IN TALE OF MILLIONAIRE DRUG SUSPECT, MEXICANS JUDGE GOVERNMENT GUILTY

MEXICO CITY -- The newspapers fly off the stands at Juan Perez's
kiosk on bustling Avenida Juarez -- especially those splashed with
headlines about the riches of Zhenli Ye Gon, an importer accused of
drug trafficking in a case Mexican and U.S. authorities have hailed
as a blow to the methamphetamine trade.

But to Perez, who has hawked news on this street for 60 years, the
true defendant is the Mexican government.

"Tons! Tons of drugs passed through the ports. Who gave the permits?"
asked Perez, a spry 75, jabbing his finger into the warm midafternoon
air as taxis whizzed by his stand. "In all this, the government is guilty."

Dubbed "El Chino" -- the Chinaman -- by Mexican media, the man whose
arrest at a Wheaton, Md., restaurant last week thrust him into the
center of the U.S. drug war has for months been the notorious
protagonist of what analysts here call the country's biggest
political scandal in recent years.

Questions are swirling about government complicity in Ye Gon's
alleged trade, not to mention his recent claim that much of the $205
million found in his Mexico City mansion was a "slush fund" he was
forced to safeguard for Mexico's ruling National Action Party.

President Felipe Calderon has called Ye Gon's version of the story a
"cuento Chino," a phrase that literally translates to "Chinese story"
but means "tall tale." Many observers reject Ye Gon's explanation as
absurd. But analysts say the obsession over the case reflects an
entrenched national belief rooted in decades of corruption: If the
government might be involved, it is.

"This is a wonderful story for our very highly emotional
intelligence. And this is a very distrustful society," said Raymundo
Riva Palacio, a political analyst and newspaper columnist.
"Perception is reality in Mexico."

The Mexican press has dissected every hint of fraud. Television
channels have replayed footage of then-President Vicente Fox handing
a citizenship certificate to Ye Gon in a 2003 ceremony. After
government officials said Ye Gon used fake permits to import huge
shipments of chemicals that can be used to make the street drug
methamphetamine, newspapers churned out articles about shifty customs
agents. The questions have triggered probes by Mexico's Congress and
the electoral watchdog agency.

Mexican authorities, meanwhile, steadily restate their case against
Ye Gon, who is jailed on charges of violating U.S. drug laws; Mexico
plans to ask for his extradition, which U.S. court sources say could
take years.

Investigators are examining Ye Gon's links to drug cartels and
possible collusion by government officials, who will face charges if
implicated, a spokesman for the Mexican attorney general's office
said. Ye Gon's U.S. lawyers say their client would not get a fair
trial in Mexico; government officials accuse them of concocting a story.

"They take advantage of our political cannibalism, and they take
advantage of the eternal distrust in our institutions, and those who
represent them in a given moment, to generate this enormous smoke
screen," Jose Luis Santiago de Vasconcelos, Mexico's deputy attorney
general, said in a recent interview with CNN.

If the Mexican public is skeptical, it is not without reason,
political analysts said. Seven decades of one-party rule under the
Institutional Revolutionary Party fostered an ethos of fraud and
untouchability. When Fox's National Action Party ended the reign in
2000, he declared a battle against corruption. But accusations have
continued -- Fox's wife, for instance, was accused of using her
husband's power to secure major government contracts for her adult
children from a previous marriage. When Calderon won the presidency
last year by a razor-thin margin, millions of street demonstrators
accused him of stealing the election.

According to recent surveys by Transparency International, a Berlin
organization that monitors corruption, Mexicans gave their government
a 4.4 on a corruption scale of 1 to 5, with 5 being most corrupt. A
poll by the daily newspaper La Reforma found that most Mexicans
either buy Ye Gon's story or believe neither side. Bumper stickers
reading "I believe the Chinaman" are for sale.

Ye Gon, a native of Shanghai, was a stranger to the Mexican public
before March. He immigrated in 1990 and for a time imported Chinese
trinkets, officials said. In 2000, he began importing Chinese
pseudoephedrine, a cold medicine ingredient that can be used to make
methamphetamine, ostensibly to sell it to drug manufacturers. The
government says he lost his permit in 2005, when Mexico cracked down
on a growing meth market.

But officials received an anonymous tip in early 2006 that Ye Gon was
dealing pseudoephedrine to Mexico's drug underworld, and "Operation
Dragon" was launched with the U.S. Drug Enforcement Administration.
On Dec. 5, a ship arrived for him in a southwest Mexican port
carrying 19.7 tons of a substance listed on shipping manifests as a
chemical that does not exist, Mexican and U.S. authorities say.
Laboratory tests revealed it was a derivative of pseudoephedrine,
authorities said.

That led to a March raid on Ye Gon's home, a colonnaded mansion with
an indoor pool and a wine bar. Authorities found six Mercedes-Benzes
and two other cars; a small collection of firearms that included an
AK-47 assault rifle; and duffel bags, wheeled suitcases and metal
lockers bursting with $205 million. A raid on Ye Gon's two Mexico
City warehouses revealed boxes filled with purses and fake Christmas
trees, and 12 bags containing pseudoephedrine, while a search of his
factory outside the capital turned up traces of meth and
pseudoephedrine, Mexican officials said.

Ye Gon, who had fled the country, was charged with drug trafficking,
money l aundering and weapons possession.

In an affidavit accompanying his petition for asylum, Ye Gon insists
he lived a quiet life in Mexico, distinguished only by his
transformation into an "ultra-successful business entrepreneur." He
says $150 million of the cash stash was escorted to his home by
police and foisted on him by Labor Secretary Javier Lozano Alarcon,
who threatened him with death.

His Washington-based attorney, Martin F. McMahon, said the rest was
Ye Gon's hard-earned money, which he did not entrust to Mexican
banks. McMahon said Mexican officials have destroyed the chemicals in
question and laundered the seized cash.

In a statement, Alarcon called the allegations "false, absurd,
implausible, deceitful and perverse."

Analysts say Calderon has a chance to capitalize on the case. If
officials helped Ye Gon, they likely did so under Fox's
administration. Busting them would make Calderon look like "a very
righteous guy," Riva Palacio said.

In interviews, several Mexico City residents said they doubted that
would happen.

"It's pure theater," said Delfino Luna Soriano, 37, an office worker.
"Investigation, investigation. Then it is suddenly going to end."

The government has attempted to deflect some of the concerns. The
$205 million, officials announced at a news conference Thursday, was
deemed abandoned after 90 days passed without a claim for it, so the
government doled it out to the attorney general's office, the courts
and the Health Ministry to combat drug addiction and fight crime.

"What we have here is a criminal case, not a political case," the
attorney general's spokesman said on a recent morning in his office,
where a framed poster of the stacks of Ye Gon's cash hangs on the
wall. He spoke on condition of anonymity out of concern for his safety.

Try telling that to Cecilia Lopez, 38, a teacher who smoked a
cigarette on a recent evening in a leafy downtown park. For all she
knew, Ye Gon's duffel bags might have held drug money or campaign
funds or both. The government and drug traffickers are part of "the
same mafia," she said, shrugging.

Ye Gon, she predicted, would be extradited and found guilty, and
nothing else would come of the case.

"It's like a soap opera," she said, exhaling. "But we know the end of
the story."