MEXICAN OFFICIALS ALLEGE DRUG CARTEL INFILTRATED ATTORNEY GENERAL'S OFFICE

MEXICO CITY -- In what could be one of Mexico's worst cases of
drug-related corruption in a decade, Mexican officials alleged that a
drug cartel infiltrated the highest levels of Mexico's attorney
general's office, paying people there as much as $450,000 a month to
get sensitive information about antidrug activities.

The Sinaloa cartel, based in Mexico's western Sinaloa state, may even
have placed a mole inside the U.S. embassy in Mexico City who fed the
drug lords information from the U.S. Drug Enforcement Administration,
according to a copy of an arrest warrant reviewed by The Wall Street
Journal and reported earlier by Mexican newspaper El Universal.

"We are currently investigating this issue along with our Mexican
counterparts," a DEA spokesman said.

Two senior Mexican antidrug officials were arrested in recent weeks in
connection with the scandal and charged with crimes related to drug
trafficking, officials said on Monday. At the time of his arrest in
early October, one of the men, Fernando Rivera, was deputy director
general of intelligence at the attorney general's organized-crime
unit. Officials said Mr. Rivera was the main liaison between the
attorney general's office and the Mexican army in coordinating
antidrug efforts.

The other person arrested was Miguel Colorado, the technical
coordinator of the antidrug unit. His duties included assigning
federal agents to various raids against drug cartels. Lawyers for the
men couldn't immediately be identified; in Mexico, most court trials
are closed to the public until a verdict is issued, making contact
with defendants and identifying their lawyers difficult. Many federal
agents have died during raids in the past few years, and others have
been murdered by cartel hit men, officials say. In total, some 35
officials from the organized crime unit have been arrested and are
being investigated, officials said. Officials said they had dubbed the
continuing investigation "Operation Clean-Up."

The scandal reflects the difficulty of President Felipe Calderon's
efforts to crack down on Mexico's drug cartels.

Mexico is the main trans-shipment point for cocaine entering the U.S.,
U.S. and Mexican officials say, and is widely seen as having overtaken
Colombia's drug war in importance. So far this year, an estimated
3,700 people have died in violence from the drug war, most of them
involved in the drug trade, according to counts kept by Mexican news
organizations.

Since taking office in November 2006, Mr. Calderon has deployed tens
of thousands of soldiers to different parts of Mexico to wrest back
control of areas under the cartels' sway. But since the crackdown, the
number of deaths related to drug violence has increased, according to
the Mexican government. The emerging scandal may be one of the most
serious instances of drug corruption to emerge since 1997 when Gen.
Jesus Gutierrez Rebollo was arrested shortly after being named head of
Mexico's antidrug agency.

Gen. Gutierrez was convicted of being in the pay of drug lord Amado
Carrillo Fuentes, known as the "Lord of the Skies," who later died
while undergoing plastic surgery.

The scandal is likely to be a setback for deepening cooperation
between Washington and Mexico City in the war on drugs, observers say.
Under the "Merida Initiative," the U.S. government will provide Mexico
with $400 million in equipment and training a year for the next three
years.

Both sides have said cooperation is much better nowadays than in the
past -- especially in the wake of the 1997 scandal.

Attorney General Eduardo Medina Mora said the scandal would lead to an
overhaul of how his agency recruits, trains, and checks on its
employees. Mr. Medina Mora suggested that the investigations could yet
implicate more high-ranking officials.

"The investigation continues and we do not rule out that there are
other people who could have taken part in crimes that will be called
to account," Mr. Medina Mora said. An adviser to Mr. Medina Mora said
he hoped with the arrests, officials had cut out "70% of the cancer"
in the institution. The investigation started as far back as December,
according to a Mexican government official, when the names of some
Mexican officials began surfacing in documents seized during raids of
drug gangs. In late June and early July, a Mexican former U.S. Embassy
employee in Mexico City was arrested and later testified that he had
passed along critical information to the Beltran Leyva gang, a key
part of the Sinaloa cartel, in exchange for money.

The witness, code-named "Felipe," also accused several high-ranking
Mexican officials, including Mr. Rivera. "Felipe" said in his
testimony that on one occasion, he was paid $30,000 from a man
code-named "19" who worked with the Beltran Leyva gang in exchange for
providing information about coming arrests of cartel members. Deputy
Attorney General Marisela Morales said Monday that higher-ranking
officials got much more money than "Felipe." She accused Messrs.
Rivera and Colorado of receiving "payments from $150,000 to $450,000 a
month" for information that would enable the Beltran Leyva drug cartel
to avoid "searches, investigations, and arrest warrants" as well as
obtain information about rival drug gangs.