said one suspect -- Juan Alberto Zepeda Novelo, a
top executive in Mexico's second-largest construction company -- was
arrested Wednesday in the case.

Biggest probe yet

The investigation appears to be the largest since Mexico adopted stricter
money-laundering laws last year. Mexico has long been suspected not only as
a major transit route for drugs headed to the American market but also as a
primary laundering channel for profits filtering back to the drug cartels.

In this week's allegations, a common suspect is Jorge Fernando Bastida
Gallardo, identified as the main money launderer for the Juarez cartel.

Newspapers in Mexico City and Guadalajara said Bastida led the negotiations
to invest at least $12 million in Anahuac on behalf of the cartel in 1995
and 1996. However, national banking authorities said they froze that
transaction before it took effect because they were suspicious of the
origin of the money.

But federal prosecutors are investigating charges that Bastida laundered
more than $80 million of the Juarez cartel's money through Anahuac in 1995
and 1996, El Universal newspaper in Mexico City reported Friday.

Later in 1996, regulatory authorities seized control of the Anahuac group
in connection with a separate fraud allegation.

El Universal also said prosecutors were investigating whether Rodr(acu)guez
Alcaine, the labor federation leader, and the union-linked Banco Obrero had
been involved in money laundering along with Bastida.