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THE NAFTA GANG

Despite international accusations of murder, drug trafficking, animal smuggling and money laundering, Mexico's Hanks keep expanding the family business all the way to the White House.

Model, Manuel Rivas

Clothing by The Westerner, Santa Cruz,CA. Photo of Blanca the tiger courtesy of San Diego Zoo.

by Julia Reynolds

photo-illustrations by Janjaap Dekker

“Animals are my only vice.”
— Jorge Hank Rhon, quoted in Earth Island Journal

In 1991, Jorge Hank Rhon was driving around San Diego with a four-week old kitten in the back seat of his car. Blanca was a rare mix of Siberian white tiger and a white Bengal. Jorge had brought her, the story goes, from his private zoo in Tijuana to Coronado so that his sister could play with her.

But Jorge has a knack for getting caught, and U.S. customs nabbed him with the tiger on his way back to Mexico in a random check of cars leaving the U.S.

“She was such a cuddly little baby,” customs spokeswoman Bobbie Cassidy told the San Diego Union-Tribune. Blanca was indeed adorable, with chocolate stripes, blue eyes and a pink nose.

It turns out white tigers are endangered, and this one was worth around $45,000. Jorge Hank’s “only vice” can net around $24 million a year. He ended up losing the animal, first to customs, then to the San Diego Zoo. He also paid a $25,000 fine.

Jorge, 46, sometimes spins out of control. He is the wild one, the youngest son of Mexico’s powerful billionaire business-político trinity made up of Carlos Hank González and his sons Jorge and Carlos Hank Rhon.

“Grupo Hank,” as the trio is called, pulls political and economic strings in Mexico at every level. Its operations and influence have even, in fits and starts, expanded into the U.S., along with the Hanks’ dreams of running the financial afffairs of the hemisphere.

Like his father and brother, Jorge is a man who has been accused of murder, money laundering, rigged gambling operations and business with drug traffickers. The charges usually slide off as soon as they are leveled - the Hank men are Teflon-coated, enjoying such impunity and influence that a U.S. government report this summer said the Hanks pose a “significant criminal threat to the United States.”

Let me start by saying that in course of interviewing for this article, more than one person was clearly frightened and insisted I not identify them. “Watch what you write and be careful,” I was told. When asked why, the person replied, “Just ask Jesús Blancornelas.”

Jesús Blancornelas is an editor whose co-worker was ambushed and killed by Jorge Hank Rhon’s bodyguards (see related story, page 15). Later, in prison, the same men orchestrated the murder of the warden.

“He moves like a fish through water without leaving a sign of his presence.”
— Adolfo Aguilar Zinzer, legislative investigator

Carlos Hank González, 71, is Mexico’s legendary self-made man, though he knows that no man makes it by himself. He started out as a schoolteacher, the son of a German father and a Mexican mother. It’s a bit hard to comprehend his transformation from a teacher who sold sweets to supplement his income, to “Don Carlos,” who today is among the most powerful of men in Mexico, the man who is said to choose presidents.

Hank built his small businesses into bigger businesses, all the while adding to his catalogue of political contacts. He became governor of the state of Mexico, a congressman, secretary of both agriculture and tourism, and mayor of Mexico City. Hank has built a business empire of banking and transportation companies, including Taesa airlines, which he founded.

He cannot be president of his country — Mexican law says both parents must be born in Mexico — but he holds court nonetheless, as the widely-known leader of the “dinosaurs,” the old guard of the ruling PRI party. Hank acquired greater influence in the late 1980s and early 90s as President Carlos Salinas de Gortari’s right-hand man. It’s hard to say who rode to power on whose coattails: Salinas clearly helped Hank amass wealth and power, but Hank is said to have hand-picked Salinas for the job.
Hank González is believed by many to be behind the 1994 assassinations of presidential candiate Luis Donaldo Colosio and politician Francisco Ruiz Massieu — and in the latter case, he is said to have set up the ex-president’s bother Raúl Salinas to take the rap, because no Hank has ever taken the fall.

Last year the Paris-based group Geopolitical Drugs Watch said that Carlos Hank González “is untouchable and will probably remain so, in the United States and Mexico.”

“The gratitude he generates is amazing,” said Adolfo Aguilar Zinzer, a Mexican legislator who investigated the Hanks, quoted in Insight magazine. Gratitude may be the key to the impunity enjoyed by Hank and his sons. It’s the currency with which the Hanks negociate. Because if people don’t feel gratitude, it can always be exchanged for fear.

Mexico has three very powerful border cartels: Tijuana, the Gulf cartel and Juárez. Analyst Andrew Reding told the Senate Foreign Relations Committee in 1995 that the Tijuana cartel essentially dominates the Pacific drug delivery route.

Tijuana is the domain of Benjamín and Javier Arellano Félix, said to be the most vicious of cartel leaders, with operations reaching into San Diego and the Eme, the Mexican prison-based gang made infamous in the film “American Me.” San Diego-based hit man David Barrón, nicknamed CH, who died in an attempted shooting of editor Jesús Blancornelas, was found upon autopsy to bear an Eme tattoo with sixteen skulls: one for each hit. He was in the employ of the Arellano Félix brothers at the time of his death. Reding told the Senate committee that “the Arellanos have hired what amounts to a private army, ranging from federal and state police to members of San Diego gangs.”

Like other drug cartels, the Arellano Félix group has numerous links to the Hank family. One of the most shocking was the murder of Cardinal Juan Jesús Posadas in May 1993. The former bishop of Tijuana was gunned down by close-range hit men — under the supervision of the Arellano brothers — in Guadalajara’s international airport. After the slaying, Benjamín and Javier flashed police badges, boarded an Aeromexico flight and were back in Tijuana in time for dinner. Flight attendants later stated they saw Jorge Hank Rhon sitting with the Arellanos in the first class section. Warrants were issued for the Arellano brothers’ arrest, and though they have been sighted in public, they have never been picked up on those charges.

Was the cardinal’s slaying meant to send a message that no one is sacred? Some think the cardinal was about to make public findings on the relationship of drug dealers to government officials.

Soon after, the Los Angeles Times reported that authorities in Mexico believed that the Arellano brothers “answer to a silent boss who is more worldly than they are and who has his own banker and legitimate businesses.” It is not difficult to conclude they’re talking about Carlos Hank González, the patriarch.

“De los Tops Cats, Jorge Hank Rhon es el número uno”.
— Prensa San Diego, quoting a Mexican report on gambling interests

If “Professor Hank” has an achilles heel, it’s his son Jorge. The younger Hank Rhon has been called “the weak link in the chain,” the loose cannon, the one who one of these days may bring it all down. According to a recent government report, a criminal investigation of him is active in San Diego.

“Jorge is more openly criminal than either his father or his brother,” says a recent U.S. government report on the Hanks, “and is regarded as ruthless, dangerous and prone to violence.” His attraction to exotic animals is his weakness. He collects paintings of horses by American artist Barbara Rieger Mittelmann, and he collects endangered species in his private zoo in Tijuana.

Earth Island Journal reported in 1996 that Jorge Hank was co-owner with David Ibarra (son of a former finance minister), of Promotora Beta, which in 1989 “served as a way-station in an international conspiracy to ship endangered birds from Indonesia, through Singapore, Japan, Spain and Costa Rica. The birds (as many as 500 a month) were then smuggled into the U.S. aboard private yachts, netting $2 million a month.”

The report continued, “An inspection into Promotora Beta’s sale of puma cubs ended abruptly when the inspector was mysteriously murdered.”

In May 1995, Jorge Hank Rhon was arrested at Mexico City’s International Airport on his way home from Japan. Customs found 12 suitcases full of rare and endangered animal hides, fur and ivory. Hank Rhon had declared the total value at $1000, and within hours he went home with a hand-slap. The fact that he was even arrested startled many Mexicans accoustomed to the Hanks’ untouchable status.

Jorge and David were also the creators of “Reino Aventura,” a popular animal park near Mexico City, which they later sold to the Mexican communications giant Televisa. According to journalist John Ross, Hank Rhon had illegally acquired a whale to serve as the star attraction at Reino Aventura. The whale, Keiko, later became a star in the movie “Free Willy.”

Jorge owns Tijuana’s Agua Caliente racetrack, which has been said to serve as an excellent money-laundering operation because Hank would rig the track so that he and his associates got race results seconds before they showed up on the park’s screen. Knowing the winner, they could instantly cash in for many thousands of dollars a pop.

Jorge has tried to stake a claim in U.S. gambling operations with not much success. Last year, the Nevada Gaming Control Board began to pressure Autotote, a U.S. gambling device manufacturer, to end its relationship with Agua Caliente or face an official probe into its association with Jorge Hank. Autotote withdrew its bid for a license rather than face the Board.

With that, the advancement of the Hanks into the U.S. market has largely been left to the elder son, Carlos Hank Rhon.

“They are crafty, like those mutant strains that develop as you create medicines.”
— Shane Phelps of the Texas District Attorney’s Office, commenting on money launderers to the San Antonio Express-News

The architects of NAFTA on both sides of the Río Bravo have allowed a new, immensely profitable system to flourish - sometimes creating millionaires overnight — based on a river of cash from drug sales that flows through the banking industry and into business expansion and acquisitions.

The NAFTA gang is made up of people who move 21 million dollars here and there this week, who another week make $100 million in the secondary public offering of a business subsidized by a subsidiary of a Hank company. If you think Internet stocks are out of control, try the “legal” side of Grupo Hank’s empire, which is made of holding companies and subsidiaries that acquire other companies, financial institutions that make loans to buy more companies, with hardly anyone knowing what exactly some of these businesses do to make money, except that they make hell of a lot of it. Forbes says Carlos Hank González is worth an easy $1.3 billion, but others believe it is much more.

Back in 1994 and ‘95, the peso was rapidly cascading. Mexican businesses, expecting to prosper under NAFTA, were instead hurting badly as the currency rapidly devalued. President Clinton pushed through emergency bailout legislation at the desperate request of President Zedillo. Mexico blamed the crash on former president Salinas and cronies such as Raúl Salinas and Mario Ruiz Massieu, who fled the country almost as fast as their money did. Salinas went from being the free-market darling to becoming one of its most hated villains, blamed for crime, corruption and crisis in Mexico.

But while Mexico reeled, Grupo Hank kept on growing, untouchable, lighter than air.

“Un político pobre es un pobre político”. (A politician who is poor is a poor politician.)
— Carlos Hank González

Carlos Hank Rhon, 51, is the trinity’s “respectable” face: the would-be international financier. Though he is positioned close to the Juárez cartel, Carlos Jr. fancies himself a Texas businessman, a banker, the wheeler-dealer behind Grupo Interacciones, a multinational company that at one time attempted to become the number one Latin American financial institution. His weakness — all the Hanks seem to have one — has been a desperate desire to expand the family business into the U.S., to advance the kingdom.

In 1991, Carlos began acquiring shares of Laredo National Bank in Texas, eventually taking control in a series of shifty maneuvers. Laredo is no small-town player; it is, in fact, a $2 billion company. Carlos Jr. did so well with his investment, says the Federal Reserve Board, that he impressed his father and inspired Don Carlos to buy shares — $20 million worth.

“Professor Hank” met with Citibank officals to arrange the deal. The elder Hank had a good relationship with the New York bank, having used his vast accounts there to pay for foreign investments, which as a Mexican government official he could not openly own without risking some political fallout. Citibank and the Hanks had a nice, discreet relationship.

Carlos Hank Rhon, according to the Fed, used Laredo Bank to move money around — to make loans to his own businesses (which they defaulted on), to finance friends’ acquisition of shares (which he later bought back); he even lent himself money, says the Fed, to purchase greater control of the bank. Though he had promised he would report to the Federal Reserve if he ever controlled more than 25 percent of the ownership, the Board says he eventually owned more than 70 percent without reporting to them.

With such liquid resources, Hank Rhon was also able to buy a majority interest in Interacciones, S.A., a large financial company with offices in New York, London and Santiago. The company had at one time planned to become the biggest financial corporation in Latin America, but it suffered a sudden loss of more than 60% of its equity capital as a result of the 1995 peso devaluation. Bloomberg Business News reported that Interacciones was “all but abandoning its plan to become a securities-trading power across Latin America.” It fell just in time for Hank Rhon to buy shares and acquire a majority interest in the company.

Doing this fast, freewheeling sort of business was easy — Carlos Jr. just dealt away like he always had in Mexico, perhaps not paying much attention to the legal minutiae here in the States. He is, after all, a Hank,who doesn’t seem to understand you can’t do it that way. He happily planned to expand his banking business, his heart set on acquiring Brownsville Mercantile, another old border bank with seven subsidiaries in Texas. The good news for the family was that Carlos Jr. was successfully making inroads into the U.S. business scene. Professor Hank could indeed be proud.

In June of 1996, Hank Rhon applied to the Federal Reserve to purchase Brownsville Mercantile Bank. He may or may not have known that the Justice Department was already investigating his family, and that the Federal Reserve Board was getting ready to nail him to the wall.

“Too many unsavory individuals were allowed entrance to the White House and access to President Clinton.”
— Republican report on the 1996 campaign finance investigation

“[Mexico] is working hard to tackle the corruption traffickers have wrought.”
— President Clinton, lobbying for recertification of Mexico last spring

On August 23, 1996, the Clinton government was nearly a year into investigating the Hank family for drug and money-laundering crimes in the US. That was also the date of one of the President’s now-famous White House coffees, and one of the guests was a target of the investigation. Gary Jacobs was president of Laredo National Bank, and Laredo was believed to be the Texas base for the Hanks’ money-laundering operations.

While one arm of the administration was preparing to expose a vast network of Mexican and U.S. bankers connected to drugs and money laundering, Clinton and representatives of the Democratic National Committee were breezily courting Jacobs in the White House Map Room.

A former Republican supporter, Jacobs began donating to Democratic candidates and the Democratic National Committee several months before the coffee, including at least one “soft money” donation to the DNC. This was right around the time Carlos Hank Rhon applied to the Fed to buy Brownsville. To his surprise, Hank Rhon’s chances weren’t looking good. He knew he had a less-than-stellar reputation that the Fed was eyeing warily. Could he have thought — naïvely, to be sure — that sending Jacobs to the White House could somehow smoothe the road? Or was it to show dad that he was moving up?

By August, Gary Jacobs and his wife had donated $23,750 to Democratic causes, and in the months after the coffee, gave $23,000 more. Although not a huge sum of money in Washington, the donations would not make the White House or the DNC look good. Jacobs was linked to the Hanks and Mexican drug money. He was Carlos Hank Rhon’s employee. And the Federal Reserve and Justice Department believed that Hank was using Laredo National Bank to launder his money.

Did Clinton know that his own administration was investigating the Hanks when he invited Jacobs to the White House? If the president wasn’t aware that the Hanks were tied to dirty money, why not? The Hanks had for years been eyed for all sorts of suspect activities, and Justice had been investigating Laredo since 1995. And if Clinton did know, did he not care that he may have been soliciting drug-related funds for the DNC?

“It looks as though the government is getting serious about going after them.”
— Andrew Reding, World Policy Institute senior fellow for hemispheric affairs

“[The accusations] are completely false, and everyone knows they are false… [Hank González] travels to the United States frequently, and I don’t understand what’s motivating these charges.”
— Carlos Arguelles, spokesman for Hank González

T he Federal Reserve never granted permission to Carlos Hank Rhon to buy Brownsville. News reports came out that officals were wary of his reputation. Rumor also had it the Fed just didn’t like his style. Too violent, too brash. In disgust, Hank Rhon withdrew his application in 1998. Bad press began to dog the Hanks at every turn.

On December 22, 1998, the Federal Reserve Board’s Office of Financial Institution Adjudication (OFIA) sent a notice to Carlos Hank Rhon, citing nine counts of violations of banking regulations and laws and calling for a public hearing that could permanently bar Hank from “participating in any manner in the affairs of a United States depository institution.” In more than 60 pages, the notice chronicles charges of self-funded loans from Laredo to Hank’s businesses, of Hank Rhon setting up “paper” board members so he could acquire more shares, of secretly investing his father’s money in Laredo Bank, and of the shuffling of funds in and out of Citibank to cover fraudulent transactions.

The hearing is set for July, 2000. Hank faces imprisonment and more than $40 million in fines. Even for a Hank, that’s gotta sting.

Then in July, a confidential report from the National Center for Drug Intelligence was leaked by the Mexican daily El Financiero and later by the Washington Post. The report, marked “law enforcement sensitive,” examined the Hanks’ criminal operations and their impact on the United States, drawing information from the Drug Enforcement Administration, the FBI, the Customs Service, the CIA, and Interpol, among others. Its dire tone was clear: “Grupo Hank poses a significant criminal threat to the United States. Its multibillion-dollar criminal and business empire, developed over several decades, reaches throughout Mexico and into the United States.”

In the U.S. we like our billionaires to be like Bill Gates, seemingly harmless nerds, who, even if we can’t stand them, we cannot really equate with evil. If Carlos Jr. thought he could ignore the rules and so easily — and cheaply — earn favors from the Fed, he underestimated. How pitiful the White House contact must have looked, how ridiculous in the scale of things!

And so they may lose ground, the NAFTA gang, not because of moral outrage, but simply because of their style. The PRI dinosaurs are not as popular today, as opposition parties gain strength and the Mexican press speaks up more than before. Rumor has it that Don Carlos is ill with cancer, and as Gabriel García Márquez would say, this may be the autumn of the patriarch.
It could very well be that forces of time and style will close in on the Hanks, just as they did for Raúl Salinas, the ex-president’s brother who is serving out a fifty-year prison sentence. But we don’t know that yet.

Truth is, if next July’s hearing with the Federal Reserve Board results in a Hank —an untouchable Hank — doing jail time, it will be a bloody miracle.

Julie Reynolds is editorial director of El Andar.

© 1999 El Andar Magazine