57

“5

-- The Mexican Attorney General’s Office formed a new
special law enforcement branch -- the Special Prosecutor
for Crimes Against Health to replace the discredited
National Counternarcotics Institute (INCD). It also moved
forward with establishing an Organized Crime Unit (OCU) to
implement the Organized Crime Bill passed in late 1996.

-- The Office of the Attorney General established a new
screening process for personnel assigned to specialized
law enforcement units that includes background and
financial checks, psychological testing, regular polygraph
testing, and drug testing. It will eventually encompass
all of the agency’s personnel.

The Mexican government also implemented a number of changes the
U.S. viewed as critical to effective bilateral cooperation.

-- The Mexican Secretariat of Foreign Relations agreed to
accredit twelve new FBI and DEA agents, increasing the
numerical limits imposed by the previous government.

-- Mexico streamlined refueling, overflight, and overnight
procedures for U.S. drug detection and monitoring assets,
despite strong negative Mexican public opinion.

-- Mexican agencies enhanced operational coordination with
U.S, interdiction forces, especially in the maritime arena.

-- Military and police personnel conducted an aggressive
pursuit of top trafficker, Amado Carrillo Fuentes, which
ultimately drove him to plan to flee the country and to
alter his appearance. He died undergoing cosmetic surgery.

Extradition will be discussed in more detail by Deputy
Assistant Attorney General Warren, but I would mention that
this was one of the areas that the U.S. interagency community
stressed to Mexico was critical to the success of our
cooperative relationship with Mexico and to our bi-national
efforts to combat international crime. This area of
cooperation is still not where we would like to see it, but
there has been progress. While no major Mexican drug
traffickers were surrendered to the United States, five have
been approved by the Government of Mexico for extradition but
await the completion of legal proceedings or sentences in
Mexico, or for the outcome of appeals against their extradition
to the U.S.

In 1997, the GOM approved the extradition of 27 fugitives
from U.S. justice, including 12 wanted for drug offenses; nine
of the 27 were Mexican nationals. Mexico surrendered 13
fugitives to the U.S. through the extradition process, seven on
drug-related charges; nine of these were U. citizens and four
were third country nationals. Ten other fugitives (eight U.S.
citizens and two third country nationals) were expelled by the
GOM in lieu of extradition. The U.S. extradited 21 fugitives
to Mexico.



121

©) Have the Mexican police attempted a raid in order to
capture a cartel kingpin, as they had tried to with
Amado Carrillo Fuentes? or has there been relative
inaction?

In December 1997, the Mexican Government (the PGR and the
military) executed more than 50 search warrants for Arellano
Felix cartel associates, but no major traffickers were arrested.
Raids were also conducted on the Amezcua organization, following
the arrest of Jaime Arturo Ladino Ayala, a lieutenant, and Adan
Amezcua, a brother of the organization’s leaders, but the
traffickers avoided capture.

4) a) ‘The Bilateral Border Task Forces represented at one
time perhaps the most promising effort to enhance
cooperation on the operational front. However, there
is much disagreement over the status of the forces.
Last year, the Attorney General of Mexico visited with

about these task forces. He informed me that Mexico
was committed to fully supporting -- both financially
and logistically -- these border task forces. I know

President Zedillo has made similar public comments. Do

you feel the Mexican government is supporting the

border task forces to the fullest of its capability?

Where is support lacking?

b) ‘The establishment of these task forces has proceeded
much slower than many would have liked. What do you

e@ as the cause of this delay? what steps bas the
delays? Do

you

these task forces as being fully operational?

c) How committed are the Mexicans at funding these forces?
Is either side making a serious effort? in your view,
will the task force ever become a useful tool at
stopping the flow of drugs or will it continue to fail
because of a lack of commitment? zffort? Funding?
Cooperation?

We continue to hope that the two governments can work
together cooperatively to target, investigate, and ultimately
prosecute and convict drug traffickers and their organizations
which affect both countries. The Mexican Government and its law
enforcement leadership have made clear their commitment to the
Bilateral Border Task Forces (BIFs) as a cooperative drug
intelligence and analysis effort. Nevertheless, we recognize
that the BTFs have not yet reached their full potential. Some
obstacles to the BTFs continue to slow their progress, including
(2) a protracted process of “vetting” and training all the



23

military has not decided how many of the aircraft will be modified to perform the
‘surveillance mission, but modifying each aircraft selected for surveillance will cost
at least $3 million.

Regarding the two Knox-class frigates, when they were delivered in August 1997, the
ships lacked the equipment needed to ensure the safety of the crew, thus rendering the
ships inoperable. The U.S. Navy estimated that it will cost the Mexican Navy about
$400,000 to procure this equipment and that it will be at least 2 years before the ships
will be operational. Even though the U.S. Navy knew that the ships would not be
operational when they were delivered, DOD began providing the Mexican Navy with about
$1.3 million worth of training to 110 personnel related to the two Knox-class frigates.

U.S. embassy officials stated that this training will be completed in March 1998. The
Mexican Navy will reassign these personnel until the ships can be used. According to
DOD officials, they approved the training because they were not informed by the U.S.
Navy that the ships would not be operational.

We believe that planning and coordination of U.S. countemarcotics assistance to Mexico
could be improved. Thus, we believe that the Secretary of State, in close consultation
with the Secretary of Defense and the National Security Council, should take steps to
ensure that future assistance is, to the maximum extent possible, compatible with the
priority requirements identified in U.S. countemarcotics programs and that adequate
‘support resources are available to maximize the benefits of the assistance.

PERFORMANCE MEASURES FOR U.S.
NTI FC

Without measures of effectiveness, it is difficult for U.S. decisionmakers to evaluate the
progress that the United States and Mexico are making to reduce the flow of illegal drugs

countries, including Mexico.


152

(ic): The threat of methamphetamine use is growing. Not only are we
faced with the danger to our communities but our environment is being
threatened. What pattern(s) is DEA seeing regarding the movement of
precursor chemicals (such as ephedrine and pseudoephedrine) in the
U.S. and abroad by Mexican organizations responsible for the
manufacture and smuggling of methamphetamine?

ANSWER: As was pointed out in your interrogatory, the threat of
methamphetamine use is indeed growing. DEA has observed a notable
increase in methamphetamine laboratory seizures in many states across the
U.S. Due to the manner in which this dangerous drug is produced, a rise in
methamphetamine availability corresponds to an increase in the use of
precursor chemicals, many of which are dangerous to the environment as you
noted.

Since DEA was specifically requested to address Mexican methamphetamine
organizations’ “patterns of movement of precursor chemicals” in the U.S.
and abroad, these comments will address Mexican methamphetamine
precursor trafficking trends. A focus on movement must take into
consideration three phases of precursor handling: chemical acquisition,
synthesis, and residual disposal.

: The acquisition of precursors by Mexican
organizations is accomplished both in the United States and in other
countries. Those Mexican organizations operating laboratories in the U.S.
tend to obtain their chemicals, especially pseudoephedrine in tablet form,
from domestic chemical sources. Although there is strong evidence that
methamphetamine laboratories operating in Mexico predominantly used
ephedrine up through 1996, as a matter of expediency and necessity they
began to smuggle larger amounts of pseudoephedrine tablets into Mexico
from the U.S. in 1997 and 1998. Two things are apparent regarding the
chemical procurement patterns and production activity of the Mexican
methamphetamine organizations: (1) they do not use any exclusive source
to obtain chemicals and (2) the U.S. / Mexican border does not seriously
impede their actions. Regardless of the location of production, the final
methamphetamine product is intended solely for distribution in the U.S.


147

cases. We limit this exchange, however, to individual cases when we are sure the
information would not put our agents or sources of information at risk.

The Government of Mexico is attempting to build a reliable civilian law
enforcement agency to replace the former anti-drug agency, INCD, which had been
seriously corrupted at virtually every level. The new agency is called FEADS,
Special Prosecuting Office for Crimes Against Health. The Organized Crime Unit
(OCU), operating in the FEADS headquarters in Mexico City, was set up in 1997
pursuant to the Organized Crime Law passed in 1996. The DEA has provided
assistance to the OCU in the development of personnel selection systems and have
provided extensive narcotics enforcement training to the new OCU agents.

The problems of establishing a corruption-free law enforcement
infrastructure are not insurmountable. However, it is essential that it be established
because of the enormous damage these criminal organizations based in Mexico are
causing to U.S. citizens. The only effective law enforcement strategy is to bring
these criminals to justice and ensure they are punished in a manner commensurate
with their crimes. At present that is not occurring and, as a result, citizens of both
the United States and Mexico are suffering greatly.

CONCLUSION

The DEA remains committed to our primary goal of targeting and arresting
the most significant drug traffickers in the world today. We will continue to work
with our law enforcement partners in other countries, to improve our cooperative
efforts against international drug trafficking. The ultimate test of success will
come when we bring to justice the drug lords who control their vast empires of
crime which bring misery to the nations in which they operate. They must be
arrested, tried, convicted, and sentenced in their own countries or extradited to the
United States to face American justice.

Thank you for the opportunity to testify before the Subcommittee and the
Caucus today. I will be happy to respond to any questions you may have.


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

J. DENNIS HASTERT, Illinois
CONSTANCE A. MORELLA, Maryland
CHRISTOPHER SHAYS, Connecticut
STEVEN SCHIFF, New Mexico
CHRISTOPHER COX, California
ILEANA ROS-LEHTINEN, Florida
JOHN M. McHUGH, New York
STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. McINTOSH, Indiana
MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

JOHN B. SHADEGG, Arizona
STEVEN C. LATOURETTE, Ohio
MARSHALL “MARK” SANFORD, South

Carolina
JOHN E. SUNUNU, New Hampshire
PETE SESSIONS, Texas
MICHAEL PAPPAS, New Jersey
VINCE SNOWBARGER, Kansas
BOB BARR, Georgia
DAN MILLER, Florida

HENRY A. WAXMAN, California
‘TOM LANTOS, California
ROBERT E. WISE, Jr., West Virginia
MAJOR R. OWENS, New York
EDOLPHUS TOWNS, New York
PAUL E, KANJORSKI, Pennsylvania
GARY A. CONDIT, California
CAROLYN B. MALONEY, New York
THOMAS M. BARRETT, Wisconsin
ELEANOR HOLMES NORTON, Washington,
De
CHAKA FATTAH, Pennsylvania
ELIJAH E. CUMMINGS, Maryland
DENNIS J. KUCINICH, Ohio
ROD R. BLAGOJEVICH, Illinois
DANNY K. DAVIS, Illinois
JOHN F. TIERNEY, Massachusetts
JIM TURNER, Texas
THOMAS H. ALLEN, Maine
HAROLD E. FORD, Jr., Tennessee
BERNARD SANDERS, Vermont
(Independent)

Kevin BINGER, Staff Director
DantEL R. MOLL, Deputy Staff Director
WILLIAM MOSCHELLA, Deputy Counsel and Parliamentarian
JupitH McCoy, Chief Clerk
Punt SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON NATIONAL SECURITY, INTERNATIONAL AFFAIRS, AND CRIMINAL
ICE

J, DENNIS HASTERT, Chairman

MARK E. SOUDER, Indiana
CHRISTOPHER SHAYS, Connecticut
STEVEN SCHIFF, New Mexico
ILEANA ROS-LEHTINEN, Florida
JOHN M. McHUGH, New York
JOHN L. MICA, Florida

JOHN B. SHADEGG, Arizona
STEVEN C. LATOURETTE, Ohio
BOB BARR, Georgia

DAN BURTON, Indiana

THOMAS M. BARRETT, Wisconsin
TOM LANTOS, California

ROBERT E. WISE, Jr., West Virginia
GARY A. CONDIT, California

ROD R. BLAGOJEVICH, Illinois

JIM TURNER, Texas

ELIJAH E, CUMMINGS, Maryland
JOHN F. TIERNEY, Massachusetts

Ex OFFICIO

HENRY A. WAXMAN, California

RoBERT CHARLES, Staff Director and Chief Counsel
SEAN LITTLEFIELD, Professional Staff Member
Amy Davenport, Clerk
EARLY GREEN, Minority Staff Assistant

ab


117

16
years, the sanction too often went no further than dismissal of the employee. I do not think

it is a matter of professional bias to assert that prosecutions would serve as a stronger
deterrent to corruption. General Gutierrez-Rebollo’s sentencing on the first of several

charges to a term of more than 13 years should set an example for other cases that follow.

President Zedillo and other top officials appear sincerely interested in rooting out
corruption in key government components. In areas related to drug trafficking, I have noted

that

being done by restructuring agencies and “walling off” and “vetting” crucial units.
More arrests have been effected and prosecutions are underway. We will watch for the

‘outcomes of these processes and for continuing enhanced efforts against corruption.
Conelusion
Chairmen, distinguished members of the Caucus and Subcommittee, that concludes

my prepared testimony. I would be happy to entertain any comments or questions any of

you may have.


66

While the aircraft do not appear to have been used in
interdiction of drug shipments per se, the aircraft have
proven very useful in conducting reconnaissance, in
reporting drug-related activity, in transporting soldiers to
remote areas, and for other drug detection, monitoring and
interception support activities. Since the ground transport
infrastructure in many parts of Mexico -- particularly the
remote and rugged areas frequently used by traffickers for
staging drug shipments or for drug crop cultivation -- is
not well developed. Neither ground transport nor fixed-wing
aircraft are as effective as helicopters for moving
personnel to those areas.

Question

1.b. In addition, it is my understanding that these
helicopters are being operated in excess of their expected
rate of operation, and that the increased maintenance that
is necessary to support these levels of operation is

inadequate. Is that your understanding? What is our
strategy here?

swer
While the operational readiness rate varies over time,
the UH-1H aircraft in Mexico reflect lower availability than
the averages in U.S. military fleets. This is the result of
overuse, but overuse because the aircraft have proven so
useful and so suitable for many of the counter-drug missions
for which it is being used. Lower aircraft maintenance
capabilities and a lack of contract support have contributed
to the lower operational rates. DoD has provided, and
continues to provide, extensive training to Mexican
personnel in maintenance and support skills, and other
assistance needed to improve operational rates of the

aircraft and provide for long-term support.


150

effort to prevent the diversion of precursor chemicals. The DEA is also
assisting the Mexican government in the establishment of a meaningful and
effective program. To that end, the following achievements can be cited:

. May 7, 1996, formation of the Binational Working Group With
Technical Expertise in Chemical Control.

. In December of 1996, training by the Chemical Operations Section in
Mexico City on the control of precursor and essential chemicals;
chemical identification; laws and international treaties; creating a
chemical control program; case presentations.

. In January of 1997, Chemical Operations Section and the DEA San
Diego Field Division’s Clandestine Laboratory Group conduct an
intensive 3 day Clandestine Laboratory School in Mexico City.

. After polite but firm encouragement from DEA, Mexico has become
an important participant in the international cooperation on the issue
of chemical control. They have seized controlled deliveries earmarked
by other nations and actively participate in several international fora
on chemical control. Mexico is also a participant in the United
Nations system for advance notification of shipment of listed
chemicals.

. In June of 1997, training of Mexican officials in Washington, D.C.,
regarding effective management techniques necessary to run a
chemical control program. This was followed by an ongoing
assessment of training needs and implementation of the “train the
trainer” concept to multiply the effectiveness of training.

. In May of 1996, Mexico passes a law that imposes criminal sanctions
on individuals who divert chemicals.

. In January of 1997, a “stand alone” secure electronic intelligence
sharing connection is established between DEA’s office in Mexico
City and the Mexican government’s intelligence center, CENDRO.

. Currently implementing an informal communication system for
information exchanges which do not require a high level of security,
for example, import/export notifications.


7

on Mexican Interior Secretary Francisco Labastida. With her
letter, Assistant Sécretary Larkin forwarded 78 unclassified
documents that had been located by the document search and were
believed to be potentially relevant to the request. She also
noted that 82 classified documents potentially relevant to the
request were available in the Bureau of Legislative Affairs, and
one was available in the Bureau of Intelligence and Research, for
initial review by congressional staff members. She explained
that Department officers would take any documents identified by
the congressional staff to the appropriate offices in Congress

for Members to review.

There was no intention to delay a response to this request
for documents. As with all such requests, we engaged in a
thorough process of reviewing files both in the Department and at
our Embassy in Mexico City. Documents that were identified then
were reviewed for responsiveness to the request, and high-level
review was necessary to ensure that the request was thoroughly
satisfied. At all stages in the process, we emphasized to all
participants the need for prompt action. We believe this complex

search for documents was completed as quickly as possible.

We believe these documents represent almost all the
information in Department holdings about Francisco Labastida.

However, the document search has been continued to include some


13

Although the Mexican govemment has agreed to a series of actions to improve its
countemarcotics capacity, and the United States has begun to provide a larger level of
assistance, at the present time there is no system in place to assess their effectiveness.
Even though the United States and Mexico have recently issued a binational drug control
strategy, it does not include performance measures. We are encouraged thal the Office
of National Drug Control Policy (ONDCP) has recently recognized the need for such
measures and have indicated that it plans to develop methods tor evaluating U.S. and
Mexican countemarcotics performance as part of the binational drug contro! strategy by
the end of this year

BACKGROUND

‘The United States has assisted the Mexican goverment in its countemarcotics efforts
since 1973, providing about $350 million in aid. Since the later 1980s, U.S. assistance
has centered on developing and supporting Mexican law enforcement efforts to stop the
flow of cocaine from Colombia, the world's largest supplier, into Mexico and onward to the
United States,

In January 1993, the goverment of Mexico initiated a new drug policy under which it
declined U.S. countemarcotics assistance and assumed responsibility for funding its own
countemarcotics efforts. This policy remained in effect until 1995 when, according to the
State Department, economic conditions and the growing drug-trafficking threat prompted
the Mexican govemment to again begin accepting U.S. countemarcotics assistance for
law enforcement organizations.

‘Among other things, the Foreign Assistance Act of 1961, as amended, requires the
President to certify annually that major drug-producing and -transit countries are fully
cooperating with the United States in their countemarcotics efforts. As part of this
process, the United States has established specific objectives for evaluating the
performance of these countries. In 1997, the United States set the following objectives

3


126

arrested, however, the Government of Mexico has issued
extradition orders against three individuals, all of whom are
Mexican nationals (Oscar Malherbe, Jaime Gonzalez Gutierrez, and
Jaime Arturo Ladino Ayala). The other three alleged narcotics
traffickers (Raul Calladores, Adan Amezcua, and Jose Angel Lopez
Laurenzana) are not currently facing charges in the United states
on which extradition requests could be based. With respect to
the case against Adan Amezcua, the United States was able to
provide Mexican authorities with information about his previous
criminal record in this country, which assisted in keeping him in
Mexican custody, as their processes continue.


132

Statement of

Donnie Marshall

Acting Deputy Admi

Drug Enforcement Admin

before the House Government Reform and Oversight Committee

Subcommittee on

National Security, International Affairs, and Criminal Justice, and

Senate Caucus on International Narcotics Control
March 18, 1998

Chairman Hastert, Chairman Grassley, members of the subcommittee and
the caucus: I appreciate the coportunity to appear today on the subject of Mexico,
Counternarcotics Efforts and our cooperation with Mexico. My comments today
will be limited to an objective assessment of the law enforcement issues involving
organized crime and drug trarficking problems with specific attention on Mexico
and Colombia, and their cooperation with U.S. law enforcement. This hearing is
extremely timely, and during my testimony [ will provide the subcommittee and
the caucus with a full picture of how organized crime groups from Colombia and
Mexico operate and affect so many aspects of life in America today.

It is important to demonstrate at the outset why the threat trom international
drug syndicates is so ominous. and why the United States needs cooperative law
enforcement programs in Colombia and Mexico in order to successfully counter
the scourge of drugs inside tne U.S. Our law enforcement efforts must be
compatible with the challenge posed by these syndicates. We must be able to
attack the leadership of international drug trafficking systems, through their
command and control functions, which is directing the organized drug trafficking
activities in this country

Many phrases have been used to describe the complex and sophisticated
international drug trafficking groups operating out of Colombia and Mexico, and
frankly, the somewhat respectable titles of “cartel”or “federation” mask the true
identity of these vicious, destructive entities. The Cali organization, and the four
largest drug trafficking organizations in Mexico are simply organized crime
groups. They are not legitimate businessmen as the word “cartel” implies, nor are
they “federated” into a legitimate conglomerate. These syndicate leaders--the

1


176

Mr. Davivow. No; I’m not.

Mr. Barr. Perhaps, one of your colleagues could fill in—would
anyone else care to comment on—or enlighten the Ambassador as
to whom Mr. Gutierrez is?

Mr. Davipow. No; I know who General Gutierrez is.

Mr. Barr. You're not aware of any evidence prior to his arrest,
or any characterizations of evidence prior to his arrest, about his
ties, there not being compelling evidence——

Mr. Davipow. I have not personally read the file on Gutierrez,
so I would not want to comment on that.

Mr. Barr. OK. Thank you, Mr. Chairman.

Mr. HaSTERT. Gentleman from Indiana, Mr. Souder.

Mr. Souber. First, I want to apologize to each of you for having
to go over to an amendment and markup over in the Education
Committee, but I was fighting the holy war against drugs over
there and had my amendment passed relating to student loans,
and if someone is caught for possession or selling, they will lose
their loans for 1 year; second offense, 2 years, and then they can
get it back through rehab. So, that’s why I missed this.

I have some particular things that I want to address to Ambas-
sador Davidow. First, as somebody who was critical of the last
nominee that was pulled back, I want to say that I am pleased that
the administration has put you forth because I believe that it’s fur-
ther acknowledgment that drugs are, indeed, if not the preeminent
issue, right up there with immigration and trade in our relations
with Mexico, and that was a very important message we’re send-
ing So, I want to compliment you.

ut, I do have some questions and some concerns that I want to
follow through on, and, to some degree, this is a little bit indirect.
I'm sure you're aware, I’ve been involved with legislation, and we,
in fact, passed a law that said we should be sending additional hel-
icopters to Colombia. Part of my concern is—this was just brought
to my attention—an article says, “U.S. officials say the current pol-
icy of nonengagement in Colombia is designed to avoid another
costly counterinsurgency adventure, such as the one the United
States waged in El Salvador through the 1980’s.” I wanted to ask
you if you’re one of those administration officials who share that,
and do you believe that, since it’s our consumption problems that
have caused many of the problems in Colombia, that we should just
abandon them? What does this mean, “U.S. officials say the current
licy of nonengagement . . . is designed to avoid another .. . El
jalvador?”

Mr. Davipow. Well, first, thank you for your kind words.

We live in a strange town, Mr. Souder, and I feel obliged to in-
form you that, as far as I know, the President has not yet nomi-
nated any individual to bhR——

Mr. SoupeEr. OK. [Laughter.]

Mr. Davipow. But if I find some——

Mr. SouDER. Premature, early, but it’s still enthusiastic.

Mt. Davipow. If I find someone on the street, I'll congratulate
them.

Mr. SoupeER. OK. [Laughter.]

Mr. Davipow. Second, in relation to Colombia—and I’m going to
ask Mr. Beers to comment on this as well—I don’t think that we


12

U.S. law enforcement reports that, at present,
traffickers appear to prefer to smuggle the precursor
chemicals into the U.S. and process the methamphetamine in
clandestine laboratories here, rather than in Mexico. This
is possibly because the penalties for traffickers, if
caught, are much lower for smuggling chemicals than for
methamphetamine or amphetamine. DEA can provide more
detailed information on this.

Question:

3.b. What are we doing with Mexico to close this trade
down? What actions has the United States taken or plans on
taking to control the international smuggling of the
precursor chemicals?

Answer:

The U.S. and Mexico have established a bilateral task
force which specifically targets the major methamphetamine
trafficking organization headed by the Amezcua Contreras
family. Mexico arrested two lieutenants of that
organization last year, Adan Amezcua Contreras and Jaime
Ladino. The U.S./Mexico chemical control working group,
chaired on the U.S. side by DEA and on the Mexican side by
the Office of the Attorney General, has greatly improved

information sharing between key U.S. and Mexican agencies.

Multilaterally, the U.S. and Mexico have worked together
in the Organization of the American States (OAS) and the
United Nations to promote greater awareness and cooperation
on this important issue. Mexico was one of the countries
that participated in the development of model regulations on

chemical control by the OAS drug commission.


30

Mr. NELSON. They do.

Senator SESSIONS. It would seem to me that, as a prosecutor for
a number of years, that law is sufficient for 90 percent of the pros-
ecutions. Would you not agree that the problem is a lack of will
and not a lack of laws, fundamentally?

Mr. NELSON. I can’t say it’s a lack of will. You’re certainly correct
that they have the laws on the books, but those laws have to be
carried out in a system where many of those charged with enforc-
ing the law are corrupt or incapable of interpreting and exercising
the authority that’s granted in the laws.

Senator Sessions. I think you've well said that, and when I say
a question of will, I don’t mean that the overall Government of
Mexico wouldn’t like to defeat. the drug traffickers, but ultimately,
as a whole, institutionally, they lack the will or the capability of
carrying out what might be a good intention. It’s not a question of
whether they have a money laundering law or a wiretapping law
or some other law that might help in certain cases, but is not nec-
essary in the routine case. Do you have any comment about that?

Mr. NELSON. I believe that, based on our work over the years,
as well as this current effort, that this is a daunting problem, and
most of the people we've spoken with believe that it will take a dili-
gent effort over a long period of time for Mexico to be in a position
to wage a very serious——

Senator SESSIONS. Well, I understand where you're going, and I
would just say this in conclusion, Mr. Chairman: We've been goin;
a long time. We been having these same hearings every year, and
it’s not getting better; it’s getting worse, and it’s going to be worse
next year. That’s probably where we're heading, and I wish it
weren't so. I respect the people of Mexico. They are a wonderful
people. They’re our good neighbors. They’ve got a problem that’s ex-
traordinarily difficult, and I’m not sure that our policy is helping
at all to improve those circumstances.

Thank you, Mr. Chairman. ~

Mr. HasTERT. Thank you, Senator. Now I recognize the Senator
from California, Senator Feinstein.

Senator FEINSTEIN. Thank you very much, Mr. Chairman.

Let me just say that I truly believe that the Mexican Govern-
ment wants to do the right thing. My investigations show that it
is extraordinarily difficult with corruption most likely in the judici-
ary, corruption in the military, corruption in the police—the ability
to know who to trust is extraordinarily difficult in this.

But I want to thank the GAO because I think one of the most
important parts of their report is the part that really kind of singes
our DOD effort. I want to point out a couple of things on page 12
and 13 of your report, and then ask you for additional comment.

You say that the United States Embassy has reported that the
Hueys provided to Mexico to improve the interdiction capability of
army units are of little utility above 5,000 feet, where significant
drug-related activities, including opium poppy cultivation, are oc-
curring. You would think we would know better.

Then you go on to say the 4~C-26 aircraft were provided to Mex-
ico without the capability to perform the intended surveillance mis-
sion. United States Embassy officials stated that the Mexican mili-
tary has not decided how many of the aircraft will be modified, but


101

tools, Mexico was left to prosecuting only couriers, people who were
caught with the drugs. Without these sophisticated evidence-gath-
ering tools, they could never proceed against the hierarchy of the
cartels. In a series of meetings over the past few years, we have
worked to provide advice about how important these kinds of laws
were and these techniques were in proceeding against the major
groups. They developed legislation that would provide for these
techniques, and, in many instances, they required constitutional
amendment, not just legislation. They did all of that, and now
those laws are in place. Unfortunately, they're not fully imple-
mented yet.

Mr. HASTERT. Excuse me. Would the gentlewoman—would you
try to summarize a little bit?

Ms. WarREN. Certainly. Unfortunately, those are not fully imple-
mented. You've heard about the difficulties with those.

Could I just give you some extradition figures? In 1995, Mexico
extradited five individuals to the United States. In 1996, 13. In
1997, they extradited 13 and then deported 10, for a total of 23.
Also in 1997, they found 15 more extraditable, 10 of those Mexican
nationals. So far in 1998, they’ve extradited three. In 1996, they
extradited one Mexican national and one dual national. In 1998,
they’ve already extradited one Mexican national. These are firsts
for Mexico. None of those were drug traffickers. Those were sexual
assaults on minors—terrible cases out of Arizona and out of Texas.
Those fugitives have been returned to be tried in the United States
now. That’s enormous progress in the area of extradition.

They have, as has been mentioned, a money laundering law.
They don’t have the prosecutions to support it. We'll be meeting
with them soon on training their new special financial investigative
unit within their Attorney General’s office.

Those are some areas of the way we've worked and the way we
think the Department of Justice thinks they’ve improved, particu-
larly in the last year.

you for your time.
[The prepared statement of Ms. Warren follows:]


37

cally to when the witness protection program can be implemented,
when wiretapping should be used. So that is still in process. The
results of the organized crime law have yet to be fully evident.
There are cases underway, but the results haven’t materialized
completely yet. The same thing can be said of the money launder-
ing law, that——

ir. BARR. But would it be fair to say that those areas, the efforts
by the Mexican Government, are in their infancy?

Mr. KUSHNER. I think that would be a fair assessment.

Mr. Barr. Have you all discovered why the extradition protocol,
the temporary extradition protocol, has not even been submitted by
this administration to the Congress?

Mr. KusHNER. No, sir; we have no information on that.

Mr. Barr. Is there anything at all that would lead any of you to
describe that the relationship between the United States and Mex-
ico with regard to making progress in the war against drugs is ab-
solutely superlative at this point? I mean, would one not have to
have yery, very low standards in order to describe it in those
terms?

Mr. NELSON. I’d say we would have some difficulty agreeing with
that characterization.

Mr. Barr. And you all have studied these areas extensively?
Would that be a fair statement?

Mr. NELSON, That’s a fair statement.

Mr. Barr. Thank you, Mr. Chairman.

Mr. HasTERT. We thank the gentleman from Georgia. I think we
have one more Member here to recognize, the gentleman from Flor-
ida, Mr. Mica.

Mr. Mica. Thank you, Mr. Chairman.

I have a question to anyone who wants to respond. Is it true that
five or six Mexican generals have now been implicated in the trial
or by the trial of former Mexican drug czar, Mr. Gutierrez? Are any
of you aware of any implication of five or six Mexican generals?’

Mr. KusHNER. The information we have on that, Mr. Congress-
man, is that there, I believe, were five generals arrested in the past
year. I don’t know specifically the connection they have to Gutier-
rez Rebollo, whether they were associated with him and his activi-
ties with the Juarez cartel or not.

Mr. Mica. One of the things that we've done—we had a heari
and we had folks in from DEA, and we've talked to the DEA Ad-
ministrator in the past. We’ve recently had some of his representa-
tives in. But last year he said that we cannot share drug intel-
ligence with any Mexican agency or it gets compromised. Is that
still the situation?

Mr. KusSHNER. I think, Mr. Congressman, there has been some
positive movement in that regard. Generally, it’s not——

Mr. Mica. Can you name an agency that we can share intel-
ligence information——

Mr. KusHNER. I think within——

Mr. Mica [continuing]. Information with a Mexican agency?

Mr. KUSHNER. Within the Special Prosecutor’s Office for Crime
Against Health there are specialized units. One of them, in particu-
lar, is the organized crime unit. There is some sharing of informa-
tion going on, but it’s not on a widespread basis. It would be more


162

(3d): The establishment of these task forces has been pointed to often as
both progress and increased cooperation between the United States and
Mexico. What accomplishments does the United States expect to be
made by these task forces in the next year? How will these
accomplishments be measured?

ANSWER: The primary objective of the BTF’s, as viewed by the DEA, is
to assist in stopping the flow of narcotics from Mexico to the U.S.
Substantial investigative leads being provided by a BTF to U.S. law
enforcement which directly result in the arrests of narco-traffickers, drug
seizures or forfeiture of drug proceeds/assets in the U.S. is an
accomplishment which would contribute to achieving this DEA objective.
Also, the BTF’s were originally envisioned to assist in dismantling major
narco-trafficking organizations, such as the Arellano-Felix and
Carrillo-Fuentes groups in Tijuana and Juarez, respectively. A major
accomplishment would be the initiation of a case by the BTF against a major
trafficker which results in the trafficker’s arrest and successful prosecution
in a court of law.

QUESTION 4: Many argue that the Government of Mexico has been
aggressively targeting corruption. How effective have they been in this
effort? In your opinion, are the current efforts being made by the
Mexican Government to fight corruption making a difference, or should
more be done? Can more be done? What assistance, if any, can or
should the United States offer to assist fighting corruption?

ANSWER: To become credible in the law enforcement arena, the GOM
must ensure the integrity of the units that have the responsibility of tracking
down and arresting the syndicate leaders. They must ensure that these
individuals are either prosecuted in Mexico and receive meaningful sentences
commensurate with their crimes, or they must agree to extradite them to the
U.S.,; where they will receive punishment similar to that of Juan
Garcia-Abrego.

To reduce corruption, the Procuraduria General de la Republica (PGR),
Mexico’s equivalent of the Department of Justice, initiated an extensive
reorganization in early 1997. The GOM stated that a thorough screening
process would be required for all PGR personnel. The screening process for
the new PGR units, including a new anti-drug unit “FEADS”, is proceeding,
but it faces many difficulties. The GOM has stated its intention to fully staff


62

-10-

U.S. and Mexican agencies are proceeding methodically to
cement cooperation across a broad front, including legal and
law enforcement cooperation, training and technical assistance
exchanges, information and intelligence sharing, extradition,
interdiction, chemical and money laundering diversion control,
arms trafficking control, demand reduction, epidemiology,
community mobilization, ‘and the list continues to expand as we
find new areas of mutual interest. The binational strategy is
not only a set of shared objectives, but a mechanism for
coordinating and focusing our efforts.

As you will hear from others testifying today, progress is
coming at different rates in each of these areas. Some are
more complicated or involve more agencies than others and some
involve extensive legal -- even constitutional -- changes.
Some institutions are able to accommodate change faster than
others. Lingering problems will continue to impede effective
U.S.-Mexican counter-drug cooperation for some time to come,
not just narco-corruption, but political sensitivities as
well. We each admit that we are far from a perfect
partnership, but, it is a real partnership, and an
increasingly-productive one.

Looking Ahead

By any objective assessment, Mexico, and the U.S. /Mexico
partnership, have a long way to go:

-- Mexican law enforcement actions have disrupted to some
extent the operations of the major cartels, but these
actions must be translated into prosecutions, convictions,
and the forfeiture of assets if the cartels are to be
dismantled.

-- Many of the fugitives from U.S. justice who are in Mexico
remain at large or are using provisions of Mexican law to
forestall extradition.

- Drug seizures, while up over 1995-96, are below 1991-3
levels, not because Mexico is not trying just as hard to
interdict them, but because traffickers are finding ways
around their -- and our -- defenses. Traffickers continue
to be successful in evading hemispheric, Mexican and U.S.
detection and monitoring systems. The U.S. and Mexico
recognize that we must develop a more effective strategy
for countering maritime trafficking in particular, as well
as continue to improve ongoing cooperative efforts to
interdict air and land shipments.

-- The eradication effort has had a measurable impact --
xeducing production by two thirds -- but tons of
Mexican-produced heroin and hundreds of tons of marijuana
are still being shipped to the U.S. each year.

-- Mexico has made significant progress in establishing
controls on precursor chemical diversion, but Mexico-based
trafficking groups continue to move large amounts of
methamphetamine or its precursors into the United States.


146

federal drug prosecutor Emesto Ibarra Santes in September 1996. The case was
developed in cooperation between the Mexican Attomey General and U.S.
prosecutors in San Diego. The two had fled to the United States, seeking to
frustrate Mexican justice. Hodoyan pled guilty on weapons charges, and is
scheduled to be sentenced on April 30, 1998. On February 19, Valdez pled guilty
in San Diego on conspiracy charges and possession of 50 kilograms of cocaine.

Unfortunately the Government of Mexico has made very little progress in
the apprehension of known syndicate leaders who dominate the drug trade in
Mexico and control a substantial share of the wholesale cocaine, heroin, and
methamphetamine markets in the United States. There have been a number of
procedural changes as the Mexican Government restructures its institutions
charged with enforcing the drug laws. New personnel have been brought in to
replace corrupt or ineffective officials. However, none of these changes has yet
produced significant results. The ultimate test of any progress is measured by
successfully apprehending the leadership and bringing them to justice.

One promising program for cooperative law enforcement efforts with the
Government of Mexico was a proposed series of Bilateral Border Task Forces
(BTF’s), although, they have never been fully implemented. The BTF’s were
totally dismantled after the arrest of General Gutierrez-Rebollo and are now being
reconstituted. The lack of sufficient funding until recently left DEA bearing the
full cost, which we continued through September, 1997. When the Mexican
government began the vetting process, the BTF personnel were thoroughly
overhauled. Corrupt officers were removed, but the replacements come with little
or no law enforcement experience. By last December, 46 law enforcement officers
had been fully screened, trained, and assigned to the BTF’s, however, plans call
for about 70 Mexican law enforcement officers.

PROSPECTS FOR PROGRESS

A reconstitution of law enforcement institutions is under way in Mexico.
This is a difficult and lengthy process. Several programs have been initiated, but
the institution-building process is still in its infancy. There are now some
individuals and small organizations with whom we are able to interact on specific


33

that they allow this to go forward, we are corrupting their govern-
ments by the money that gets there.

You haven't looked in any way at the responsibility of the United
States and what we do to stem the flow at all? You just totally ig-
nored it?

Mr. Forp. Mr. Congressman, there are some things that the
United States Government is doing to try to help the Mexicans in
this regard. We have some small programs in Mexico to help——

Mr. Suays. No, no, I’m talking about the money that is paid in
the United States of America—we export the dollars. There would
be no drug business if there weren't dollars to make it move. These
dollars have to get there somehow. We are exporting the dollars to
pay for the drugs. Doesn’t it seem logical that we would want to

focus in on that as well? Doesn’t it take dollars and doesn’t it take
weapons to make this thing work?

Mr. Forp. Well, obviously, that’s true, but I think you have to
remember a lot of these dollars are being sent back to Mexico ille-
gally through the same people who bring the cocaine into the
United States. They export the dollars back through the same ille-
gal channels.

Mr. SHays. So we're talking about people in the United States,
correct?

Mr. Forp. That’s correct.

Mr. SHays. What is the United States of America doing to pre-
vent the exporting of the money?

Mr. Forp. Well, our law enforcement community investigates
those activities as part of their normal law enforcement investiga-
tion of drug activities here in the United States.

Mr. Suays. Am I making a point or am I totally in left field here?
I guess what I’m trying to say is, we are saying to Mexico, you
have a responsibility to stop drugs coming into these United States
and to prosecute those who do. I’m asking a very simple question:
We have a responsibility to prevent the money going to Mexico to
pay for the drugs. We have a responsibility to protect the weapons
that go to Mexico to help protect these drug lords. I’m asking three
American citizens what we are doing about that, and we're dump-
ing on Mexico, and I just wanted to now if there was any balance
in this process of our looking at ourselves, and what I’m hearing
is an answer that probably you get in Mexico, and Mexicans, I
would think, would be pretty outraged. I wonder if they are having
a hearing in Mexico asking what we’re doing. And if they don’t, I
wonder why they don’t. So the bottom line is you don’t have any
information to help me in this?

Mr. Forp. Yes, I think you're asking a legitimate question, but
that’s not really—our work on this project, we didn’t look at the do-
mestic side of the equation. I think it’s a very fair question to ask,
but we just don’t have information—I can’t tell you exactly how
much the DEA here domestically, the FBI, the Treasury Depart-
ment, and the other law enforcement agencies, the local commu-
nities, are addressing that issue. I’m sure they are, but we don't
have the actual data on that rate now as part of this project.

Mr. SHays. The bottom line—and I'll yield my time—the bottom
line is, though, they export the drugs to our country, and I’m ask-
ing you, what is their incentive to do that?


Acting Assistant Secretary of State Beers

Joint Hearing of
Senate Caucus on International Narcotics Control and the
House Government Reform and Oversight Subcommittee on
National Security, International Affairs
and Criminal Justice
March 18, 1998

Question:

l.a. Last year I raised the issue of Mexico developing a
radar net to help in controlling in air smuggling. Both the
Administration and the Mexican Government argued that this
longs-declared necessity was now not needed because most
smuggling was maritime, and to the best of my knowledge this
continues to be the case. As I understand it, these
helicopters are the majority of our direct assistance to
Mexico in dollar value and they are currently being used to
ferry troops around for eradication. This hardly seems a
good use of scarce resources. Keeping this in mind, why did
we give Mexico 70 helicopters to aid in interdiction?

Answer.

The 73 UH-1H utility helicopters transferred to the

Mexican Secretariat of National Defense by the U.S.
Department of Defense over the past two years were intended
to serve a variety of counter-drug uses, not just
interdiction of drug shipments. Mexico is a major producer
of both marijuana and heroin intended for U.S. consumption,
and the intensive Mexican government eradication campaign
has reduced net production significantly. We believe that
the Mexican military has used these aircraft flexibly and

effectively in response to detected threats.


102

Chairman Grassley, Chairman Hastert, distinguished members of the Caucus and
Subcommittee, I am honored to appear before this joint hearing today to outline for you the
assessment of the Department of Justice of the current state of bilateral cooperation between
the United States and Mexico in the area of drug law enforcement. 1 would like to
summarize briefly my prepared statement, which I ask be made a part of the record of this
Joint hearing. I shal) be happy to respond to any questions or comments you may have

regarding my testimony.

General Background

From the perspective of the Department of Justice, our bilateral cooperation
relationship with Mexico in the area of drug law enforcement remains a work in progress.
Certainly, we would have hoped to be further along, yet we can point to tangible progress

over the past year.

The challenges facing both the United States and Mexico in the area of drug law
enforcement are indeed substantial. Mexico represents a critical crossroads to the U.S. in
combating illicit drugs: with respect to cocaine, Mexico is the largest transit country to the
U.S.; as for heroin, Mexico is both a source and transit route for heroin consumed in the
U.S.; as for methamphetamine, Mexico is a manufacturing and trafficking base and chemical
source and transit country; and with regard to marijuana, Mexico is the largest foreign
producer for U.S. consumption. The ease of access across the massive common border,

which fosters recent increases in trade and financial interaction, unfortunately, also appeals to


165

With the implementation of the STU, OCU, and other vetted groups, the USG
hopes to identify potentially corrupt individuals prior to their to assignment
in key law enforcement positions.

(5c): Where should the United States expect the staffing, abilities, and
funding of the FEADS to be a year from now? What additional steps can
or should the United States take to support the staffing, training, and
functions of the FEADS?

ANSWER: The GOM’s projected staffing goal for the FEADS is 3,000
agents. To date, 2,300 agents are on board. Of these, 796 have been vetted
in Mexico, 206 have been “super vetted” in both Mexico and the U.S., and
175 agents have been U.S.-trained. The USG will continue to support the
creation of these groups by vetting the candidates and training new members.

QUESTION 6a: Leaders of major Mexican Drug Trafficking
organizations responsible for the control of the flow of heroin, cocaine,
and methamphetamine to the United States have been identified. In fact,
U.S. law enforcement agencies have investigated, and indicted in the U.S.
just about all of these leaders of drug organizations. DOJ has filed
provisional arrest warrants for the most significant of these traffickers
in Mexico. Even though some have been arrested, others remain at large
and none have been extradited to the U.S. Do you see this delay as
intentional, or just a matter of time?

ANSWER: Of the provisional arrest warrants requested by the United States
for apprehension of indicted major drug traffickers, the GOM has granted
five extraditions. However, a legal maneuver known as the amparo has been
issued in all five cases to prevent or impede the extradition process. As this
legal defense mechanism in the Mexican judicial system expires, DEA hopes
that the traffickers will be extradited.

(6b): What should the United States reasonably expect from Mexico in
terms of arrests and extraditions in the next year?

ANSWER: Accomplishments should be the dismantling of the major drug
trafficking organizations and the extradition of the leaders of these
organizations who are indicted in the U.S.


124

and/or incompetence, and many have subsequently been re-hired
after successfully challenging legal technicalities in their
dismissal proc Nevertheless, the Mexican Government has
taken significant steps to ensure that the re-hired individuals
do not have access to sensitive information and are not attached
to the special investigative units. While no system is perfect,
we have learned over time that U.S. law enforcement agents can
work with the special *vetted” Mexican investigative units,
without compromise. This process of developing trusting
relations is a gradual one which necessarily takes time to
develop and mature.

6) a) ‘This year has seen the Government of Mexico approve the
extradition of 27 fugitives from U.8. justice, 12 of
these for drug charges. Despite this being a
significant improvement over past years, some in
Congress have expressed frustration over the lack of
these fugitives actually being surrendered to U.s.
authorities for trial. How does the Mexican track
record of time from the approval of extradition to the
delivery of the fugitive to 0.8. law enforcement
compare with similar situations in other countries?
How does this compare with the average time for
extraditions from the United states?

It is quite difficult, if not impossible, to compare the
countries with which we have extradition relationships in terms
of time consumed in the appellate process following the entry of
orders of extradition. With Mexico, for instance, we are
sometimes frustrated by delays of surrenders for a number of
years during the repeated filings of amparos (similar to habeas
corpus actions) by fugitives; however, in other cases, we see
returns effected within months of the original decision. our
experience with other countries and within our own system is much
the same, with prolonged delays often and unfortunately being
attributable to the financial capacity of the fugitive to hire
expert defense counsel to fight extradition.

With regard to the number of fugitives described in your
question, it should be noted that 13 of the individuals mentioned
were actually surrendered through the extradition process in
1997; 10 other fugitives were deported; and 14 others were
ordered extradited but were not surrendered.


43

Mr. BarreTT. Are they better paid than the civilian police?

Mr. NELSON. I believe that they are.

Mr. BaRRETT. You also, and Senator Feinstein made note of sev-
eral of the problems with the military help that we were giving
Mexico, and I’m curious, for example, with the two Knox-class frig-
ates that were purchased. Apparently, Mexico purchased them with
their own money, not with our foreign assistance, and that they are
inoperable. What has been Mexico’s response to our selling them
two inoperable ships?

Mr. KUSHNER. Well, Mr. Congressman, I think the Mexicans, at
least from the documentation we have seen, were kind of surprised
that those ships were inoperable when their contractor came to
move them down to Mexico. DOD’s position on that—the informa-
tion we have—is that the Mexicans were provided a tour of the
ships. They were escorted through the ships. But, the position is,
under the FMS program, DOD sells the ships as is, where is, and
it’s like a “buyer beware” type of operation. The Mexicans—the
United States claims the Mexicans should have been aware of the
fact that the ships weren’t operational. The Mexican’s say, “Well,
we were not aware of that fact.”

Mr. BARRETT. Has this been a dispute?

Mr. KusHNER. There has not been a major dispute. There’s been
some communication between the Mexican navy and the DOD. But,
as far as we know, it didn’t ever materialize into a major dispute.

Mr. BarreTT. Does that surprise you?

Mr. KUSHNER. Not really. I think that when your dealing with
$400,000, in the scheme of things, that’s relatively a small amount
of money when you're talking about fighting narcotics, when one
cartel can offer $500 million in bribes within Mexico. I think the
Mexicans feel that they weren't going to go to bat for half a million

lollars.

Mr. BARRETT. On page 11 of the report, you refer to the section—
I don’t know if it’s 10-04 or 1,004—funds $26 million, and about
70 percent of that is used for training. I’m curious as to how much
we give for police training, or is the bulk of our counter-narcotics
training in Mexico through the military? Do we do any civilian po-
lice training?

Mr. Forp. Yes; actually, the civilian police training is funded
through a different means than what’s shown on this table. It’s pri-
marily funded through the State Department’s INC budget.

Mr. BaRRETT. Do you have a rough figure as to what that
amount is? I don’t know. I’m sorry.

Mr. Forp. I don’t have the precise figure on how much they use
for police training. I think their budget for last year was—I think
we have in our statement that they spent somewhere between—
about $11 million in the last 2 years in terms of overall support,
a lot of which goes to the civilian side of law enforcement.

Mr. Barrett. Mr. Chairman, I have no further questions.

Mr. Hastert. I thank the gentleman from Wisconsin. Senator
Sessions.

Senator SESSIONS. Briefly, Mr. Chairman. Let me ask you, Mr.
Nelson, in the course of your report investigation, did you deal with
what has been reported in the paper as a shouting match con-


85

Questions for the Record Submitted by
Senator Grassley to
Acting Assistant Secretary of State Beers
Joint Hearing of

Senate Caucus on International Narcotics Control and the
House Government Reform and Oversight Subcommittee on
National Security, International Affairs
and Criminal Justice
March 18, 1998

ues:

8.a. Since March of last year, Mexico has instituted
improved and more comprehensive anti-money laundering laws
and reporting requirements by Hacienda. Moreover, the
creation of a new Financial Intelligence Unit to handle the
increases in work load. Do you consider this adequate
progress or does Mexico lack desire or muscles to enforce it?
Answer:

Mexico has committed to enhance its prosecution of money
laundering cases. As you have noted, Mexico has made
progress in establishing the legal framework and
institutions needed to detect, to prosecute and to
eventually deter money laundering. There are some areas
where U.S. experts believe Mexico could improve its
regulations, but the basic regulatory framework is a good
one. We would, in particular, like to see Mexico impose
reporting requirements on outbound movements of currency or
financial instruments, which would complement U.S.-required

reporting on in-bound movements. This would enhance the

effectiveness of both systems.

The Office of the Attorney General (PGR), until very
recently, did not have a specialized unit to pursue money

laundering investigations and prosecutions. Although the


6

Let me just summarize by saying one thing. The inability to
break up these cartels has resulted in my State now becoming the
source for methamphetamine for the rest of the United States, and
most of that methamphetamine traffic in California is carried out
by Mexican nationals and is the product of one Mexican cartel.

Thank you, Mr. Chairman.

Senator Sessions [presiding]. Thank you Ms. Feinstein. Thank
you for those very wise comments. I hope everyone who was listen-
ing will pay much heed to that.

made a little outline last night. I just had a few points I was
going to make, and they follow so closely your outline; it’s some-
what remarkable, but I guess it’s pretty obvious.

I was U.S. attorney for 12 years under Presidents Reagan and
Bush. Two years I served as chairman of the Narcotics Committee.
In Mobile, AL, we were on the gulf coast and prosecuted many,
many international smuggling cases involving groups from all over
the world, particularly South and Central America and Mexico. It’s
not hard to make a few observations.

One is lack of extraditions. There are, I’m sure, hundreds, if not
thousands, of significant Mexican national drug traffickers under
indictment in Federal courts in America today, United States
courts. They are not being extradited. You can talk about where
they might be in the future or it could happen in the future, but
the fact is they are not extradited.

We had in my home district a number of years ago a very signifi-
cant trafficker from Mexico City. He was supposedly involved with
the murder of Enrique Camarena, and within weeks of the time
that we expected to have him extradited, he escaped. Fundamen-
tally, I don’t know how he escaped, but he escaped and was not ex-
tradited. That is the pattern over and over and over and over
again—no extraditions.

There’s insufficient arrest of major traffickers. That’s quite obvi-
ous. The major drug cartels are not being broken up by the domes-
tic law enforcement. Corruption is widespread. That is well-known
and continues, and is not being abated.

The Binational Border Drug Task Force, this group for which we
had so much hope, has collapsed. It is not working. The Bilateral
Border Drug Task Force is a failure, it appears, in every respect.

What fest can we say? Mexico has passed a money laundering
bill. Well, I don’t think it’s been implemented, No. 1, and, No. 2,
a money laundering bill, if it’s no more effectively prosecuted than
the laws they already have, is absolutely worthless. It is of no
value whatsoever.

I’ve prosecuted money laundering cases, but it is not the finest
tool in the world against drug traffickers. It’s something you can
use on occasion. As a matter of fact, traffickers would be delighted
to have a few hundred thousand, a few million dollars seized. What
they fear is arrest, incarceration, and extradition. That is what the
drug traffickers fear. Money laundering is not a statute which will
have any likelihood of breaking down an entrenched drug cartel as
we have in Mexico. I’m not impressed with that and do not believe
it is of any significant value.

Ultimately, what do we know? In the early eighties, when I was
USS. attorney, the largest number of drugs coming into the country


CONTENTS

Hearing held on March 18, 1998 ....
Statement of:

Beers, Rand, Acting Assistant Secretary, Bureau of International Narcot-
ics and Law Enforcement Affairs, Department of State ..

Davidow, Ambassador Jeffrey, Assistant Secretary of State, Bureau of
winter American Affairs, it of State

, Donnie, Acting Deputy ‘Adauinistrator, Drug Enforcement Ad-
samumbtzetin De| ent of Justice .
Nelson, Ber , Director, International Relations and Trade Issues,
National Security and International Affairs Division, U.S. General Ac-
counting Office, accompanied by Jess T. Ford, Associate Director, and
Ron Kushner, Associate Director ..

Warren, Mary ‘Lee, Deputy Assistant Attorney General, Criminal Divi-

sion, Department of Justice .....
Letters, statements, etc., submitted for the record by:

Beers, Rand, Acting. Assistant Secretary, Bureau of International Narcot-
ics and Lew Enforcement Affairs, Department of State, prepared state-
ment of

Davidow, Am jet it Secretary of State, Bureau of
Inter-American ‘Affairs, Doprtnent of ore State, prepared statement of .....

Hastert, Hon. J. Dennis, presentative in Congress from the State
of Illinois, prepared statement of ...

ner, Ron, Associate Director, information concerning precursor

Do ig
ministration, n Department of Justice, prepared Statement of
Nelson, Benji Director, International Relations and
National ‘ity
counting Office, prepared statement of
Warren, Mary Lee, eputy i
sion, Department of Justice, prepared statement of .

50
47
129


148

DEA ACTING DEPUTY ADMINISTRATOR DONNIE R. MARSHALL
DRUG ENFORCEMENT ADMINISTRATION
HEARING BEFORE THE
HOUSE GOVERNMENT REFORM AND OVERSIGHT COMMITTEE,
SUBCOMMITTEE ON NATIONAL SECURITY, INTERNATIONAL
AFFAIRS AND CRIMINAL JUSTICE AND THE
SENATE CAUCUS ON INTERNATIONAL NARCOTICS CONTROL

MARCH 18, 1998

QUESTIONS SUBMITTED BY SENATOR CHARLES GRASSLEY (1A) AND
REPRESENTATIVE DENNIS HASTERT (IL)

QUESTION 1A: Iowa, my state, is increasingly the target for
methamphetamine. This is increasingly the drug of choice, and most of
it is marketed, by Mexican gangs. In your view, where is most of this
meth coming from? Is it made in Mexico and smuggled into the United
States? Or do the Mexican criminal gangs import the precursor
chemicals for meth and then cook it in labs in this country?

ANSWER: Methamphetamine is an increasing problem not only for the
Midwest, but also for the entire country. Clandestine laboratory seizures and
actual methamphetamine powder seizures continue to increase at an alarming.
rate. As methamphetamine increasingly becomes the drug of choice, Iowa,
and many other states across the country, are experiencing these problems.
Iowa’s methamphetamine supply has been tied to Mexican national drug
trafficking organizations. However, it is not clear whether the majority of the
methamphetamine available in Iowa is produced in Mexico and then
smuggled into the United States for distribution, or if the chemicals are
smuggled into the U.S. and the methamphetamine is then produced in
southern California for nationwide distribution.

One interesting phenomenon regarding Mexican production of
methamphetamine is that DEA offices in California and Arizona previously
reported that the majority of Mexican methamphetamine distributed in their
region was produced in southern California. DEA Riverside has recently
encountered a significant drop in the number of seizures of labs operated by
Mexican national drug trafficking groups. DEA agents in Riverside,
California reported that they only seized two labs operated by Mexican
nationals in the last four months. They had previously seized two or three


40

point: Both Mexico and the United States are victims of a malicious
conspiracy.

I do not for a moment believe that the majority of Mexican citi-
zens or government officials condone or promote the promotion and
trafficking in illegal drugs, nor do I believe that the majority will
permit this vicious trade. Yet, Mexico is the source of many of the
illegal drugs now entering this country. It is the transit zone for
most of the cocaine reaching the United States, and it is through
Mexico, or at the hands of major Mexican criminal gangs, that
most of the methamphetamine now reaches our streets. This is a
problem, and it’s a very serious problem. We cannot ignore it. It
is perhaps the single most important issue in our bilateral rela-
tions, and it is the one most likely to doom any chances of signifi-
cant improvement in those relations if not adequately addressed.

We expect, and it is wholly reasonable, that Mexico will do all
in its power to stop this illegal activity. The production and traffic
in these drugs is illegal, even under Mexican law. Mexico has
signed solemn international agreements to control this trade, and
Mexico has also entered into specific agreements with the United
States to stop these activities.

Doing so is one of the requirements of membership in an inter-
national community of civilized nations committed to the health
and welfare of their respective populations. Expecting Mexico to
fulfill its obligations is not only reasonable, but it’s absolutely nec-

essary.

Today, however, we see tons of illegal drugs reaching this coun-
try through Mexico and at the hands of criminal gangs. We see
these activities and much associated violence menace the rule of
law in Mexico. We see rampant corruption that reaches into every
level of government and society and threatens efforts to democ-
ratize. We see what appears to be a system incapable of bringing
these activities to a halt and to meaningful punishment for wrong-

loers.

Judges and courts routinely fail to deliver justice. Many law en-
forcement officials work for drug lords, not for the government. In
consequence, there are many doubts about Mexico’s ability to take
and sustain serious action against drug traffickers.

This problem in Mexico becomes a major problem then in our
country. We see it on our streets and in our homes. We must ac-
knowledge that the American appetite for illegal drugs fuels much
of this problem in Mexico, but I do not buy the argument that this
is wholly a demand, and therefore, totally a United States problem.
Supply, lots of it at affordable prices, has long been critical in driv-
ing demand. Kids don’t naturally grow up to be drug users. It’s
supply, availability, that sets the stage for that use.

it is why we must focus much of our attention on supply. We
also do this here because the only competent authority in this
country for dealing with such international problems is the Federal
Government, and the congressional oversight of our activities in
this area.

That is one reason why we have this annual certification process,
and as we go through this evaluation, however, I must remind my-
self, my colleagues, that the standard of judgment in our annual
certification is not fully successful, but fully cooperating.


159

December 1, 1998. At the request of the Mexican Government, the DEA,
FBI, and USCS have assisted in a second level “vetting process” referred to
as “super vetted”. The failure rate for applicants in the “super vetting”
process is approximately 40 percent. As of December 1997, a total of 206
Mexican agents and prosecutors have been “super vetted” and 175 of these
“super vetted” personnel have attended a four week investigators course in
the Washington, D.C. area.

DEA believes that this “vetting process” is the GOM’s best chance at
assuring integrity within their law enforcement agencies. That said, it must
be noted that no system is failsafe from the corruptive influences of the major
drug trafficking organizations. The “vetting process” requires continual
revalidation and is only as good as the highest level official that has been
cleared.

During the Summer of 1997, the staffing of the BTF’s on the Mexican side
was completely overhauled by the GOM. All agents had to pass the new
“super vetting process”. In addition, these “super vetted” agents attended the
US. training. Since the re-staffing with “super vetted” personnel, fifty-two
agents and three comandantes have been deployed to the BTF’s in Tijuana,
Mexicali, San Luis, Juarez, Reynosa, and Monterrey-Matamoros. These
agents come from a variety of backgrounds and have no prior law
enforcement experience. Some have college degrees in professions such as
accounting, engineering, and law. Those who do not possess a college
degree, have a high school education with prior work experience. All of the
agents are assigned from other cities in Mexico, which causes them to live
apart from their families. These new agents appear to be very eager and
energetic, however, they lack direction and a mission. In short, the agents are
hindered by their lack of law enforcement experience, and this is
compounded by the fact that they are not familiar with their area of
responsibility or the criminal organizations they are tasked to investigate.

Since the re-staffing of the BTF’s, Mexico’s intelligence center, known as
CENDRO, has dictated much of the investigative activity foreach BTF. The
CENDRO Center, based in Mexico City, analyzes investigative information,
and provides daily leads to each BTF over a secure computer communication
link. A common complaint regarding this process is that the leads involve
low level traffickers which have resulted in insignificant seizures. BTF
personnel attribute this problem to the inexperience of the personnel assigned
to these CENDRO off-site facilities.


Senate Caucus on International Narcotics Control and the
House Government Reform and Oversight Subcommittee on
National Security, International Affairs
and Criminal Justice
March 18, 1998
Question: :
3.a. Towa, my state, is increasingly the target for
methamphetamine. This is increasingly the drug of choice,
and most of it is marketed by Mexican gangs. In your view,
where is most of this meth(amphetamine) coming from? Is it
made in Mexico and smuggled into the United States? or do
the Mexican criminal gangs import the precursor chemicals
for meth and then cook it in labs in this country?
Answer:

According to DEA, Mexican-based trafficking organizations
have come to dominate the illicit production and sale of
methamphetamine in the United States. Based on this
analysis, the U.S. Government intensified its discussions
with the Government of Mexico on the urgent need to enhance
laws and administrative measures to criminalize and control
the diversion of precursor chemicals to these illicit

purposes.

Mexico responded with enforcement actions, notably a 6.7
metric ton seizure of ephedrine in 1996, and stronger
controls on the flow of precursors into and through its
territory. For example, Mexico has limited chemical imports
to select ports of entry and passed comprehensive chemical

control legislation in December 1997.


80

Border Task Forces as well as other important cooperative

law enforcement initiatives.

That said, the program had to be completely reorganized
after the national anti-drug commission director, Jesus
Gutierrez Rebollo, was arrested on drug-related corruption
charges in March 1997. Since that time, the Government of
Mexico has worked to reestablish them on a more solid
foundation. Personnel now go through intensive screening
and training before being assigned to the task forces. This
is time-consuming, but necessary. In addition, the Task
Forces still need additional funding and material support,
which the Government of Mexico is attempting to provide.

The U.S. is also providing some material support, as well as
advanced training to Mexican personnel, but this is not a

substitute to adequate, regular funding from Mexico.

From the U.S. perspective, another major impediment is
the fact that we have not yet reached full agreement with
the Government of Mexico regarding the official status of
U.S. agents who were to have worked full time in these
units, and we are not yet satisfied with the current
security arrangements for them. U.S. agents stationed in
Mexico maintain contact and share information with the task
force personnel, but we believe that it will take U.S. and
Mexican agents working full-time together over time for the

units to reach their potential. We cannot, at this time,


OVERSIGHT OF UNITED STATES/MEXICO DRUG
COOPERATION

JOINT HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY,
INTERNATIONAL AFFAIRS, AND CRIMINAL JUSTICE

OF THE

COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES

AND THE

CAUCUS ON INTERNATIONAL NARCOTICS CONTROL
UNITED STATES SENATE

ONE HUNDRED FIFTH CONGRESS
SECOND SESSION

MARCH 18, 1998

Committee on Government Reform and Oversight

Serial No. 105-154

Printed for the use of the House Committee on Government Reform and
Oversight and the Senate Caucus on International Narcotics Control

ae

U.S. GOVERNMENT PRINTING OFFICE
50-587 WASHINGTON : 1998

For sale by the U.S. Government Printing Office
‘Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-057547-8



106

5
Although necessary, the changes brought about after the discovery of failures such as
those I have just mentioned, have slowed progress both within Mexico and bilaterally. Yet
from such disappointments — and sometimes impelled by these embarrassing incidents —-
Mexico has taken some decidedly positive steps. While I am not representing to this
distinguished group that all is well in relation to our dealings with Mexican drug law
enforcement, I can state, as I review our progress over the last year or so area by area, that
on balance we have a reasonable basis for-guarded optimism. Let me candidly highlight to

you some specifics that give rise to that caveated assessment.

Special Law Enforcement Task Forves

Because it is not possible to reform Mexico's law enforcement and judicial system
overnight, we have focused on developing and working with special, segmented, trusted units
that are better trained, staffed by dedicated officials, and promised to be adequately funded.
The prime example of this concept are the several Border Task Forces (BTFs) which the
U.S. and Mexico agreed to establish in a July 1996 Memorandum of Understanding.
Regrettably, the BTFs have not yet realized their potential effectiveness. According to the
original design of these units, U.S. law enforcement agents resident on the U.S. side of the
border were to "commute" on a daily basis to work side by side with their Mexican
counterparts South of the border. Because concerns for the security of the U.S. agents have
not yet been resolved, the full potential of these task forces has not yet been met. The issue

of security for both the Mexican and U.S. law enforcement officers remains paramount for


180

ents back home say, and some of my colleagues say, that if we can
triple fence or double fence 200,000 miles of interstate highway in
this country, maybe we can do a better job of triple fencing that
border at the strategic points. Some would say, do the whole bor-
der. But, I think we need to neutralize and be able to control that
movement across the border. Now, you can fly over and you can dig
under it, but we ought to be able to take care of that. We need to
do a better job where we can do a better job, and maybe that’s
where we start. And, you know, I don’t know if that’s feasible, and
we have agreements on both sides of the border, but we need to
do something. And, we need to do something now that we can con-
trol the flow.

Mr. Davidow, if we need the x-ray machines down there and to
beef it up, I think we’ve had good cooperation between the Con-
gress and those agencies to get the stuff down there, the where-
withal. And, every port that I’ve visited, they're building sheds and
putting the machines in and hoping it’s there. But, I've also seen
railroad cars move across those rail lines, and nobody's taken a
look at them, and put false sides into some of these railroad cars
or, I think, these cars are coming across, and they’re filled with
marijuana, or in some cases, cocaine.

We constantly have to be alert and look in new places and see
what the next move is. We want to work with you, but we need
to have that effort on your part to make it work.

Thank you, I’m going to adjourn this hearing. I appreciate every-
body being here.

ereupon, at 5:12 p.m., the subcommittees adjourned subject
to the call of the Chairs.]

O°


129

Mr. Hastert. Thank you. Mr. Marshall, welcome back.

STATEMENT OF DONNIE MARSHALL, ACTING DEPUTY ADMIN-
ISTRATOR, DRUG ENFORCEMENT ADMINISTRATION, DE-
PARTMENT OF JUSTICE

Mr. MARSHALL. Chairman Hastert, members of the subcommit-
tee, and the caucus, I thank you for the opportunity to appear here

oday.

I’ve submitted a complete statement for the record, and I'll try
to briefly summarize that statement here today.

I hope to give you some sense of the power of the organizations
that we’re dealing with. The Colombian and Mexican trafficking or-
ganizations that we see today are sophisticated organized crime
groups. The leaders of these groups are the 1990’s version of the
mob leaders that we fought successfully in this country since the
turn of the century. While it was not easy for us to build cases
against these mob leaders in the United States, law enforcement
in this country knew that once a good case was made on a gangster
boss, that mob boss could be located within the United States, in
most cases, arrested, and sent to jail. That is not the case with
many of today’s international organized criminal groups. It’s dif-
ficult for us, sometimes nearly impossible, for U.S. law enforcement
to locate and arrest these leaders without the assistance of law en-
forcement in the other countries.

In the last few years, Colombian traffickers have struck deals
with the Mexican traffickers in order to reduce their potential
losses, and now we see Mexican trafficking groups routinely paid
for their services with multi-ton quantities of cocaine. This has
made them powerful trafficking groups in their own right. These
organizations now control the distribution of cocaine into the West-
ern half of the United States and also into the Midwest of the
United States.

The leaders of these criminal organizations, which are generally
headquartered with the command and control structures outside
the United States, enjoy extraordinary wealth, power, and influ-
ence in many countries in the world, and particularly in Mexico.
Most of them have, so far, escaped apprehension by United States
or world law enforcement.

In the interest of time, I know we’re running behind, I will omit
my detailed description of most of the organizations here, with the
exception of the Arellano Felix organization. I would like to simply
say a few words about them.

This organization is one of the most powerful, violent, and ag-

ssive trafficking groups in the world. is control extends directly
from high-level figures in Mexico to street-level individuals in the
United States. This organization has been responsible for the mur-
der of several Mexican law enforcement officials, journalists, in-
formants, and for threats directed at DEA and FBI agents, as well
as a United States prosecutor.

Unfortunately, the violence that is a part of the Arellano Felix
organization and other organizations impacts innocent citizens, law
enforcement officers, and other public institutions. For example, on
July 17 of this year, Hector Salinas, who was a primary witness
in a McAllen, TX, trial of a major marijuana drug trafficking orga-


157

example, while arrests and intelligence gathering were accomplished in one
investigation shared by the Guadalajara and Tijuana task forces, the Tijuana
Cartel they targeted has been virtually untouched by any investigative
activity generated by the Tijuana, Guadalajara, and Mexicali task forces.
Similarly, the Monterrey Task Force has not provided information against
Gulf Cartel members, the most significant traffickers in their area of
responsibility. Because of the uncoordinated efforts between GOM
counterdrug units, the Task Force investigations of several targets have
stalled. .

Finally, since August of last year, the Juarez Task Force has provided
intelligence to DEA about warring factions of the Juarez Cartel. The
collected intelligence relates to the ongoing “turf war” between Juarez
traffickers battling for control of this strategic corridor. To date, none of the
intelligence collected against these organizations has led to significant
seizures or arrests of any major violators in these organizations. Since its
inception, no viable intelligence has been collected by this BTF against the
Juarez Cartel despite the fact that the cartel has controlled this corridor for
the last nine or ten years.

(3b): The establishment of these task forces has proceeded much more
slower than many would have liked. What do you see as the cause of this
delay? What steps has the Mexican Government taken to address these
delays? Do you believe the initial expectations and hopes for these task
forces are still realistic goals? When do you see these task forces as
being fully operational?

ANSWER: In 1996, USG and GOM officials signed a memorandum of
understanding outlining the framework for the USG and GOM to conduct
joint investigations targeting major Mexican trafficking organizations. This
enforcement strategy was’ to be accomplished through the BTF’s. These
BTF’s would be located along the Tijuana-Juarez and Matamoros-Monterrey
borders. Each BTF would include approximately twenty Mexican Agents,
two DEA agents, two FBI agents and two USCS agents, all working for a
Mexican comandante. The U.S. law enforcement agents, totaling twenty-
two, were to reside in the U.S. and would cross the border each day to their
regular, full-time assignment of working in the BTF’s. These agents have
thus been referred to as the “commuter agents”.




107

6
both our countries. In the meantime, we are seeking alternative, albeit less immediately
effective means of cooperating. And the primary objective of immobilizing the Juarez and

Tijuana Cartels remains to be achieved.

Mexico has taken steps to address the earlier institutional shortcomings of the BTFs,
including the decision to replace personne! with top police academy graduates vetted with
U.S. technical assistance and support. This vetting process, combined with enhanced
training ~ some provided by U.S. law enforcement in the United States, a minimum time
commitment and a promise of premium pay, are intended to make the special units less
subject to corruption and more competent to carry out their important and delicate work of
combating the highly sophisticated and violent drug trafficking cartels. To date, Mexico has
deployed the BTFs to Tijuana, Mexicali, San Luis, Juarez, Reynosa, and Monterrey-
Matamoros, as well as a specialized chemicals group in Guadalajara. For some time the
BTFs have been buoyed by U.S. funding. We have continually urged the Government of
Mexico, as a sign of their commitment, to devote substantial financial resources to the BTFs.
ur past disappointment in this area is slowly giving way as we see Mexico’s assuming the

‘operational costs for these units, which were earlier financed wholly by DEA.

Last July, Mexico formally authorized the increase of six DEA Special Agents and six
FBI “Resolution Six” (drug agents) Special Agents. Some of this new group have been
assigned to the Juarez and Tijuana offices to provide interim U.S. law enforcement agent

support to the BTFs.


28

Mr. NELSON. Well, I think no matter what process you put in
place, there will be certain individuals or there will be the oppor-
tunity for corruption. The profits involved in narcotics is such that
the law enforcement people in Mexico who have low salaries are
particularly vulnerable to corruption. Even high-paid officials are
vulnerable to the kinds of profits that are available in drug traf-
‘icking.

The Government has instituted within the Attorney General’s of-
fice a screening process to screen workers who are part of the At-
torney General’s office, and that process has been successful in that
I believe over 2,000 people have been screened. The problem with
that is some members of the milit , as well as other law enforce-
ment agencies, are not subject to this screening. But the screening
is one step toward dealing with the corruption issue.

Mr. Barrett. OK. It’s my understanding that the Mexican Attor-
ney General’s office dismissed 1,250 officials for incompetence or
corruption, but 200 of these officials were apparently rehired. Is
that accurate? Have I got my facts straight there?

Mr. NELSON. That is also my understanding, that some 200 have
been rehired.

Mr. BARRETT. How do you think that this has worked to help im-
prove the police force? It seems to me if you just got rid of 200 peo-
ple because they're either corrupt or incompetent and then you
turn around and rehire them, you're not really making a lot of im-
provement.

Mr. Forp. I don’t know. We don’t have a lot of information on
that. We know that that, in fact, happened. The issue is whether
or not that helps the situation, and obviously, it doesn’t. If these
individuals were considered to be suspects when they were fired,
and they’re rehired, there’s a question about whether or not they’re
potentially corruptible.

The process that’s put in place for the reorganization of the At-
torney General’s office is attempting to get at that through the
screening process that Mr. Nelson just mentioned, but they fave a
long way to go. Based on the information we received from DEA
on our visit in Mexico, I believe less than half of the people had
yet gone through that process. So they still have a ways to go be-
fore they're going to have fully qualified individuals for these——

Mr. BarRETT. Were the majority of these people fired because
they were corrupt or because they were incompetent? I never
thought I'd be pushing for incompetence.

Mr. NELSON. I don’t think we—do we know that? We don’t have
that information.

Mr. Forp. I don’t think we have that information as to why they
were—the precise reason all those individuals were let go.

Mr. BarRRETT. OK, thank you, Mr. Chairman.

Mr. HASTERT. The Senator from Alabama, Mr. Sessions.

Senator SESSIONS. Thank you, Mr. Chairman.

Well, I don’t think we need to minimize the difficulty and the
challenges that a nation like Mexico or Colombia faces with an en-
trenched drug cartel. It’s not helpful for us to suggest that it’s easy
for them to overcome that. It’s very difficult, and corruption is sys-
temic. Extortion and fear and murder and assassination is a reality
when you’re dealing with entrenched multi-billion cartels.


87

Mexico is currently sharing CMIR information with the
U.S. Department of Treasury. It will be a major challenge
to track CMIRs because we feel that the problem is’ really
attacking "placement." The U.S. position is that as the law
and the régulations go into place in Mexico, joint actions
between both governments will help stop the currency flow

that is going on right now.

U.S. agencies, particularly the Department of Treasury,
have provided considerable technical support and training to
the Secretariat of Finance and Public Credit in establishing
its Financial Intelligence Unit. The Department of State
has provided material support in the form of computers and
software. Mexico has been very receptive to U.S. training
initiatives and has reiterated its willingness to
participate in the training programs of other countries.
Question:

8.c. The arrest of Jorge Abrego Reyna in the U.S. for money
laundering and the former Jalisco state Governor

Flavio Romero de Velasco in Mexico for drug trafficking is
cited by the Mexican government as "one of the very best
examples of Mexican-American cooperation." Would you
characterize this incident as a good example of
Mexican-American cooperation? Has the new money laundering
legislation instituted by Mexico been beneficial in

US-Mexican cooperation on money laundering? Do you feel
that it has been fully implemented?


82

ie for core

Acting ‘Assi, t_ Se of State Bi

Joint Hearing of
Senate Caucus on International Narcotics Control and the
House Government Reform and Oversight Subcommittee on
National Security, International Affairs
and Criminal Justice
March 18, 1998

Question:

7. Many argue that the Government of Mexico has been
aggressively targeting corruption. How effective have they
been in this effort? In your opinion, are the current
efforts being made by the Mexican government to fight
corruption making a difference, or should more be done? Can
more be done? What assistance, if any, can or should the
United States offer to assist in fighting corruption?
Answer:

President Zedillo has publicly acknowledged the severe
and pervasive problem of drug-related corruption within his
government, particularly in the criminal justice sector, and
has taken very specific steps to combat it. A number of
current and former government officials have been arrested
and are being prosecuted on corruption charges, including
the brother of the previous President, the head of the
national anti-drug police agency, a Cabinet official, and a
former governor. President Zedillo’s quick action last
February to remove the national drug coordinator, General
Gutierrez Rebollo, was an act of political courage,

particularly coming on the eve of U.S. certification.

By removing and prosecuting General Gutierrez, and others
implicated in the investigation, President Zedillo kept his

pledge to the Mexican people to confront organized crime and


10

States and Mexico have recently issued a Binational Drug Control
Strategy, it does not include performance measures. We are encour-
aged, however, that the Office of National Drug Control Policy has
recently recognized the need for such measures, and has indicated
that it plans to develop methods for evaluating United States and
Mexican counternarcotics performance by the end of this year.

In sum, the United States and Mexico have created a framework
for increased cooperation, and the Mexican Government has initi-
ated some important law enforcement reforms. However, follow-
through on all of the elements of the joint strategy is needed if the
United States and Mexico are to significantly increase their ability
to combat drug trafficking in Mexico.

Mr. Chairman, this concludes my opening remarks. I would be
happy to respond to any questions you or other Members may

ave.

[The prepared statement of Mr. Nelson follows:]


52

States and Mexican agencies are proceeding methodically to cement
cooperation across a broad range of issues, and the list continues
to expand as we find new areas of mutual interest. The binational
strategy is not only a set of shared objectives, but a mechanism for
coordinating and focusing our efforts. We are far from a perfect
partnership, but it is a real partnership and an increasingly pro-
ductive one.

That said, Mexico has a long way to go, as does our partnership.
We need to be taking stronger, more definitive action against orga-
nized crime, including the forfeiture of assets. We need to be build-
ing up the specialized units, as well as achieving lasting reforms
within the criminal justice system as a whole. We need to be bring-
ing more fugitives to justice. We need to be finding more effective
ways to counter drug movements, particularly in the maritime
area. We need to be effectively curbing and deterring money laun-
dering and chemical diversion. We need to be assuring the safety
of Mexican and United States law enforcement personnel.

I understand that this hearing was called by many Members of
Congress because of the doubts about Mexico’s counternarcotics
performance. As I indicated at the beginning of my presentation,
however, we did not approach this as an exercise in finding fault
with our partner, nor was it an exercise to cover up faults, which
both Governments acknowledge are there.

The President determined that the Government of Mexico cooper-
ated fully with the United States in counternarcotics and took
steps to comply with the goals and objectives stated in the 1988
United Nations Convention, which are the basis of the United
States certification. Mexico faces very serious drug-related prob-
lems, but the Government of Mexico has implemented a broad-
based strategy to approach these problems and has worked closely
with us to build an effective partnership. I suggest to you that this
is full cooperation. I suggest to you that this is forward movement.
I can also assure you that this is why the President determined
that the Government of Mexico should be fully certified this year.

Again, I appreciate this opportunity to meet with you and discuss
this very important issue, and I look forward to answering your
questions.

(The prepared statement of Mr. Beers follows:]


169

law enforcement, I think, in today’s world, at least, are fairly
quickly made up.

Mr. BARRETT. Let me ask, if I may. Let me ask you this: If pro-
duction of marijuana is down, seizures are up. What’s been the im-
pact on the street price of marijuana? That would seem to me that
you're saying that the supply is down and the price would be going
up.
wie. MARSHALL. I don’t believe we’ve noticed much change in
that, sir.

Mr. BARRETT. Because demand is up, or because supply isn’t ac-
tually down?

Mr. MARSHALL. Well, because of what I was talking—that you
have actual production here that exceeds demand, and when you
impact this particular area of the chart, you have to impact it way
down below what the demand is before you see an impact. So,
that’s why you’re not going to see an impact in the price.

Mr. BARRETT. What about the price of heroin and cocaine? What
are we seeing there?

Mr. MARSHALL. I don’t believe we’ve seen any changes in those
either.

Mr. BARRETT. That’s your analysis. Mr. Beers, would we be hav-
ing—would Mexico be certified if they were our 102d trading part-
ner rather than our 2d?

Mr. BEERS. Mexico’s certification was on the basis of the judg-
ment of the inter-agency community looking at what they had done
this year against what we had talked with them about doing this
year. We believed that was a fair judgment based on the facts.

Mr. BarRETT. Thank you.

Mr. Hastert. I thank you. The gentleman from Georgia.

Mr. Barr. I thank the chairman from Illinois. Ms. Warren, in
your testimony last year, you stated that the extent of corruption
of Mexico is not fully known. On your statement this year, appar-
ently, you now know that—I quote from your testimony—“corrup-
tion remains widespread and disabling within all Mexican Govern-
ment institutions.” I do congratulate the Department of Justice on
at least now, after a year, recognizing the extent of corruption in
Mexico, and I think your statement that it is widespread and dis-
abling within all Mexican Government institutions is an accurate
one,

Unfortunately, your testimonies last year and this year are very
similar. There’s a lot of rhetoric. A lot of bureaucracy. What does
this mean—and again, I’m talking about your section on corruption
here—‘bilateral cooperation has consequently increased but careful
attention to the relationship must continue to assure that the mo-
mentum of change and the growth of trust are not lost.” In lay-
men’s terms, what exactly is the state of play here, given the fact
that corruption is widespread and disabling within all Mexican
Government institutions? How can we really deal with this?

Ms. WarrEN. I believe I said that we have worked on developing
and trying to build a relationship with those special groups, par-
ticularly in the law enforcement area. Groups that have now been
vetted, and we’ve provided advice and support on that vetting and
even training, and we see, slowly but surely, some forward move-
ment, particularly in the Organized Crime Unit. Not only have we


94

"amparo") which was established to protect individuals from
governmental abuses, but which is frequently abused by

criminals to delay or to circumvent court action.

A new Protocol to the Extradition Treaty was signed
during the. Zedillo visit in November 1997 that provides a
"temporary" surrender mechanism for persons sought for
extradition by one country who have been convicted of other
offenses in the other country. This will enhance law
enforcement cooperation between the United States and Mexico
by permitting authorities promptly to prosecute individuals
who have committed extraditable offenses on both sides of
the border without first having to wait for the completion
of a sentence for the first conviction. This tool will be
particularly helpful in going after members of trans-border
criminal organizations. We will be sending the Protocol to

the Senate shortly seeking consent to ratification.

Question:

10.b. What should the United States reasonably expect from
Mexico in terms of arrests and extraditions in the next year?

Answer:

We can reasonably expect bilateral cooperation in
bringing fugitives to justice on both sides of the border to
continue to improve in the year ahead. As specialized units
in Mexico develop, and as information sharing and
cooperation with U.S. counterparts grows, we can likewise
expect that there will be increasing arrests of significant
drug traffickers, money launderers and others engaged in
organized crime. Passage by both Senates of the Extradition
Treaty protocol should result in increased numbers of
fugitives being returned by both countries to face charges
in the other.


168

Mr. BARRETT. Coming from other countries through Mexico.

Mr. BEERS. With respect to marijuana, there is a crop in Colom-
bia which does, in certainly some ways, come through Mexico into
the United States. But, there again, I think that we are the largest
producer of marijuana consumed within the United States.

Mr. BaRReETT. OK, again, so your answer to my question—my
question is: Are we importing more through Mexico or not?

Mr. BEERS. Or not. And, I can’t answer that with precision be-
cause we don’t have those statistics.

. Mr. BARRETT. What's your belief?

Mr. BEERS. My belief is, based on the Mexican product alone,
that it’s less.

Mr. BARRETT. What about cocaine?

Mr. BEERS. With respect to cocaine, the levels appear to have re-
mained constant over the last year. We have reduced, however—
and that’s based primarily on DEA statistics that there hasn’t been
a change in price. Having said that, I can tell you that with respect
to the overall world supply, the amount of cocaine available to the
world this year is 100 metric tons less than it was last year, based
on CIA’s crop estimates in Bolivia, Peru, and Colombia.

Mr. Barrett. And heroin?

Mr. BEERS. The heroin trade globally——

Mr. BARRETT. Mexico.

Mr. Beers. I understand. With respect to Mexico, there are ap-
proximately 4,000 hectares of opium poppy left growing in Mexico.

‘his is the lowest level since about 1993. With respect to Mexican-
produced heroin, this year the amount available to come into the
United States is less than last year.

Mr. BARRETT. As a gateway?

Mr. BEERS. As a gateway, the amount of Mexican plus Colombian
opium poppy available is roughly—excuse me. Colombian opium
Poppy available to come to the United States is roughly static with

respect to the overall supply that was produced in Colombia. So,

at’s static and Mexico is reduced, then, depending upon what

the trafficker routes are precisely—and we can’t say those—there

is less—but I don’t mean to be making a huge success out of this—

but there is less available to come to the United States from those
two countries through Mexico.

Mr. BarRETT. OK. Mr. Marshall, do you concur with that analy-

sis?

Mr. MARSHALL. Congressman, I think it’s difficult for me to com-
ment on the actual quantities of drugs coming into this country,
and we focus, I think, less on that aspect of it than many agencies
in the Government. There is an interagency law enforcement com-
munity assessment of that perhaps. But, the reason I think it’s less
important, the exact numbers, is that taken in the aggregate, you
have a certain level of demand for drugs, and say that level is here.
I believe that you also have a certain existing production capabilit;
for drugs, or actual production for drugs that is at this level. ‘And,
that’s a level that’s higher than the demand for drugs, so that al-
lows for loss. That allows for seizure, that sort of stuff. But then,
when you look at the actual production capability of drugs, I think
that it is up even higher than the actual production, so that any
seizures that are made—or any seizures that are undertaken by


3

The U.S. has also invited Mexico to participate in a
Multilateral Chemical Reporting Initiative. This is a
multilateral effort by chemical trading countries to share
information on chemical shipments and intended customers to
identify and to stop shipments of precursor chemicals liable
to diversion to illicit drug manufacture. Mexico
participated, along with 33 other countries and
international organizations in the October 28-30, 1997,
meeting in Lisbon, Portugal, co-sponsored by the European

Commission, that formally launched the initiative.


34

Mr. Forb. Well, you’re—.

Mr. Suays. What is their incentive to do that?

Mr. Forb. Money.

Mr. NELSON. You’re asking a good economic question. They give
us the drugs, and we send the money for them. That’s economic
transaction.

Mr. SHAYS. So it’s a partnership, correct?

Mr. NELSON. I can’t say it’s a partnership.

Mr. Suays. It strikes me it is.

I yield back, Mr. Chairman.

ir. HASTERT. The gentleman from Indiana, Mr. Souder.

Mr. SouUDER. Thank you very much.

One of the things, as we’ve looked at issues in South and Central
America, is the continued discussion that Mexico doesn’t fall under
SouthCom, and doesn’t fit into the traditional way of coordination.
Have you looked at that in GAO, and do you have any opinions?

Mr. Forp. We know that it’s not part of the unified command

lan. SouthCom’s jurisdiction does not include Mexico. We don’t
Know why the Pentagon made that decision.

Mr. SouprERr. Do you think that that decision is inhibiting in any
way for rapid coordination or decisionmaking?

Mr. ForD. We don’t have the data to answer that question, sir.
We know that the Department of Defense’s involvement in transit
zone activities, as far as the Caribbean, they're extensively in-
volved. They are particularly involved in the air operations. They
do provide support in Mexico for air operations there. Whether or
not that could be better coordinated is—I can’t answer that. I guess
you'd have to ask DOD that question.

Mr. SouDER. Well, we may ask some additional research or ques-
tions, because, clearly, it was devised more around when we had
a Caribbean problem and we had most of the drugs transitting
through that area. As we see it move a lot to water, and coming
directly from the other countries, that potentially could lead to lack
of coordination. I don’t necessarily know, either. That’s why I asked
the question.

en the chairman and I were down in Mexico and talking with
President Zedillo, I think he’s pretty convincing that he’s commit-
ted, and I think that many of the leaders we met in Congress there
are committed. The problem is in the execution. It’s one thing to
say you’re committed, and even try to do that in a democracy, and
actually be able to fulfill that, as we’ve heard today in numerous
questions.

One of the things that I was intrigued by was with the political
shift in Mexico. I don’t know whether you’ve looked at this or
whether you’ve seen the ramifications of this. A lot of the corrup-
tion problems are particularly along the border in Sonora and the
areas right along the American border, where we're looking at 90
percent corruption rates in the narcotics people, a lot in the mili-
tary, and even questions about the Governors of some of those
areas. Yet, the President, partly because his party is now facing
more challenges, has decentralized control and given more author-
ity to the local administrators and local Governors, as opposed to
having it centralized. To what degree do you believe their internal
decisions are complicating our ability to get control on the borders?


179

on the ground, and I did go to those fields. So, I have made every
effort I could to familiarize myself with the situation.

That said, the issue of how much money is available to do the
number of tasks that we have is a very serious issue, and I can as-
sure you that we will be coming to the Hill in the course of the
next week or two to make a presentation to you that we hope will
be responsive to your concerns and our concerns so that we can
move ahead on this issue together.

But, after the specifics of where we are on the Blackhawk pur-
chase at this particular point in time today, we have not signed a
contract yet. And, we will come and talk with you in the days
ahead.

Mr. SouDER. Thank you very much for your answers.

I'm looking forward to working with you over the next few weeks,
and we share concerns, too, about Bolivia and other issues. I know
the chairman has worked with us.

I wanted to also pass on and reiterate my first point. Should you
become Ambassador to Mexico someday in the future, and also, Mr.
Beers and Donnie Marshall and all of you, I know that one thing
that we hear every time we go down there is: What are you doing
back home? And, what you heard me say initially when I came in
is: We are pushing on every front and we’re going to work with the
administration to push other fronts, and the chairman is coordinat-
ing the Speaker’s Drug Task Force and let them know that we’re
being aggressive here in addition to trying to back you up in the
international efforts and down in Mexico. We don’t point a finger,
and not at ourselves too. We're all in this together.

With that, I yield.

Mr. Hastert. Mr. Beers, I just want to interject, too, off this con-
versation. We have about—I think, just off the top of my head—
probably $250 million in INL, approximately, which out of a $17-
plus billion drug budget is not a lot, comparatively speaking, rel-
ative.

Mr. BEERS. About 1 percent.

Mr. Hastert. I would suggest you come up with a strategy, and
I know you have to coordinate inside, but you come up with a strat-
egy of what you need, and I think this Congress would be more
than willing to give you the wherewithal to do the job. Make no lit-
tle plans. Be bold. That’s what we’re looking for. And, we'll work
with you, but we want to see some results. We’ve got to see some
results. And, whether you’re talking about Bolivia and Peru with
the marine issue because the shoot-down policy happens to be
working there. We need to follow through on that.

The unique situation in Colombia—now, I have to tell you, just
as an aside, I walked those borders and spent, I guess cumula-
tively, probably 10 days in all the different places and different
times along that border. The places where I saw the most effective
control was in El Paso and Tijuana, where they triple fenced. They
moved that fence out 13 to 15 miles out into the desert. And then
you get on the end of the fence, and I was with the Border Patrol
agents, and they’re rounding folks up there like cattle and bringing
them in and finger printing them out, and taking them across the
bridge, and letting them go, and they would cross there the next
night, if not the same night in some cases. You know, my constitu-


46

know who knew what and when. Both sides said that they thought
the other side was aware of the shape of the equipment, and I
think that it’s a case of lack of coordination or lack of someone tak-
ing charge to make sure that whatever we deliver could perform
the mission.

Senator FEINSTEIN. Is it fair to say that what we have deliv-
ered—whatever this—is it $87 million worth?—is really not either
up to the task or fully operational? “Up to the task,” I mean by
sending helicopters that can’t fly at the altitude that drug activities
necessitate.

Mr. KUSHNER. Not 100 percent. I believe that the helicopters, in
particular, their use is limited, but they could be modified at a sub-
stantial cost to actually perform the mission.

Senator FEINSTEIN. Ideally, at least I’m speaking for myself, in
my view, we should only send equipment that’s fully operational.
If we really want Mexico to do what we want Mexico to do, and
we want to help them do it, at least send them equipment that’s
operational. It seems to me that’s kind of elementary, and I intend
to look much more deeply into that.

Would GAO be able to take a look at American banking practices
with respect to drug money, specifically wire transfers or cash
transaction reports and make some recommendations on how to
strengthen our banking system to prevent the transmission of dirty
money back to Mexico?

Mr. NELSON. Senator, I believe there’s a substantial body of work
in the GAO regarding that matter, and we can make those reports,
or summaries of those reports, available to your staff. This is an
area where we have been working for a number of years, particu-
larly with wire transactions and money laundering, and I believe
the United States has been leading an international effort to im-
prove reporting on large financial transactions and getting other
countries to sign on to agreements to get a better handle on that
issue.

{Nore.—A copy of the reports entitled, “Money Laundering:
Needed Improvements for Reporting Suspicious Transactions are
Planned,” (GAO/GGD-~95-156); “Money Laundering: U.S. Efforts to
Combat Money Laundering Overseas,” (GAO/T-GGD-96-84);
“Money Laundering: A Framework for Understanding U.S. Efforts
Overseas,” (GAO/GGD-96-105); “Money Laundering: Regulatory
Oversight of Offshore Private Banking Activities,” (GAO/GGD-98-
154); and, “Money Laundering: U.S. Efforts to Fight it Are Threat-
ened by Currency Smuggling,” (GAO/GGD-94-73), were provided
to the Senate Caucus on International Narcotics Control. To obtain
copies call (202) 512-6000, or visit GAO’s website at http://
www.gao.gov.]

Senator FEINSTEIN. I'd appreciate seeing them. Thank you very
much.

Thanks, Mr. Chairman.

Mr. HASTERT. Thank you, Senator. Does anybody else wish to
ask further questions at this round? If not, thank you, Mr. Nelson,
for being here today.

I'd like to now call up our second panel. The second panel is Am-
bassador Jeffrey Davidow, the Assistant Secretary of State for the
Bureau of Inter-American Affairs; Mr. Rand Beers is the Acting As-


115

4
violations of Mexico's money laundering law. According to the Hacienda, during the period
May through October 1997, Mexico initiated 49 money laundering investigations but obtained
only one indictment under the new money laundering law, and this case was later dismissed.
Constant personnel changes in the Office of the Attorney General (PGR) have hampered the
expeditious handling of money laundering investigations and severely hindered the
development of a specialized unit for the investigation and prosecution of financial crimes.
‘The specialized unit has now been formed-in the PGR and Mexican supervisory officials will
soon travel to Washington to consult with the Departments of Treasury and Justice on the
best practices and procedures learned in our experience of anti-money laundering task forces.

t Forfen

Mexico has provided useful assistance to the United States in three asset forfeiture
cases: a $9 million civil forfeiture case against the assets of former Deputy Attorney General
Mario Ruiz-Massieu in Houston (S.D. Tex.); the criminal forfeiture judgment for $350
million (as yet unsatisfied) against Juan Garcia-Abrego; and the seizure and ongoing
forfeiture actions in the Amado Carrillo-Fuentes matters in the Southern Districts of New

York and Florida.

In terms of Mexican domestic law, an asset forfeiture law passed in November 1996
was an important first step. The law is still new and being tested. While generally

adequate, the law is silent on international forfeiture cooperation and asset sharing, and has


51

eventually encompass all of its personnel. They have conducted an
aggressive pursuit of the top trafficker, Amado Carrillo Fuentes,
which ultimately drove him to flee the country, and he died under-
going cosmetic surgery.

In support of bilateral cooperation, the Government of Mexico
has raised the limit of United States law enforcement personnel in
Mexico. They have streamlined refueling overflight and overnight
procedures for United States drug detection and monitoring assets
despite strong negative Mexican public reaction, and they have en-
hanced operational coordination procedures with United States
interdiction forces, especially in the maritime area.

Deputy Assistant Attorney General Warren will discuss extra-
dition, but I would mention that this is one of the areas that the
United States inter-agency community has stressed to Mexico as
critical to the success of our partnership, and cooperation on fugi-
tives, I regret to say, is still not where we would like to see it, but
I would also say that there has been progress.

Law enforcement and military efforts have had a disruptive ef-
fect on the major criminal groups, drug-related arrests are develop-
ing into successful prosecutions, and conviction rates have in-
creased. Major traffickers received sentences ranging up to 40
years in length.

The Government of Mexico, particularly at the senior levels, rec-
ognizes that the justice sector and anticorruption reforms are criti-
cal not only to United States-Mexican relations but to Mexico’s na-
tional security and public safety and to gaining public trust. Mexico
is prosecuting corrupt officials in all parts of the government. The
arrest, in early 1997, of the head of their drug effort, Gen. Gutier-
rez Rebollo, and other government officials, including a former Gov-
ernor of Jalisco, Flavio Romero de Velasco, raised the level of
awareness of the extent of the problem of narcoinfluence and
served as a catalyst for further reform.

During 1997, the office of the Attorney General opened abuse
cases against over 100 members of the Federal judicial police and
over 20 Federal prosecutors. Many are now fugitives. The Mexican
Secretariat of National Defense brought charges against five gen-
eral officers, something unheard of in years past. Mexican inves-
tigations are also unearthing narcoinfluence in the private sector
as well, and we view this as progress.

While we are convinced of the Zedillo administration’s commit-
ment, there is no doubt that Mexico’s justice sector institutions re-
main flawed. It is a monumental task and will require all three
branches of government to work together. However, Mexico is be-

inning to take the steps needed to strengthen its institution, en-
ance the capabilities and security of the personnel, improve
professionalization, offer adequate pay and benefits, establish
checks and balances within the system, and combat entrenched cor-
ruption. The Mexican Congress also deserves high praise for its bi-
artisan support for drug control and institutional reform. The
Mexican national judicial council took the unprecedented step of
recommending that three sitting judges be indicted for corruption.

Neither United States nor Mexican officials delude themselves
that corruption can be defeated in the near term, but the beginning
of an institutional transformation is underway. Bilaterally, United


136

and Peru in order to circumvent Colombian middlemen. In addition to the supply
of cocaine entering the U.S., trafficking organizations from Mexico are responsible
for producing and trafficking thousands of pounds of methamphetamine. They
have been major distributors of heroin and marijuana in the U.S. since the 1970's.

ORGANIZED CRIME SYSTEMS BASED IN MEXICO

The command and contro! element for an increasingly large portion of the
drug distribution in the United States is based in Mexico. These syndicate leaders
are well-known to U.S. law enforcement, and most of them have been charged in
numerous indictments in the U.S. The leaders of these criminal organizations are
living with extraordinary wealth in Mexico, and have so far escaped apprehension.
by law enforcement. In order to understand the tragic impact these groups have on
citizens, families, and neighborhoods, and sometimes entire communities in the
U.S., we need to examine, in detail, who they are and how they operate:

THE CARRILLO-FUENTES ORGANIZATION: Amado Carrillo-Fuentes,
based in Ciudad Juarez, was known as the “Lord of the Skies” because of his
transporting plane loads of cocaine for Colombian traffickers. Amado Carrillo-
Fuentes had extensive ties to a number of officials in law enforcement and the
military, up to and including the former Commissioner of the now-disbanded
INCD (the National Institute to Combat Drugs) General Gutierrez-Rebollo.
Before his death, in July 1997, and after the arrest of General Gutierrez-Rebollo in
March, Amado Carrillo-Fuentes was under pressure from law enforcement in the
USS. and Mexico. As a consequence, he had made efforts to disguise his
appearance through cosmetic surgery and relocate some of his operations to Chile.

The Carrillo-Fuentes organization is based in Juarez, and is associated with
the Cali Rodriguez-Orejuela organization and the Ochoa brothers of Medellin. This
organization, which is also involved in heroin and marijuana trafficking, handles
large cocaine shipments from Colombia. Their regional bases in Guadalajara,
Hermosillo, and Torreon serve as storage locations where later, the drugs are
moved closer to the border for eventual shipment into the United States. The scope
of the Carrillo-Fuentes network is staggering, reportedly forwarding $20-30
million to Colombia for each major operation, and generating tens of millions of
dollars in profits per week.


47

sistant Secretary for the Bureau of International Narcotics and
Law Enforcement Affairs; Ms. Mary Lee Warren is the Deputy As-
sistant Attorney General of the Criminal Division, Department of
Justice; and Mr. Donnie Marshall is the Acting Deputy Adminis-
trator of the Drug Enforcement Administration. It’s a rule of our
committee that we will swear in all of our witnesses.

[Witnesses sworn.]

Mr. HAsTERT. Let the record show that the witnesses answered
in the affirmative.

Ambassador Davidow, please proceed with a brief summary.

STATEMENT OF AMBASSADOR JEFFREY DAVIDOW, ASSISTANT
SECRETARY OF STATE, BUREAU OF INTER-AMERICAN AF-
FAIRS, DEPARTMENT OF STATE

Mr. Davipow. Thank you, Mr. Chairman. As there are two rep-
resentatives of the State Department here today, by prior agree-
ment, Mr. Beers will present the State Department’s testimony,
and I will be available to answer any questions that you may have
for him or for me.

(The prepared statement of Mr. Davidow follows:]


16

Questions for the Record Submitted by

Senator Grassley to
Assistant Secretary Davidow and

Acting Assistant Secretary Beers

Joint Hearing of
Senate Caucus on International Narcotics Control and
Government Oversight and Reform Subcommittee on National
Security, International Affairs and Criminal Justice
March 18, 1998

Questio:

5. On the 11th of February, Senator Coverdell, Representative
Gilman, and I sent you a letter regarding the allegations raised
in a 5 February article in the Washington Times about Mexican
Interior Minister Francisco Labastida that he has “long-standing
ties to narcotics traffickers.” This letter was a follow up to a
6 February letter from Senator Coverdell and Representative
Gilman on the same topic. While we have received a brief
response from our 11 February request, the other is still
outstanding.

In a staff meeting on the 13th of February, my staff was assured
that this information would be sent to Congress quickly and
without delay. Follow up conversations with the State Department
have repeatedly assured my staff that (1) there was nothing for
us to be concerned about, (2) the information has all been
compiled and it was simply a matter of approving the cover
letter, and (3) the information would be sent to Congress very
shortly. We heard this on the 24th of February. On the Sth of
March. On the 11th of March. And again on Monday the 16th of
March. Why the delay? Some might interpret this delay as an
intentional intent to keep from Congress this information until
the window to overturn the President’s decision to certify Mexico
expires. If there's nothing for Congress to be concerned about,
why has it taken weeks to deliver this information; and why is
the information still incomplete?

Answer:
Assistant Secretary for Legislative Affairs Barbara Larkin
wrote to Senator Coverdell and Congressman Gilman on March 18 in

reply to their letter of February 6 requesting a document search


86

PGR has finally established its anti-Money Laundering Unit,
we are concerned at what appears to be a lack of close
coordination between that Unit and the Secretariat of
Finance and Public Credit’s (Hacienda) Financial
Investigations Unit (FIU) in reviewing and acting upon both
large-value and suspicious transaction reporting information
received by Hacienda. We are continuing to encourage the
Government of Mexico to use an interagency (regulators,
investigators and prosecutors) approach in identifying,
targeting, investigating, and prosecuting money laundering
cases.

stion:
8.b. How is Mexico cooperating with the United States on
issues of money laundering in order to decrease the flow of
marco dollars across the border? What support is the United
States providing to assist Mexico in dealing with this

problem? Is the government of Mexico providing adequate
resources and emphasis to deal with this problem?

Answer
Mexico is cooperating well with the U.S. in combatting
money laundering. Legal and regulatory changes in Mexico
have improved Mexico's ability to combat money laundering as
well as to improve bilateral cooperation with the U.S. and
other countries. Our two governments have three formal
agreements in place which facilitate exchanges of important
information and evidence, and extensive informal exchanges
also occur daily. Mexican officials have been helpful in a
number of U.S. investigations and have even testified in

hearings here.


41

In forming our judgment on this issue, we must remember some-
thing. We and the Mexicans both are the unwilling victims of
criminal gangs that produce and push these drugs. They are our
rightful targets. They are the villains in this story. They sell the
drugs. They corrupt our officials. They kill and threaten to silence
opposition. They menace free institutions, and even the rule of law.

at I expect to hear today, and probably already could have
heard, if I were here, from the witnesses is how our efforts are
going. I want to know from the administration just what criteria
it uses to decide if Mexico is fully cooperating. What are the spe-
cific critical elements in that evaluation? How are these weighed
and weighted?

I also want to remind our Mexican partners in this effort of
something, and that is that, although they see the certification
process as unfairly singling them out, that is not the case, because
the purpose of the certification process is twofold. First, to look at
the activities of other countries, as already stated, but also for us
to look internally at the administration that executes the laws to
look internally and to see if the goals are met; that all is being
done adequately; full cooperation among our own government agen-
cies. Is money being spent well? In other words, for us to certify
whether the American programs are working as they should work.

I have a number of concerns here, and will address those ques-
tions. Let me conclude by noting four areas where it is absolutely
essential to see visible, meaningful progress.

We need to see movement on extradition. We need to see a mari-
time strategy and a maritime agreement. We need progress in
operationalizing the border task forces, and to permit these to have
any chance of success, we need to see real improvement in dealing
with corruption. Without clear progress in these areas, we cannot
sustain our present evaluations of United States-Mexican coopera-
tion.

We need to see major progress in the war on drugs. Mexican co-
gperation is crucial to fighting the flow of drugs into our United

tates.

So, I thank the chairman. I thank my colleagues of the Congress
for letting me appear at this point.

Mr. HASTERT. Thank you, Senator.

It’s the intent of the Chair to go through a very brief second
round of questions, and I’m going to start.

Mr. Nelson, the administration has often talked about the so-
called Department of Justice high-level contact group. This group
is charged. with getting results, and we’ve seen them in action for
a couple of years. I’m sure that you’ve taken a look at that. Have
we objectively reduced corruption through this so-called contact

oup?
ates NELSON. I think it would be difficult to say that you can at-
tack the corruption problem mainly through the high-level contact
groups. The contact groups are very useful in terms of developing
a binational strategy, to come up with measures for cooperation,
but the endemic problems with corruptions have to be addressed
through efforts such as this——

Mr. HASTERT. Well, what have we achieved through this contact
group?


127

Senator Biden’s Question

1) Last year, the New‘ York Times reported that the
Administration was considering Proposing a fre of
of commercial front ventures of the Mexican trafficker:
Similar sanctions were imposed against over 100 companies
linked to the Colombian cartels in 1995.

— Where does this matter stand? Is it still under
review?

~ ‘When will a decision be made?

In October 1995, pursuant to his authority under
International Emergency Economic Powers Act (IEEPA), 50 U.S.C. S$
1701-1706, President Clinton issued Executive Order 12978, which
finds that “the actions of significant foreign narcotics
traffickers centered in Colombia . . . constitute an unusual and
extraordinary threat to the national security, foreign policy,
and economy of the United States,” and declares a national
emergency to deal with that threat. The Executive Order
prohibits transactions by U.S. persons and entities with and
blocks all property subject to U.S. jurisdiction of four
principal narcotics traffickers -- cali Cartel kingpins Miguel
Rodriguez Orejuela, Gilberto Rodriguez Orejuela, Helmer Herrera
Buitrago, and the late Jose Santacruz Londofio -- and of companies
and individuals which are owned or controlled by, or act for or
on behalf of, the designated kingpins. The initial list of 80
Specially Designated Narcotics Traffickers (SDNTs) has been
supplemented several times, for a total to date of 424 SDNTs (4
principals, 287 individuals, 133 companies).

At the same time, the President instructed the inter-agency
community to continue to gather and review information relating
to other international criminal organizations to determine
whether IEEPA sanctions might aid the United states in combatting
their illicit activities as well. The Department, in
coordination with other Government agencies, has begun a process
of reviewing the susceptibility of other countries to economic
sanctions, in conjunction with the implementation of the
President's PDD-42.

One reason that targeting the leaders of the Cali cartel was
so successful is that the law enforcement and intelligence
communities had amassed many years’ worth of information and
documentation regarding this criminal organization and its front
companies and front persons. Moreover, much of that information
came from open source materials which could be used directly in
the evidentiary packages prepared by the Department of Justice
and submitted to the Department of the Treasury, Office of

10


ill

Crime Law

Mexico passed an Organized Crime Law in 1996, which, for the first time, authorized
the use of important investigative tools such as plea bargaining and court-authorized wiretaps.
Unfortunately, trained, vetted, competent personnel are still not in place among the ranks of
law enforcement officers, prosecutors, and judges to make effective use of these new
important evidence gathering authorities. The Organized Crime Unit has availed itself of
several of these procedures and techniques, often to the benefit of U.S. law enforcement, for
example, by sharing cooperating witnesses with us. These are the few notable exceptions,
however, as a general rule, the special investigative units do not yet have access to these
tools, apparently awaiting guidelines and policies from senior PGR officials and trustworthy

court officials to oversee them.

5 R A

The extradition relationship between the U.S. and Mexico has continued to improve.
The U.S. Government has approximately 120 active provisional arrest and extradition
requests pending in Mexico. A total of 23 fugitives for whom extradition was sought by the
United States were surrendered in 1997, eight (seven extraditees and one expelled fugitive)
for drug-related offenses. No Mexican citizen was physically surrendered through the
extradition process in 1997, although ten were found extraditable in 1997, by the

Government of Mexico. These ten cases and a case of one other Mexican fugitive found


120

3) a) During the fall of 1997, Ramon Arellano Felix was
Placed upon the FBI’s “Ten Most Wanted List,” it was
thought that it would serve as an accurate predictor of
Mexican determination of fighting the cartels. As of
now, he is still free. Has there been any effort on
the part of the Mexicans to track him down? Is it a
matter of time or do you think he will ever be caught?

Ramon and Benjamin Arellano Felix are the subject of
pending charges in Mexico; warrants have been issued for their
arrest on these charges and rewards offered for information
leading to their capture. It is clear that the Mexicans are
acutely aware of the dangers posed by the Arellano Felix
Organization, which is among the most violent in Mexico and whose
actions have exacted a great toll on the honest law enforcement
officials in Mexico. While both governments have made
significant efforts to locate all members of the Arellano Felix
organization, it will take some time before the leaders are
arrested and prosecuted.

b) Is there much cooperation with intelligence and
information sharing on fugitives/cartel kingpins
between the United States and Mexico? Or have the U.8.
officials been reluctant because of leaks?

Although some investigations have been compromised because
of a variety of problems, including leaks, in general, there is a
cooperative relationship between U.S. and Mexican law
enforcement. The United States works with Mexican counterparts
in such a way as to maximize the effectiveness of the
relationship and to minimize any risk to ongoing U.S. law
enforcement interests. Increased intelligence and information
sharing has resulted in the arrest of three Mexican
methamphetamine traffickers in Mexico on provisional warrants for
extradition to the United States and the indictment of 17
additional targets by the Mexican Government.

This cooperative relationship also resulted in the recent
indictment of 10 San Diego gang members who were recruited by the
Arellano Felix Organization to assist in gang protection and
enforcement along the U.S.-Mexico border. This indictment,
unsealed in early 1998, charged members of the Logan Heights gang
with conspiracies to import and distribute cocaine and marijuana
into the United states. These defendants were recruited by a
now-deceased leader in the Arellano Felix Organization who
provided personal security for the Arellano Felix brothers and
directed missions to eliminate rival drug organizations and
honest law enforcement agents and prosecutors.


125

b) Do you expect the appeals for the remaining fugitives
to be successful, and what is the time line for the
delivery of those appealing? How do: e U.8.-Mexico

arrangement on extradition compare with agreements with
other countries such as Canada?

It is not possible to predict the eventual outcome of the
amparo proceedings in Mexico involving fugitives from U.S.
justice or to give a definite time line for the resolution of
their claims. The eventual success rate has generally been quite
good, however, and a recent ruling by the Mexican Supreme Court
upholding the constitutionality of the bilateral extradition
treaty may be useful in moving other pending appeals through the
system. In addition, the United States and Mexico have
negotiated and signed a protocol to their existing bilateral
extradition treaty to authorize the temporary surrender of
persons for trial purposes and return after prosecution to

complete the process or sentence in the country of their initial
arrest.

It is difficult to compare bilateral extradition
relationships with different countries. In statistical terms,
Canada returned 25 fugitives to the United states through the
extradition process in 1997, another 16 individuals waived
extradition (a course of action very rarely chosen by fugitives
in Mexico), and 10 people were deported. During the same period

of time, 13 fugitives were extradited by Mexico and 10 were
deported in lieu of extradition.

Canada is thus ahead of Mexico as to sheer numbers, but such
a comparison does not take into account the notable improvements
in our success rate over recent years with Mexico, which in 1995
surrendered only six fugitives during the entire year. A
comparison based solely on numerical figures also fails to
reflect the difficulties involved for the Mexican and U.S.
Governments in reconciling fundamental differences in our two
legal systems -- theirs based on civil law, and ours, like
Canada’s, based on common law. Although much work needs to be
done, the U.S. extradition relationship with Mexico has improved
significantly over the last three years, more than with any other
country, and Mexico’s implementation ranks second only to Canada
among our treaty partners.

c) We have seen the arrest of 6 drug kingpins or
lieutenants in 1997. why is only Oscar Malherbe
subject to possible extradition?

It is not clear what the basis is for the number of kingpins
and lieutenants arrested in 1997 used in this question (i,e.,
six). Of the major individuals listed in the Embassy of Mexico’s
fact sheet on arrests of major narcotics trafficking figures


149

Mexican national labs per month, which has prompted speculation that the
tougher precursor controls may be causing more of a shift back to production
in Mexico. In addition, the availability of ephedrine and pseudo-ephedrine
is now reported very low in the southern California area. DEA offices in
Texas reported that the majority of methamphetamine production in their
regions came from labs located in Mexico. A high level DEA confidential
source of information (CS) has also recently advised that the majority of
methamphetamine production by the Amezcua organization now takes place
in Mexico. This CS reported that tougher law enforcement in the United
States and the recent introduction of precursor controls, combined with
reported police corruption in Mexico, now makes the production of
methamphetamine in Mexico more attractive.

DEA has documented quantities of methamphetamine, currently being
produced and distributed by Mexican trafficking organizations, in the
Midwestern section of the country, including states such as Iowa.

Towa ranked #10 in DEA methamphetamine lab seizures with 22 labs
reported seized in CY-1997. The DEA Des Moines, Iowa office estimates
that over 90% of the methamphetamine distributed in Iowa is brought into
the state by Mexican national drug trafficking organizations. This situation
poses a mandate to interdict the Mexican national organizations distribution
efforts. On the positive side, this also means that the public safety problems:
fire, explosions, environmental contamination, toxic waste, and poison gas
deaths, associated with operational methamphetamine laboratories are less
frequently encountered in Iowa than many other regions of the country (i.e.,
California, Arizona, and Missouri).

(ib): What are we doing with Mexico to close this trade down? What
actions has the United States taken or plans on taking to control the
international smuggling of the precursor chemicals?

ANSWER: Both at the policy and working group levels, the Drug
Enforcement Administration has taken a leading role in promoting the
concept of a chemical control system in Mexico and encouraging Mexico to
be a committed participant, along with other nations, in the international


153

Preliminary indicators suggest that Mexican methamphetamine organizations
and others are experiencing increased difficulty in obtaining
pseudoephedrine and ephedrine in the United States due to the recent
implementation of the Methamphetamine Control Act which placed tighter
controls on chemical companies. DEA focused on thwarting the importation
and distribution of chemicals by rogue chemical firms. These control
measures include denial or withdrawal of chemical registration to handle List
I chemicals, imposition of civil fines for record-keeping or reporting
violations, injunctions which prohibit the sale of certain precursors by
chemical firms and their operators for substantial periods of time, and
criminal prosecutions.

In addition, the law lowered the single transaction threshold limit for retail
and mail order distribution of pseudoephedrine to 24 grams. That action
abruptly affected the previously unrestricted sales of pseudoephedrine tablets
primarily by the mail order rogue chemical firms, and also curtailed the
heretofore unlimited over-the-counter sales of retail] pseudoephedrine tablets.
The effective date, October 3, 1997, is so recent that the salutary effects of
this statute are just beginning to have effect.

It is reasonable to predict that the Mexican methamphetamine trafficking
groups will thus become more dependent on foreign sources for
pseudoephedrine, ephedrine, iodine, and red phosphorus (iodine and red
phosphorous when mixed with water create hydriodic acid). For example,
a recent injunction against a California firm known to have previously
diverted large volumes of iodine resulted in documented instances of some
Mexican methamphetamine groups experiencing difficulties in obtaining
iodine domestically. Immediately after this action there was a notable
decrease in the number of clandestine laboratories seized locally suggesting
that organizations relying on domestic supplies of iodine had to seek new
sources.

Until recently, methamphetamine precursors such as pseudoephedrine,
combination ephedrine, iodine, and red phosphorus were widely available on
the wholesale, retail, and black U.S. markets. However, the availability of
these chemicals on the wholesale level is declining and will likely affect
black and retail markets here in the United States. Other chemicals used in
methamphetamine production such as freon and hydriodic acid frequently are
obtained in Mexico.


CAUCUS ON INTERNATIONAL NARCOTICS CONTROL

CHARLES E. GRASSLEY, Iowa, Chairman
JOSEPH R- BIDEN, Delaware, Co-Chair
ALFONSE D'AMATO, New York BOB GRAHAM, Florida
FRANK MURKOWSKI, Alaska DIANNE FEINSTEIN, California

JEFF SESSIONS, Alabama

Wa. J. OLSON, Staff Director
Curis PUTALA, Minority Staff Director

(dD


148

taken to the Mexican Customs office for processing. About 20 minutes later,
eight gunmen, armed with AK47 rifles, 9mm and 45 caliber handguns, arrived
at the Customs office and a gun battle erupted. The Nogales, Arizona port of
entry was also hit with gunfire from the Mexican side, but no injuries were

inflicted on the U.S. side of the border.

On January 27,1998, MFJP Agent Juan Carlos De La Vega-Reyes and his
brother Francisco were shot to death at the Hotel Las Americas in
Guadalajara, Mexico. Agent De La Vega-Reyes was on temporary duty
assignment in Guadalajara from Juarez.

* On February 12,1998, FEADS Commandante Rodolfo Blancas, and several
task force officers were conducting an investigation into a suspected stash
house for drugs in Nogales, Sonora. While working to cooborate
information on the location, they were fired upon by two individuals. The
FEADS returned fire and arrested one of the assailants identified as Roberto
Ruiz Kempton.

When violent acts such as these do not result in arrest, conviction, and
punishment, the impact on the law enforcement community and honest citizens is
devastating. Few citizens are willing to cooperate when police commandantes,
prosecutors, elected officials, and members of the free press are gunned down in
broad daylight. Solving drug assassinations in Mexico will increase the
opportunity for successful law enforcement.

CORRUPTION AND INTIMIDATION: TOOLS OF THE TRADE

The corruption of public officials and law enforcement officials is critical to
the power of organized crime. The criminal organizations based in Mexico have
placed a major emphasis on the corruption of public officials and have
demonstrated an ability to corrupt officials serving in high level positions in both
law enforcement and the military. Drug-retated corruption is probably the single

greatest obstacle that law enforcement faces in its global battle against international

drug trafficking. President Zedillo has recognized drug-related corruption as a
threat to Mexican National security and recently announced a national initiative to
fight crime, violence, and corruption.


104

3
and monitor progress in our bilateral counterdrug agenda. In addition, Attorneys General
Reno and Madrazo have met several times and speak by telephone often to discuss the
pressing law enforcement issues. Staff of both offices follow this example with regular and
frequent contacts on law enforcement matters of mutual interest. Through this immediate
and frequent contact, the two offices and their leadership have been able to discuss and often
defuse concerns, which in earlier times might have exploded across headlines and stymied

forward progress against criminal activity-

Further, the U.S./Mexican Senior Law Enforcement Plenary Group -- which I co-
chair with the Mexican Deputy Attorney General — convenes frequent meetings to discuss
and resolve ongoing operational and practical law enforcement issues and problems. This
Plenary Group has established Working Groups to focus on key counterdrug concerns —
Fugitives, Counternarcotics, Money Laundering, Prisoner Transfers, Arms Smuggling, and
Chemical Controls, among others. The Plenary Group and its Working Groups provide an
important forum for establishing direct and personal channels of communication between law

enforcement officials.

In May 1997, Presidents Clinton and Zedillo signed a U.S.-Mexico Alliance Against
Drugs articulating 16 areas for joint cooperation; at that same time, the two Governments
released the Binational Threat Assessment. Since that time, the Department of Justice has
worked diligently with other U.S. Government agencies to reach a consensus with the
Mexican delegation on a Binational Drug Strategy of how to implement the principles of the


64

-12-

The Mexican government has alsd' worked closely with the
U.S. Government to build an effective partnership against the
shared aspects of the drug threat. We have studied the threats
and developed a strategy to address them. We will follow this
up with plans and measures of effectiveness, so that you, the
Mexican Congress, and the U.S. and Mexican people can judge our
progress.

I suggest to you that this is full cooperation in a
reasonable interpretation of the law. I suggest to you that
this is forward movement. I can also assure you that this is
why the President determined that the Government of Mexico
should be fully certified in this year’s review.

Again, I appreciate very much the opportunity to meet with
you and discuss this very important issue, your concerns, and
your ideas about how Mexico and the United States can work
better together in the coming year to combat this mutual threat.

I would be pleased to answer your questions.


50

STATEMENT OF RAND BEERS, ACTING ASSISTANT SEC-
RETARY, BUREAU OF INTERNATIONAL NARCOTICS AND LAW
ENFORCEMENT AFFAIRS, DEPARTMENT OF STATE

Mr. BEERS. Mr. Chairman, members of the subcommittee, Sen-
ators, I’m Rand Beers from the Bureau of International Narcotics
and Law Enforcement Affairs, and I’d like to make a brief state-
ment and then pass on to my colleagues from the law enforcement
agencies.

I recognize the seriousness of this issue. We come forward today
to be as responsive as we possibly can with respect to the reasons
for which the decisions regarding certification were made and to
answer any questions which you may have in that regard.

With respect to the certification process as a whole, this year was
an unusual year in which we had a very open and complete discus-
sion among all of the agencies involved in our certification process,
and we came to what, in the end, was a unanimous recommenda-
tion, which the Secretary of State communicated to the President
of the United States and which he then signed. That included a full
certification for Mexico. In that context, we believe that the certifi-
cation system, as a whole, works; that it serves a useful purpose
in highlighting the importance of the issue of counter-narcotics to
the United States and highlighting the importance of that issue
worldwide. We believe that, as a result of this process, govern-
ments around the world take measures that they might not other-
wise have taken, and we believe that there are specific instances
which are demonstrated: for example, the major counter-narcotics
efforts in Peru and Colombia over the last several years.

But with respect to Mexico, I would simply like move on to talk
with you about the continued threat that Mexico faces. In May
1997, President Clinton and President Zedillo announced the Dec-
laration of the United States-Mexico Alliance Against Drugs and
released a binational drug threat assessment. Just recently, Gen-
eral McCaffrey released a binational drug control strategy with the
foreign secretary of Mexico, and we will begin, as you fave heard
earlier, to work on implementation of that plan in the year ahead.
By objective standards, the counterdrug steps, which Mexico took
on its own, achieved progress toward the goal of the United Na-
tions Convention and other international agreements in 1997.

For example, Mexico exceeded its 1996 record for eradication of
opium poppy cultivation and for seizures of cocaine and opium
gum, although other statistics with respect to cultivation and sei-
zures were mixed, these were the most significant aspects of both
measures of eradication and seizures.

In addition, the Government of Mexico passed a comprehensive
chemical control piece of legislation, one of the major gaps in com-
pliance with the United Nations Convention, and they made record
seizures of trafficker assets, both cash and otherwise. In addition,
they replaced the discredited national counter-narcotics institute
with a new drug law enforcement branch, which has carefully
screened its personnel. They have established an organized crime
unit to implement the organized crime bill and a financial intel-
ligence unit to implement tighter money laundering controls. They
have created a rigorous new screening process for justice minist:
personnel assigned to specialized law enforcement units, which will


171

don’t see now. I know that our money-laundering statutes are not
perfect. We could take a look at them as well.

I guess I shouldn’t speak for the Department of Justice. Does the
Department of Justice believe that the money-laundering statute
that Mexico enacted is sufficient, or are there some deficiencies in
that as well?

Ms. WARREN. It’s quite sufficient. We did advise, and the Treas-
ury Department advised, on what should be in a money-laundering
statute. The problem is in implementation. The problem has been
in prosecutions, not so much what’s on the books.

Mr. Barr. In other words, you don’t see any need for them to in-
clude structuring or export reporting requirements.

Ms. WARREN. ‘Well, structuring will get reported in the suspicious
activity reports, and from those, money-laundering investigations
that will carry a much higher penalty will be available. It’s the
same in the United States. Typically, we don’t proceed on the struc-
turing prosecution if a money-laundering one is available because
the penalties are so much more severe.

Mr. Barr. Should the Mexican Government be lauded for passing
this money-laundering statute even though the only case pros-
ecuted, I guess last year, was thrown out. Is this another where
they should be congratulated?

's. WARREN. I think, first of all, you have to criminalize money
laundering before you can proceed. Now they have to implement it.
They’re just beginning to get a prosecutors group together. We
have tried to hurry them along on that, offering advice. It has
taken a while to form that unit. They do have a very strong fence
there now that will help that prosecutors unit develop the cases
they need to.

Mr. Hastert. The gentleman’s time has expired.

Mr. Barr. Thank you, Mr. Chairman.

Mr. Hastert. Mr. Davidow, last year, you were up here and
some of us in Congress wailed and moaned, and we beat on our
chests. I kind of led a charge that said let’s get some measurable
objectives. Let’s see if we can get the radars in the south and get
them up and running so that we have that cooperation that was
promised. Let’s get some maritime cooperation here, and I guess we
gave them ships and they don’t run, maybe that’s part of the prob-
lem. And we said let’s make sure that 20 DEA agents that we ap-

ropriated for—this is last year—that we get them in country and
feel that they’re fairly safe. And, let’s get the felony extradition
issue taken care of. Let’s get some concrete measures for corrup-
tion. We talked about it, and the Senate munched that over, and
we kind of faded away into the twilight. Mexico was certified and
went off into the twilight. But, we’re back here again, and I guess
that’s the frustration.

Ms. Warren, I’m asking you. You’re the head. You lead the team
of the U.S. High Level Contact Group. Next year, can we say that
we're going to expect a maritime agreement that’s in place? I mean,
it’s been 2 years. Can we expect that? Can we expect it next year?
Yes? No?

Ms. WarrEN. Could I first correct the chairman. I’m not the head
of the High Level Contact Group. That’s General McCaffrey.

Mr. HASTERT. Well, what’s your role? You're Justice, right?


99

Mr. HasTERT. Thank you, Mr. Beers. Ms. Warren.

STATEMENT OF MARY LEE WARREN, DEPUTY ASSISTANT AT-
TORNEY GENERAL, CRIMINAL DIVISION, DEPARTMENT OF
JUSTICE

Ms. WarREN. Thank you, Mr. Chairman. I’m very privileged to
appear before this joint hearing today to outline the Department of
dustice’s assessment of United States and Mexico drug law enforce-
ment cooperation.

I would like to summarize just very briefly my prepared state-
ment and ask that the prepared statement be made part of the
record for this hearing.

From the perspective of the Department of Justice, our bilateral
cooperation relationship with Mexico in the area of drug law en-
forcement remains a work in progress. Certainly, we would have
hoped to have been further along, yet we are able, at this point,
to point out tangible progress over the past year.

The challenges facing both the United States and Mexico in the
area of drug law enforcement will be very large. Mexico represents
a critical crossroads to the United States in combating illicit drugs
with respect to cocaine, heroin, marijuana, methamphetamine, and
its precursors, and even the diversion of pharmaceuticals. The ease
of access across the massive common border, so helpful to our le-
gitimate trade and commerce, opens an easy escape route to those
who would flee from justice and also a conduit for smuggled drugs
and drug proceeds. This ease of access demands that the United
States ana Mexican Governments coordinate and strengthen efforts
in areas of particular interest to the Department of Justice: extra-
dition, counternarcotics, money laundering, and asset forfeiture.

The goal of the Department of Justice is to eliminate any remain-
ing obstacles to law enforcement cooperation with Mexico and rec-
ognition of the drug threat posed to the national security of both
countries, and that the impunity that can result if criminals are
not brought to justice is ended.

The United States-Mexico bilateral consultative mechanisms that
have been mentioned here at the High Level Contact Group and
others, such as the Binational Commission, where the two coun-
tries meet at the Cabinet level each year. The two Attorneys Gen-
eral are in regular contact one with the other. There’s also, at a
more operational level, a United States-Mexico senior law enforce-
ment plenary group that involves prosecutors, investigators, and
representatives from the other departments who talk in a very
“nuts-and-bolts” way about our progress in the areas of fugitives
and legal reform, prisoner transfers, and chemical controls.

You've heard of the bilateral strategy and bilateral threat assess-
ment, and now the challenge is an action plan with real perform-
ance measures.

The impediments for Mexico’s fighting has brought an array of
drug-related threats, and the obstacles to United States-Mexican
law enforcement cooperation are well known and acknowledged by
the Mexican leadership. The Mexicans are the first to acknowledge
the entrenched corruption at all levels of law enforcement. They re-
alize they have a fledgling and often easily compromised set of gov-
ernment institutions that, in the past, have been staffed by often


24

into the United States. We have previously noted the need for ONDCP to develop drug
control plans that include performance measures to allow it to assess the effectiveness of

antidrug programs.

In February 1997, we recommended that ONDCP complete its long-term drug contro!
plan, including quantifiable performance measures and multiyear funding needs linked to
the goals and objectives of the intemational drug contro! strategy. Subsequently, in
February 1998, ONDCP issued a national drug contro! strategy covering a 10-year period.
In March 1998, ONDCP issued general performance measures, but they do not include
targets and milestones for specific countries, such as Mexico.

As | noted earlier, the United States and Mexico issued a joint U.S.-Mexico binational
drug strategy in February 1998. Although the binational strategy is indicative of increased
U.S.-Mexico cooperation, it does not contain eritical performance measures and
milestones for assessing performance. State Department officials stated that the bilateral
process of establishing performance measures and milestones is incremental and will be
addressed during 1998. ONDCP officials told us that they plan to issue specific targets
and milestones for the binational strategy by the end of this year.

This concludes my prepared remarks. | would be happy to respond to any questions you
may have.

15, Feb. 27, 1997).


20

stated that the screening requirements do not apply to judges, most units of the military,
and other key law enforcement organizations engaged in drug control activities. U.S.
agencies are supporting this initiative by providing equipment, training, and technical
assistance. Moreover, U.S. embassy personnel are concemed that Mexican personnel
who failed the screening process are still working in the Special Prosecutor's office and
the special units.

Although all of Mexico's actions are positive steps to reducing drug-related activities, there
are still many issues that need to be resolved. For example,

-- U.S. and Mexican officials indicated that personnel shortages exist in the Special
Prosecutor's office and the special units;

-- the special units face operational and support problems, including inadequate
Mexican government funding for equipment, fuel, and salary supplements for
personnel assigned to the units, and the lack of standard operating procedures;

= U.S. law enforcement agents assigned to the Bilateral Task Forces cannot carry
arms in Mexico; and

-- Mexico continues to have difficulty building competent law enforcement institutions
because of low salaries and little job security,

PLANNING AND COORDINATION OF
US. PROVIDED ASSISTANCE,

U.S.-provided assistance has enhanced the countemarcotics capabilities of Mexico's
military. However, the effectiveness and usefulness of some equipment provided or sold
to Mexico is limited due to inadequate planning and coordi
particularly military agencies within DOD.

tion among U.S. agencies,

10


103

2
those criminals fleeing justice and those drug traffickers seeking to transport and conceal
illegal goods and illicit profits. This ease of access demainds that the U.S. and Mexican
Governments coordinate and strengthen efforts in such areas of particular interest to the
Department of Justice and the U.S. Government as extradition, counternarcotics efforts,

money laundering controls, and asset seizure and forfeiture.

‘The goal of the Department of Justice -- and the policy of the United States -- is to
eliminate any remaining obstacles to law enforcement cooperation with Mexico in recognition
of the threat posed to the national security of both countries and the international community
by transborder narcotics trafficking and criminal activity and by offenders seeking to use
territorial boundaries and differences in our legal systems to elude detection and achieve

The Governments of the United States and Mexico cooperate extensively on
counterdrug policy issues — at several levels. For instance, the Binational Commission meets
annually, at which Cabinet-level officials from both governments discuss the status and
progress on broad issues and programs of mutual concern and interest, The High Level
Contact Groups, led for the U.S. by General Barry McCaffrey, Director of the Office of
National Drug Control Policy, and including representation from the Departments of State,
Treasury, Justice, Defense, and Health and Human Services, meets at regular intervals to set


160

The goals established by the original BTF concept are realistic and beneficial
for both the GOM and the United States. And, in spite of the many problems
the BTF’s have encountered over the last few years, it seems that the GOM
has recently made some effort to staff the BTF’s with reputable personnel.
Although slow in coming, the GOM has also begun to support the BTF’s
with money and resources. Nonetheless, despite these initial efforts by the
GOM, the BTF’s will not be successful until they are staffed with
experienced and reputable management and senior personnel. The BTF’s are
slowly rebuilding, and without the daily guidance of the DEA and other U.S.
law enforcement agents, any success will be gradual.

(3c): To date, how much money has the United States committed toward
the establishment of these task forces? How much has Mexico
committed to funding these forces? How much has Mexico spent? In
your view, how much more money will the United States and Mexico
have to commit before these task forces are fully operational? Given
that these task forces become fully operational, what are the projected
U.S. and Mexican maintenance costs?

ANSWER: To develop the program, the DEA provided the GOM with
approximately $2.9 million USD in 1997, of which $788,000 was obligated
for support to specific investigative expenses regarding targets of mutual
interest to the U.S. and Mexico. In addition to this funding, the USG
transferred approximately $5.6 million USD from a federal asset forfeiture
fund to the GOM in further support of the maintenance of the task forces. To
date, the GOM has failed to illustrate where this shared funding has been
spent. In 1998, the DEA appropriated $2.5 million USD, of which $400,000
is for miscellaneous investigative expenses in support of major targeted
cases.

Mexico currently commits approximately $24,380 USD per month to
maintain the task forces. These expenses are basically incurred for the rental
of safehouses, utilities, and telephone lines in all of the Task Forces. The
GOM has also provided vehicles to the task forces at an estimated cost of
$80,000 USD. The DEA does not have access to a total amount spent for the
BTF’s on behalf of the GOM.

For FY 1998, the DEA has obligated $2.5 million USD. This sum is
sufficient to improve the BTF’s operational capability, but Mexico must
fully staff the units and have them adequately trained. All of the BTF’s lack


163

the FEADS with a total of 3,000 new employees. To date, the GOM has
screened and vetted 796 candidates, of which 206 are “super-vetted” (vetted
by both the GOM and U.S. Government (USG)). At the request of the GOM,
the USG assists in this effort by playing a significant role in training and
vetting these agents.

To attack the sophisticated organized crime syndicates in Mexico, the USG,
in conjunction with the GOM, must continue the process of creating and
establishing credible law enforcement units. To that end, DEA is
aggressively pursuing-- in conjunction with the GOM-- the establishment of
vetted units, which consist of highly-trained and screened personnel capable
of conducting complex investigations without being compromised or
corrupted. The vetting process includes the following mandatory checks on
each individual working in a vetted unit: financial disclosure statement,
indices background investigation, medical and psychological screening,
urinalysis drug testing, security questionnaire and interview, and a polygraph
examination. With the exception of the polygraph, which is administered by
the DEA and FBI, these steps are administered by the host country officials
and supervised by DEA. The vetting process and its continual validation are
necessary to establish and maintain the integrity of the units as they receive
sensitive intelligence from DEA and conduct highly sensitive investigations.

In order to overcome the problem of widespread corruption in law
enforcement, the GOM has, over the last two years, increasingly replaced
civilian authorities with military officers. Recent experience has
demonstrated that military officers, once exposed to the extraordinary
opportunities for corruption, are as equally susceptible as civilians, The most
obvious example of this occurred last year when the head of the anti-drug
agency, General Gutierrez-Rebollo, was arrested for being on the payroll of
the leading drug cartel in Mexico. Since then, several other military officials
have also been arrested and charged with facilitating drug trafficking.

QUESTION Sa: Since the arrest of General Guiterrez Rebollo, Mexico
has started afresh in reorganizing a counternarcotics institution. With
a new, more thorough vetting process and other structural changes, they
hope to create a corruption-free force to fight narcotics traffickers and
organized crime in Mexico. Do you believe the vetting process that
Has been created to insure the reliability of those joining this new
counternarcotics force is effective?


167
all part of a much larger whole that we have to be concentrating

on.

That is what we are about, both on the international side and
in the domestic law enforcement community. To put barriers at
each point in that process, so that we have as many ways, with as
many tools as possible, to try to stop the cultivation, and interdict
the flow, and arrest the traffickers, and reduce the demand in the
Unites States so that we have less of a problem.

Mr. Davipow. Congressman, if I can add. With the previous
panel, there were a lot of questions which I think—I’m not suggest-
ing they be repeated at this point—but relating to smuggling of
money from this country outside, precursor chemicals, bank trans-
fers. The fact of the matter is that the U.S. Department of Treas-
ury, the Justice Department, particularly the DEA, do have very
elaborate and, I think, well functioning operations in this regard
based on laws which have been passed by Congress. I think, per-
haps, they would be—I’m sure they would be delighted to come and
brief this committee on those topics—but the situation, while very
bad—and I don’t minimize it at all—is not one which we are de-
fenseless against, either in terms of our own operations or law.

Mr. HASTERT. Well, Mr. Davidow, one of the things we don’t have
right now is an Ambassador in Mexico City, unfortunately. I would
hope the next Ambassador to Mexico would make this a No. 1 pri-
ority in all aspects, that we make sure we can do a better job.

The frustration’s here, and I can see that somebody’s trying to
keep this on the front burner in the Congress day in and day out.
We have People just throwing their hands up and saying, “Well, we
can’t do anything about it.” We can’t tolerate that. We can’t sustain
that. You know, we talk about today in Congress about Bosnia and
Iraq. If we had lost 10,000 kids a year in Bosnia or Iraq, this place
would be up for grabs. But, we’re losing 10,000 kids on our street
corners every year because of drugs, either because of drugs or
drug violence, and we're sitting there on our hands. I just have to
express that frustration.

I'm going to yield to my good friend from Wisconsin.

Mr. Barrett. Thank you, Mr. Chairman. Mr. Beers, are we, in
this country, importing more marijuana this year or last year from
Mexico?

Mr. BEERS. From Mexico?

Mr. BARRETT. Through Mexico. From Mexico. Either.

Mr. BEERS. Sir, if you look at the statistics overall with respect
to 1997, the amount of marijuana seizures are up this year and are
at their highest levels since 1991, within Mexico.

Mr. BARRETT. That wasn’t my question. My question is, the
drugs coming in——

Mr. BEERS. I’m getting there. The second thing I would argue is
that, with respect to the overall level of marijuana production in
Mexico, it is this year at the lowest level within Mexico that we
have on record. While I can’t tell you how much of that marijuana
that is produced in Mexico actually crosses the border, I can tell
you, with confidence, there is less marijuana in Mexico to export
to the United States this year than ever before.

Mr. BARRETT. What about as a gateway?

Mr. BEERS. Excuse me?


32

Senator FEINSTEIN. Stop there, Mr. Nelson, just for a second. In
other words, what you're saying is that the banks are structuring
that; is that correct? Or are you saying the individuals banking are
structuring their deposits?

Mr. NELSON. It’s the individuals.

Senator FEINSTEIN. So they're structuring their deposits in a way
that avoids reporting?

Mr. NELSON. That is correct.

Senator FEINSTEIN. How big a problem would you say this is?

Mr. KUSHNER. We don’t have a real good handle on the mag-
nitude of that particular problem, Senator, but we know it is tak-
ing place down there.

Senator FEINSTEIN. Is there anything that our Treasury Depart-
ment could do in this regard or is this entirely within the sovereign
power of Mexico? Are these wire transfers coming from our coun-
try?
Mr. KUSHNER. I’m not sure exactly what our Treasury Depart-
ment can do on that particular issue, but there is a suspicious
transaction report for the banks in Mexico. If they get any indica-
tions that there’s a suspicious transaction or it’s an attempt on the
part of the depositor to structure, then that should be reported to
the Mexican Hacienda, which is the equivalent of our Treasury De-
partment.

Senator FEINSTEIN. I recognize, Mr. Chairman, my time is up,
but I’d like very much to talk with you more about this.

Mr. Hastert. I think we could arrange a quick second round, if
you'd like.

The gentleman from Connecticut, Mr. Shays.

Mr. SHays. Thank you.

Td just like to approach it from a different perspective. I basi-
cally feel that, candidly, as it relates to Mexico’s intention and ag-
gressiveness in dealing with cutting off the drug traffic is prac-
tically nonexistent. That’s my own view.

But I want to know what we're doing to prevent the export of the
chemicals to make the drugs, the weapons to protect the drug
lords, and the money to pay the drugs. We export three things to
Mexico and other countries. What kind of effort are we making?

Mr. NELSON. I’m sorry, we cannot answer that. Those issues
were not covered under this particular effort. We have limited in-
formation on the nature of that problem or what efforts are under-
way by the U.S. Government to deal with it.

4 Mr. SHays. Mexico is an intermediary, correct? It’s not the pro-

{ucer—

Mr. NELSON. Right.

Mr. Suays. It’s basically ——

Mr. NELSON. It’s a transit country.

Mr. Suays. It’s a transit country. So we’re exporting two items
to Mexico to make this system work. We’re exporting the money to
pay for these drugs and we're exporting the weapons to help pro-
tect these drug lords. And it just strikes me as astounding that we
don’t focus in on what we do—this great magnificent country, the
United States, what we can do to prevent the corruption of other
countries. As much as they’re corrupting our people in the sense


173

Ms. WaRREN. They are doing some things about that. They have
random switches of lanes that even the inspectors have no idea
when its going to happen. It’s all sort of computer randomly con-
trolled now. That’s one thing theyre working on. Yes, those spot-
ters are out there.

Mr. HASTERT. Do you think we can get the INS agents so that
they can open trunks? There might be somebody hiding in the
trunk. You never know. Is that something we can do?
es WarrREN. I thought they did open the trunks. I just don’t

ow.

Mr. HASTERT. I don’t think they do. I’m just saying, we need to
do better. We need to do better on both sides of that border. And,
I hope next year, if I’m still here, and we have these hearings
again, we can say, “Gee, you know, this year we’ve accomplished
something.” Mr. Davidow, I think you understand what I’m talking
about.

Mr. Davipow. Yes, I do.

Mr. Hastert. OK. The gentleman from Wisconsin.

Mr. BarreETT. Ms. Warren, with respect to the temporary extra-
dition protocol, what’s the status of that in the Mexican legisla-
ture?

Ms. WarRREN. It is ready to go before their Senate. I think they
were just—will send them to our Senates simultaneously.

Mr. BARRETT. You anticipate that it will be controversial there?

Ms. WARREN. It was the Mexicans that suggested this protocol.
It was not a U.S. suggestion in the first instance. I would hope it
would have a likelihood of passage down there.

Mr. BARRETT. Are you confident?

Ms. WarRREN. I’m not—I don’t know their legislative bent. The
fact that they proposed it and together we drafted it, I would hope
that it has good chance in both of our Senates.

Mr. BarRETT. It’s my understanding that that doesn’t kick-in in
Mexico, assuming again that it passes, unless the Mexican Govern-
ment also is essentially prosecuting individuals. Is that correct?

Ms. WaRREN. Well, it will help us out when Mexico is prosecut-
ing the same individual we would like extradited, but it will also
help us if an individual has just a very long series of appeals or
keeps filing the equivalent to our habeas corpus actions, that we
will be able to remove that person for trial here in the meantime.

Mr. BARRETT. But, can it be operative if the Mexican Govern-
ment declines to prosecute? That’s my question.

Ms. WarREN. Under Mexican law, they are not permitted to de-
cline prosecution, unlike us.

Mr. BARRETT. Asset forfeiture. Again, maybe you can help me un-
derstand the law in Mexico. Do the asset forfeiture laws kick in if
the person has died or has left the country?

Ms. WARREN. No, that’s a loophole that needs to be filled in their
law. Just 2 weeks ago, we provided them with expert advice on our
civil forfeiture proceedings that allow for us to proceed against the
property itself, as a way of resolving that.

Mr. BarreETT. And has that been controversial?

Ms. WARREN. They're considering itasa possibility.

Mr. BarRETT. Your level of confidence that that would happen?


113

2
during 1997, in a wide range of cases, including narcotics and money laundering
investigations, A welcome development under the MLAT has been its use in conjunction
with Mexico's Organized Crime Law to transfer important cooperating witnesses from prison

in Mexico to the United States to testify in U.S. criminal proceedings.

Chemii tical Diversion 1
Although the area of diversion control is seldom in the news media spotlights, few
law enforcement endeavors are as cost-effective as controlling the chemicals from which
drugs are illicitly manufactured. This is especially true for wholly synthetic drugs like LSD,
PCP and, of special interest here, methamphetamine. Mexico and the U.S. have cooperated
actively on chemical control initiatives over the last two years, and there is some success to

Teport.

‘The Mexican Congress passed a comprehensive chemical regulatory law late in 1997,
which complements the pre-existing law to reach all chemicals regulated by international
drug conventions. Moreover, Mexico has limited its ports of entry for precursor chemicals,
where heightened scrutiny is applied. Mexican cooperation on investigations of mutual
interest improved in 1997, but we still need to work better together in this area.
Communication prior to chemical shipments has also improved. The quantity of chemicals
seized in 1997 declined from the previous year, apparently due to publicity of the large 1996

seizures, causing traffickers to take additional measures and seek alternate methods and


134

should be bribed, and how much. They send thousands of workers into the United
States who answer to them via daily faxes, cellular phone, or pagers. These
workers carry out murders within the United States on orders from the top
leadership. These syndicate bosses have at their disposal airplanes, boats, vehicles,
radar, communications equipment, and weapons, in quantities which rival the
capabilities of some legitimate govemments. Whereas previous organized crime
leaders were millionaires, the Cali drug traffickers and their counterparts from
Mexico are billionaires.

It is difficult—-sometimes nearly impossible---for U.S. law enforcement to
locate and arrest these leaders without the assistance of law enforcement in other
countries. Their communications are encrypted and they intimidate, murder or
corrupt public officials and law enforcement officers. These sophisticated criminal
groups cannot thrive unless law enforcement officials have been paid bribes, and
witnesses fear for their lives. Later in my testimony I will discuss some of these
problems in greater detail. It is frustrating for all of us in law enforcement that
the leaders of these criminal organizations, although well known and indicted
repeatedly, have not been located, arrested, or prosecuted.

The international drug syndicates operating in Mexico and those in
Colombia are interconnected. We cannot discuss the situation in Mexico today
without looking at the evolution of the groups from Colombia --- how they began,
what their status is today, and how the groups from Mexico have learned
important lessons from them, thereby becoming major trafficking organizations in
their own right.

During the late 1980's, the traffickers from Cali assumed greater power as
their predecessors from the Medellin self-destructed. Where the Medellin
waffickers were brash and publicly violent in their activities, the criminals from
Cali, labored behind the pretense of legitimacy, by posing as businessmen
carrying out their professional obligations. The Cali leaders --- the Rodriguez
Orejuela brothers, Jose Santacruz Londono, Helmer “Pacho” Herrera-Buitrago-~-
amassed fortunes and ran their multi-billion dollar cocaine businesses from high
rises and ranches in Colombia. Miguel Rodriguez Orejuela and his associates
composed what was, until then, the most powerful international organized crime
group in history. They employed 727 aircraft to ferry drugs to Mexico, from
where they were smuggled into the United States, and then return to Colombia

3


175

Governor of Sinaloa—excuse me if I mispronounce it—from 1987 to
1993. Is that a correct assessment or what? Mr. Ambassador?

Mr. Davipow. We have looked at the reports we have on this
case, Congressman. We do not find the reports are compelling to
indicate a drug tie between Mr. Labastida and narco-traffickers.
We find that there is no reason for us not to maintain good work-
ing relations with him, and we do so.

r. BARRETT. Thank you. I have no further questions, Mr. Chair-
man.

Mr. HASTERT. The gentleman from Georgia.

Mr. Barr. Thank you, Mr. Chairman. Mr. Ambassador, what is—
give me some benchmark as to what you mean by “not compelling.”
Does that mean there is some evidence but not a preponderance,
not proof beyond reasonable doubt? I mean, where does that fit into
the spectrum of the credibility and the strength of the evidence.

Mr. Davipow. In this particular case, without, for obvious rea-
sons, Congressman, getting into specifics, I would say the reports
that we have received were dated and unsubstantiated, and were
not ones that would provide a reasonable individual to make the
judgment that the allegations of drug ties was correct.

Mr. Barr. Was there—is it fair to say, then, that there is no
credible evidence, that Mr. Labastida has long-standing ties to nar-
cotics traffickers, as the newspaper article alleged?

Mr. Davipow. I would say there’s no credible evidence of that.

Mr. Barr. Apparently, or Senator Coverdell and Representative
Gilman and Senator Grassley, I believe, have written State regard-
ing these allegations of narcotics ties to Mr. Labastida, and State
has failed to respond. It’s my understanding that there was a meet-
ing on February 13, but there has been no followup.

Mr. Davipow. My understanding, Congressman, is that there has
now been an answer in the sizable number of documents that have
been turned over, and to the Congressman and Senator in question,
and that there are other documents which are available under the
normal practice for review by those Members of Congress or their
staffs.

Mr. Barr. Is your assessment that there is no credible evidence
that there are any long-standing ties to narcotics traffickers to Mr.
Labastida. Is that a view shared by all components of the intel-
ligence community?

Mr. Davipow. I believe so. Let me try to explain this if I may.
There are very few public officials with long history in Mexico,
about which there are not rumors of one sort or another. Indeed,
the kind of reports that you and I have just been talking about
have appeared in the Mexican press about that same individual.
When I say credible, I mean reports which are supportable by fact
and sustainable by observation. I don’t see that in what I have
seen.

Mr. Barr. What sort of evidence was there? Was there also no
credible evidence that Mr. Gutierrez had ties to narcotics traffick-
ers?

Mr. Davipow. I’m not familiar with the background brief of Mr.
Gutierrez—General Gutierrez or what information was available
about him.

Mr. Barr. You’re not familiar with that case?


56

-4-

In May 1997, Presidents Clinton and Zedillo announced the
"Declaration of the U.S.-Mexico Alliance Against Drugs" and
released the s Bi-Na
joint study which analyzes the threats based by illicit drugs.
The Presidents also announced that the two governments would
develop a comprehensive joint anti-drug strategy, which was
released in February. The two governments will shortly begin
work on developing implementation plans for the strategy which
will include concrete goals and measures of effectiveness.
This will be a major topic on the agenda of the High-Level
Contact Group when it meets on April 6-7.

The Department of State’s International Narcotics Control
eport (INCSR) which was released February 26, as well

as the Office of National Drug Control’s September

on U.S.-Mexican counter-drug cooperation, provide
detailed descriptions of these collaborative activities as well
as efforts undertaken by Mexico on its own -- the successes as
well as the failures -- so I will provide here just a few of
the highlights from the Department’s report.

Mexico's Anti-Drug Effort

Like the newly-released "U.S. National Drug Strategy,”
Mexico’s national anti-drug strategy encompasses the full range
of actions called for in the 1988 UN Convention, the OAS
"Anti-Drug Strategy in the Hemisphere," and other major
agreements in this area. It also highlights the importance of
international cooperation, particularly with the United States
and other neighboring states. In 1997, the Zedillo
Administration began to implement this broad-based national
program, including strengthening bilateral collaboration with
the U.S. against transborder drug trafficking and organized
crime.

By objective standards, the counter-drug steps which
Mexico took on its own achieved progress toward the goals of
the United Nations Convention and other international
agreements:

-- Although statistical results were mixed, Mexico
exceeded its 1996 record for eradication of opium poppy
cultivation and for seizures of cocaine and opium gum.
While heroin seizures were down, opium gum seizures rose.

=- Mexico passed comprehensive chemical control
legislation, one of the major deficiencies in its record
of compliance with the UN Convention, as well as made
further improvements to its money laundering control
regime.

-- Mexico made record seizures of trafficker cash and
assets.


110

9
spilled over to the U.S. side of the border. The U.S. Government has formally

sought a provisional arrest warrant for extradition of Ramon Arrellano-Felix (and the
FBI has placed him on their Top Ten Most Wanted list), as well as top lieutenant

Arturo "1

iti" Paez-Martinez of this group.

‘The Amezcua Organization. One of the Amezcua brothers, Adan Amezcua, was
arrested in November pursuant to a-routine search at a highway checkpoint and Jaime
Arturo Ladino-Avila, one of the brothers’ top lieutenants was arrested in Tijuana on
May 28, 1997, on a provisional warrant for extradition to the United States. Mexico
otherwise had not charged or apprehended any principal in the chemical and
methamphetamine production and trafficking Amezcua Organization, although 11
lower-level organization members have been arrested and 75 kilograms of

methamphetamine seized.

Miguel Caro-Quintero Organization. Since Rafael Caro-Quintero’s imprisonment in
1985, on drug charges and for his role in the murder of DEA Special Agent Enrique
Camarena, his brother, Miguel, has continued to operate this Sonora-based cartel.
There are four outstanding arrest warrants for Miguel Caro-Quintero in the U.S.;
charges dating from 1992, in Mexico were dismissed. The U.S. Government has

filed a request for his provisional arrest for extradition.


4

ions f: Record Submitted
Senator Charles Grassley to
a aoe

Joint Hearing of
Senate Caucus on International Narcotics Control, and the
Government Reform and Oversight Subcommittee on
National Security, International Affairs,
and Criminal Justice
March 18, 1998

Question: ©

4. Based on the International Narcotics Control Strategy
Report (INCSR), the certification process is not only a
useful tool, it is a successful one. It achieves its purpose
in promoting cooperation on drugs. This judgment, I presume,
is shared by the Administration, since this documents was
cleared (sic). If that is the case, does the State
Department stand by this judgment? Do you agree with the
INCSR when it says this process is “unusually effective" and
that the "value of the drug certification process is that
every government concerned is publicly accountable for its
actions, including the United States"?

Answer:
The State Department stands by the INCSR judgment that

the certification process has proved to be an unusually
effective instrument of public diplomacy in the global
narcotics control effort. From the outset, this
Administration’s policy has been to apply the certification
standards stringently to elicit greater international
cooperation and progress in the fight against drugs. This
policy is reflected in the number of countries that have been
denied certification or issued a vital national interests
certification since 1993. The policy has been effective.
Owing to the attention and pressure caused by certification,
several countries have increasingly focused their antidrug
efforts on the most important targets, as for instance on

powerful kingpins who pose fundamental threats to the rule of


26

Mr. Hastert [presiding]. We thank the gentleman.

Mr. Nelson, can you assess the progress that the special units
discussed in your testimony are making in reducing drug-related
activities?

Mr. NELSON. The special units I can say was a good concept, but
they’ve not been successful and they've suffered from problems that
are typically present in terms of resources, having the appropriate
number of qualified and screened personnel, and the resources to
carry out their jobs.

Mr. HasTerT. Mr. Nelson, you talked about the GAO study.
Clearly, 70 to 75 percent of the drugs coming into this country are
moving through Mexico. We've tried, worked strategies for several
years. You said we haven't had any extraditions back to this coun-
try of narco traffickers or drug traffickers. Through our coopera-
tion, we haven’t helped develop competent judicial or law enforce-
ment institutions. We've given them ships and they're not operable.
There are no evaluation standards. These are just some of the
things that you’ve given in your testimony. Who’s responsible in
the United States overnment for making sure that Mexico in the
area at least of drug interdiction and drug problems?

Mr. NELSON. Mr. Chairman—

Mr. Hastert. Is it the Office of the Drug Czar or the ONDCP,
or is it the State Department, or is it SouthCom, or who’s coordi-
nating that?

Mr. NELSON. Mr. Chairman, that is a good question. When you
look at some of the problems that we identified in our work, you
would have to raise a question of, who’s responsible for making
sure that all of the parts come together? We have, of course, the
Office of National Drug Control, who has a role; we have the De-
fense Department; we have the State Department, but, apparently,
in some cases there isn’t the appropriate level of coordination to
make sure that the assistance we're delivering, that our plans and
strategies are in sync, and that we have a well-orchestrated ap-
proach to this problem.

Mr. HASTERT. You say the Defense Department has a hand in
this, too, now. SouthCom, which would, in my mind, would have
everything south of the border, I’ve been told by their CINC,
doesn’t own Mexico. So there’s no coordination there of the drug
policies; is that correct?

Mr. NELSON. That is correct, sir.

Mr. HASTERT. Who does control that then? As far as the armed
services?

Mr. NELSON. Control for Mexico I believe is out of the Pentagon.

Mr. Hastert. So that’s a special office?

Mr. Forb. Mr. Chairman, let me jump in here on this.

Mr. Hastert. Sure.

Mr. Forp. My understanding is Mexico is under the jurisdiction
of an office over at the Pentagon. The assistance program that we
referred to in our statement was basically run out oF v Washington.
SouthCom is not really involved in that.

Mr. HASTERT. Well, they say that they don’t have ownership of
Mexico, and I’m' not sure if they should have ownership or they
shouldn't, but one of the questions that I have in mind, when you
have shiploads of coca coming up the eastern Pacific and going into


92

place with a number of countries in the hemisphere include
provisions for highly sensitive actions which impact on
national sovereignty, such as shipboardings, hot pursuit,
exchanges of shipriders, operations within each other’s
territorial.seas, overflights, etc. These agreements come
as a result of long periods of practical, less formal
cooperation and only after painstaking negotiations. We are
simply not there yet with Mexico. An agreement would not
produce cooperation; cooperation may, in time, produce or
become formalized through an agreement.
Question:
9.e. What changes or signs of progress should the United
States expect to see in our maritime relationship with
Mexico in the next year?
Answer

As indicated in response to Question 2, the U.S. and
Mexico have been working very closely over the past three
years to improve our mutual understanding of the drug
situation, exchange information and experiences, and to
develop a comprehensive joint strategy. The Bi-National
Drug Strategy highlights the maritime smuggling issue and we
will be proceeding over the course of the next year to

identify and pursue specific actions to combat that threat.

As stated above, we anticipate that there will be further
policy and operational-level exchanges working toward a
well-defined plan to improve maritime cooperation. We hope
too that information exchange and cooperation will assist

both governments increase maritime drug seizures.


7

came through Miami and south Florida, through the Yucatan

Straits, through airplanes and boats. Now we know that that traf-

ficking has shifted almost in large part to Mexico and into Califor-

nia, Senator Feinstein. That’s where it’s coming into the country in

record numbers. We know that, and it’s getting worse, not’ getting
etter.

So it seems to me particularly odd when our drug czar, Mr.
McCaffrey, would suggest that Mexico is “absolutely superlative co-
operation from Mexico.” I think we would do the people of Mexico
a disservice if we suggested that they are making significant
progress there.

this country, if the United States and the President feels he
must certify Mexico, as he’s done with Colombia, under the na-
tional security exception, fine, but I do not believe that we ought
to accept the proposition that the circumstances in Mexico are get-
ting better.

One final comment: When I read the remarks and the reports
and proposals for accepting this certification, I thought back to the
early 1980’s when I was involved as a prosecutor. The very same
things are being said every year. The same promises, the same
hopes are being held out every year, but we know it’s not reality.
We know that. We know that’s not reality.

I think it’s time for us to be more honest about it. If we need to
reevaluate the certification process, I am prepared to do so.

The chairman has not returned. I’d like to ask Congressman Bar-
rett if he has an opening statement he’d like to make.

Mr. BARRETT. Thank you, Mr. Chairman. I want to welcome both
you and Senator Feinstein to the House side. I spent last weekend
in Alabama for the first time in my life and had a wonderful week-
end in Selma, Birmingham, and Montgomery.

I also want to join the other members of this joint panel in wel-
coming our witnesses today.

The importance of cooperation between Mexico and the United
States in the effort to fight illegal drugs cannot be overstated.
Roughly 60 percent, or even by some estimates 70 percent, of the
cocaine consumed or seized in the United States passes through
Mexico, and it’s not only cocaine. Mexican criminal organizations
are major suppliers and distributors of heroin, methamphetamine,
and marijuana in this country. They are behind much of the drug-
related violence, death, and ruined lives that we see every day in
our communities, and they threaten Mexico’s democratic institu-
tions.

Both Mexico and the United States have a heavy stake in this
effort. As he did last year, President Clinton recently certified Mex-
ico as having cooperated fully with the United States to satisfy its
international obligations to combat illegal drugs. I was critical of
that decision last year. I thought that the Government of Mexico
did not, by any reasonable measure, satisfy that standard. If other
considerations required certifications, I felt we should do so only on

ounds that it was in the vital national interest of the United

tates.

Have we seen a meaningful change in the last year? For myself,
and I think for many of us here in Congress, the jury is still out
on that question. The work of the United States-Mexico high-level


%

law, and drug crops that underpin the entire drug trade.
This has resulted in arrest, extradition, and crop
eradication progress that was unimaginable a few years ago.
The United States, meanwhile, asks no less of an effort from
itself. Indeed, the United States typically leads the world
in promulgating antidrug laws and penalties, developing
investigations, attacking consumption, and implementing
chemical, money laundering, and crop control initiatives. It
ie against this backdrop that the Administration will
continue to abide by the certification law, applying it in
the most effective way to elicit international cooperation

and achieve progress.


81

predict when these problems will be resolved, or when the
units will be fully operational. That said, they are
functional now, with three border task forces and five
satellite offices, and are proceeding with investigations
and information gathering against the major drug trafficking

organizations based in northern Mexico.


‘This Congress wants to promote policies that will lead to victory. We
don’t want promises that are ten years out; we want results. Certainly, we
know that there is a great deal to do here domestically to reduce drug use.
‘That is why Congress passed the Drug Free Communities Act last year.
This will potentially add up to one hundred thousand dollars for every
community in America willing to create an anti-drug coalition.

Today, our two committees will examine Mexico’s progress in the
fight against illegal drugs. No country in the world poses a more immediate
drug threat to the United States. In an effort to fully examine this issue we
will hear testimony from the GAO outlining some of the important steps in
counternarcotics that Mexico has made in the last year. GAO will outline
Mexico’s efforts to combat commuption, enhance interdiction activities, and
ppass laws to improve law enforcement and other capabilities.

These areas of progress are encouraging. However, Mexico still has
not signed a bilateral maritime agreement; and corruption remains a major
impediment. In addition, U.S, law enforcement agents still are not allowed
to carry sidearms into Mexican territory in self-defense. This leaves them at
risk and seriously undermines the future success of the US/Mexico Bilateral
Task Forces. In short, we have a long way to go.

‘These are issues that remain at the top of our agenda and we hope to
see progress on them in the near future.


109

8
P inst Major Ni flicking Organizati

‘The Mexican Government has made some limited progress against major trafficking

organizations.

* Amado Carrillo-Fuentes Organization. The surgery performed on Amado Carrillo-
Fuentes resulting in his death in July 1997, was apparently related at least in part to
his desire to disguise his physical appearance in order to avoid increasing law
enforcement pressure. Key lieutenants of the organization, which now appears to be
in a state of transition, bave yet to be apprehended. Information coming to light after
Carrillo-Fuentes’ death revealed his corrupt ties to the Mexican military and law
enforcement community, and has led to the arrests of several senior military officers.
Mexican authorities have not yet taken steps necessary to effectively weaken the
remnants of this organization. The U.S. Government has. sought the Provisional
Arrest for extradition of Vicente Carrillo-Fuentes, one of the remaining leaders, and

several lesser members of the group.

© Arellano-Felix Organization. None of the senior members of the Arellano-Felix
Organization (AFO) has been arrested. The transition of the Amado Carrillo-Fuentes
Organization has resulted in apparent strengthening and emboldening of this
notoriously violent and dangerous organization. The AFO-controlled areas of Mexico

are now plagued by unprecedented violence and intimidation, some of which has


19

est ior ted _br
Senator Grassley to
Act sisi x of Stat

ari of
Senate Caucus on International Narcotics Control and the
House Government Reform and Oversight Subcommittee on
National Security, International Affairs
and Criminal Justice
March 18, 1998

Question:

6.a. The Bilateral Border Task Forces represented at one
time perhaps the most promising effort to enhance
cooperation on the operational front. However, there is
much disagreement over the status of forces. Last year, the
Attorney General of Mexico visited with me about these task
forces. He informed me that Mexico was committed for fully
supporting -- both financially and logistically -- these
border task forces. I know President Zedillo has made
similar public comments. Do you feel the Mexican government
is supporting the border task forces to the fullest of its
capability? Where is support lacking?

6.b. The establishment of these task forces has proceeded
much slower than many would have liked. What do you see as
the cause of this delay? What steps has the Mexican
government taken to address these delays? Do you believe
the initial expectations and hopes for these task forces are
still realistic goals? When do you see these task forces as
being fully operational?

6.c. How committed are the Mexicans at funding these
forces? Is either side making a serious effort? In your
view, will the task forces ever become a useful tool at
stopping the flow of drugs or will it continue to fail
because of a lack of commitment? Effort? Funding?
Cooperation?

Answer (6.a,b,c):

We continue to believe that the task force concept of
U.S. and Mexican agents working together to combat criminal
organizations which operate on both sides of the border is a
sound one. Bilateral cooperation and information sharing
toward this end is proceeding well. We believe that the

Mexican government remains committed to supporting the


105

4
Alliance and combat the threat facing the two countries. We anticipate that the Strategy will
advance the progress that our two countries have seen with respect to counterdrug policy
coordination. On February 6, 1998, the Clinton and Zedillo Administrations simultaneously
announced the release of the Strategy; the next step will be to implement its principles and
develop ways to measure such implementation.

‘The impediments for Mexico’s fighting its broad array of drug-related threats and to
US/Mexican law enforcement cooperation are well-known: entrenched corruption at all
levels, fostering a tradition of impunity; weak, easily compromised government institutions,
staffed by underpaid and undertrained officials; and a dearth of resources, especially when
measured against the enormity of the problem. A skeptic can easily find "negatives" in
Mexico's counternarcotics performance. We need only recall the February 1997 arrest of
‘Army General Jose de Jesus Gutierrez-Rebollo, appointed two months earlier to head what
was then the leading drug-fighting agency in Mexico (the INCD), for assisting the Amado
Carrillo-Fuentes drug trafficking organization. On the positive side, one must applaud the
quick and decisive action of the Zedillo Administration to arrest and charge this high-level
official. The Gutierrez-Rebollo arrest is noteworthy testimony to President Zedillo’s anti-
corruption commitment. In April, the disgraced INCD was dissolved and replaced by the
Special Prosecutor's Office for Crimes Against Health (FEADS), headed by Mariano Herran-
Salvetti. The progress of US/Mexican law enforcement cooperation, set back with the arrest
of Gutierrez-Rebollo and the subsequent reorganization of Mexican counterdrug authorities,

has resumed once more.


90

Mexican military, including the Navy, in drug interdiction.
Mexico has dedicated increased resources to the maritime
interdiction effort, primarily through the Mexican Navy.
The Mexican Navy created new riverine operations forces to
patrol littoral regions, and purchased two decommissioned
U.S. Knox ‘Class frigates to modernize its forces and to
contribute to maritime counternarcotics operations. More
resources are clearly required, and this will continue to
hamper operational effectiveness for some time. Mexico is,
for example, having difficulty interdicting high-speed craft
(go-fast boats).

Question:

9.c. How has the US-Mexican maritime relationship changed

in the past 2 years? What changes can we expect to see in
the upcoming year?

Answer
The U.S.-Mexican maritime relationship has changed
considerably in the past two years. In the past, while
there was occasional cooperation between the Mexican Navy
and the U.S. Coast Guard, there was no ongoing
relationship. With growing interest and concern by both
governments, this is changing. Both governments have
detected increased maritime trafficking of drugs, weapons,
and chemical precursors, both in commercial shipping and
non-commercial high-speed power craft. As our discussions
progress, we are sharing more information and identifying

more ways for our agencies to cooperate, as we did during


178

In fact, if we become paralyzed by the nuances here, rather than
seeing this is the trend that’s international in Central and South
America, we aren’t going to be able to confront the drug war. And,
that was why there was concern by the comment of that, and that
while I understand the history of it, the fact is, is it not, that in
all these countries, most of the rebellions at this point are getting
more and more closely intertwined with drug war, and it’s becom-
ing very difficult, if possible at all, to separate them.

Mr. Davipow. It is getting very complex. I think that what we
have to do is make clear the following: Those individuals and
groups in Colombia—let’s talk about Colombia here—that are in-
volved in narcotics, from our point of view, the assistance that we
give to the Colombian Government, be it helicopters or eradication,
or what have you, those groups, whether they're politically moti-
vated or not, if they’re involved in narcotics, our facilities, our
equipment is eligible to be used against them. I think that should
be a clear message and would apply to guerrilla groups, para-
military groups, or what have you.

I don’t want to convey the impression that we are paralyzed by
nuance, although I think that that’s a wonderful description of
some of the policies that we sometimes come up with around the
world. We are not paralyzed. We have a very active program there,
which I know you're aware of.

Mr. SoupeER. Thank you, and Mr. Beers if the chairman will con-
tinue.

Mr. BEERS. Thank you. I share your concern, your deep concern,
about Colombia. The only country that I’ve been to so far in the
brief period that I’ve been the Acting Assistant Secretary is Colom-
bia, because I felt that it was absolutely essential to go down there
early on and before the certification decision in order to see on the
ground what had been happening since I had been there last,
which was 4 years ago. I found a very encouraging situation down
there in terms of the cooperation that is available from the Colom-
bian National Police and elements of the military.

And, we have come back from Colombia and are attempting, at
this point in time, to put the final touches on a Colombian strategy,
which will involve an expansion of our current effort in Colombia
across the board. It will involve increased engagement with respect
to the law enforcement cooperation in Colombia. It will involve in-
creased eradication of both opium poppy and coca. It will involve
increased interdiction against cocaine labs on the ground and it
will involve efforts to get the aerial interdiction program in Colom-
bia started.

We will be looking at options to increase the amount of money
available in order to prosecute these programs in Colombia, and we
expect to come to the Hill soon.

‘ith respect to the issue of the blackhawks; we also share your
concerns about increasing our ability and the Colombian capability
to go after the opium poppy crop there, which is of great impor-
tance to us.

Before I went down, Donnie Marshall and I had a conversation,
which was particularly informative to me, about the importance of
that product. I spent considerable time talking to his DEA country
attache while I was there to familiarize myself with the situation


58

~6-

The fourteen fugitives who were approved for extradition
but have not yet been turned over to U.S. authorities include
nine Mexican nationals, four of whom are sought on drug-related
charges, as well as a dual national who is also sought on drug
related charges. They have all appealed the Mexican
extradition orders and some also face Mexican charges.

Notorious Mexican drug traffickers Oscar Malherbe, Jaime
Ladino Avila, Juan Angel Salinas, Tirso Angel Robles, and
Jaime Gonzalez Castro and William Brian Martin are among
those individuals resisting extradition.

Arrests and Prosecutions

In 1997, a number of significant drug traffickers and
mafia lieutenants, were arrested, including Oscar Malherbe,
Adan Amezcua and Jaime Arturo Ladino. While law enforcement
and military efforts did not succeed in dismantling any of the
major criminal organizations, we believe they did have a
disruptive effect.

Crime figures who, until recently, paraded through the
streets of border cities and flaunted both their wealth and
their "untouchability," have been forced underground. They are
finding it somewhat harder to conduct their business. Numerous
political or governmental protectors are themselves in jail, on
the run, or out of jobs.

Some 10,742 individuals were arrested on drug-related
charges in 1997, down from 11,245 in 1996 but up significantly
over 1994-5. Mexican investigations and enforcement actions,
some in cooperation with U.S. agencies, resulted in some
disruption of the major trafficking organizations. Some of the
most significant arrests included:

-- Oscar Malherbe de Leon, operations manager for the Gulf
Cartel (U.S. warrants outstanding; subject of a U.S.
Department of State reward offer) ;

-- Adan Amezcua Contreras, a member of the Amezcua
Organization (Colima Cartel) and brother of the
organization's leaders, a major methamphetamine
trafficking organization engaged in smuggling this drug
into the U.S.;

-- Jaime Arturo Ladino Avila, a relative and alleged
financier for the Amezcua Contreras Organization (on a
U.S. provisional arrest warrant; now facing extradition to
the U.S.);

-- Manuel de Jesus Bitar Tafich, a major money launderer for
the Juarez Cartel who sought to establish a refuge in
Chile for Amado Carrillo Fuentes;

-- Jaime Gonzales-Castro, a mid-level member of the Juarez
Cartel (found extraditable to the U.S.);


There has been intense international criticism as well as
Congressional criticism about the harshness of the
certification process, but I firmly believe that the
certification process has yielded results.

I am convinced that many of the countries who are now
parties to the 1988 United Nations Drug Convention would not
have taken this first basic step without the annual spotlight
of the Department’s International ‘cotic: trate
Report (INCSR) or certification. The same is true for other
major multilateral and bilateral agreements, the passage of
critical anti-crime legislation and important reforms efforts,
including against narco-corruption. Seizures, eradication,
arrests, and extraditions have all been encouraged by the
annual certification review.

It is helping to move large numbers of countries beyond
rhetoric to concrete action, and to illuminate the emptiness of
the claims of those who merely provide lip service to
international goals and objectives.

That said, the certification process is not a subtle or
refined grading system; it is pass or fail. While there are
many objective criteria to use in analyzing performance, no one
is determining and in many cases, a specific measure may be
misleading. For example, a drop in drug seizures could
indicate poor performance. It could also mean that the country
has implemented an effective interdiction program which is
deterring trafficking. You have to look beyond numbers and
look at what is really happening on the ground.

The judgment of what constitutes "full" cooperation with
the United States or "adequate" action on ones own is
ultimately human, and therefore, subjective. Some argue that
"fully cooperating" means that another country does everything
the U.S. asks in exactly the way the U.S. dictates -- no
delays, no differences of viewpoint, and no obstacles, human or
political. All other interests should be sacrificed to our
single overriding concern.

We could approach certification as a confrontation with
our partners, and it might even enable us to win a "battle" or
two, but it will never produce long-term cooperation or
ultimate victory, and we would soon find ourselves fighting a
multi-front "war" with no allies.

Certification is not only about political will, but also
about good will. It is not meant to drive wedges between us
and our foreign colleagues but to find ways to work with them
more effectively. We strive in our reporting to be as fair and
objective as possible, giving credit where credit is due, but
being frank about problems and shortcomings. In many
countries, where reform-oriented governments struggle to pass
modern laws or to challenge established ways of doing business,
the certification process provides needed reinforcement.


16

criminals who are charged in both countries to be temporarily surrendered for trial while
evidence is current and witnesses are available. The protocol is not yet in effect because
it requires legislative approval in the United States and Maxico, and it has not been
submitted to either body.

Organized Cri

In November 1996, Mexico passed an organized crime law that provides authority for
Mexican law enforcement organizations to employ modem techniques to combat crime.
‘These include authority to use plea bargaining and confidential informants, establish a
witness protection program, and conduct controlled deliveries and court-authorized
wiretaps. The law also has provisions for asset seizures and forfeitures. U.S. embassy
officials stated that the passage of the organized crime law represents a major
advancement in Mexico's law enforcement capabilities.

According to U.S. and Mexican officials, the impact of the organized crime law is not likely
to be fully evident for some time. For example, Mexican and U.S. officials told us that the
process of conducting investigations is inherently lengthy and that the capabilities of many
Mexican personnel who are implementing and enforcing the law are currently inadequate.
Mexican agencies are investigating a number of drug-related cases. U.S. embassy
officials stated that, although some guidelines and policies have been established,
additional ones still need to be developed, including the use of wiretaps and of the
witness protection program.

While this law provides the law enforcement community with the necessary tools to fight
organized crime, including drug trafficking, ONDCP reported in September 1997 that the
law stil lacks some important elements neaded to meet the 1988 United Nations (U.N.)
Vienna convention and other intemational agreements. For example, according to
ONDCP, the law lacks provisions allowing the seizure of assets of a suspected criminal
who has either died or fled Mexico. Furthermore, according to U.S. and Mexican officials,

6


45

Let me ask you for just a moment about the precursor chemicals.’
Is ephedrine one of the chemicals that you allude to, that is now
restricted to eight ports of entry, or has ephedrine been banned by
Mexico for entry into the country, as it is in this country?

Mr. KUSHNER. Senator, we don’t have the specifics on that. We
can provide that information to you for the record.

(The information referred to follows:]

Ephedrine is not banned for entry into Mexico; it is a controlled chemical that is
restricted to eight authorized ports of entry:

Acapulco Mexico city (airport)
Guadalajara Nuevo Laredo
Manznaillo Tampico
Matamoros Veracruz

Senator FEINSTEIN. If you would, I’d appreciate it very much. I
think that’s a very important point. Do you know what chemicais
are permitted to come in at those eight ports? Could you also pro-
vide that as well?

Mr. KUSHNER. We will.

[The information referred to follows:]

Mexico controls the following precursor and essential chemcials and restricts them
to eight authorized ports of entry:

PRECURSOR CHEMICALS

N-Acetylanthranilic acid Phenylpropanolamine
Lysergic acid Isosafrole

Benzyl chloride 3,4-Methylenedioxylphenyl-2-propanone
Ephedrine Piperonal

Ergometrine Safrole

Ergotamine Pseudoephedrine

1-Phenyl-2-propanone

ESSENTIAL CHEMICALS

‘Acetone Ethyl ether
‘Anthranilic acid Methyl ethy! ketone
Hydrochloride acid Potassium permanganate
Phenylacetic acid Piperidine

Sulfuric acid Toluene

‘Acetic anhydride

Senator FEINSTEIN. Thank you very much.

Now, let me go back for a moment to the money laundering, and
I recognize that the task given to you was really to discuss the
Mexican side of cooperation. I'd like to really explore what the
United States can do more of to be cooperative. One of the things
is to provide fully operational military equipment to the Mexicans
for counter-drug activity. What prevents us from doing that today?

Mr. KUSHNER. The question is: What’s preventing us from pro-
viding operational equipment?

Senator FEINSTEIN. That’s correct.

Mr. KUSHNER. I don’t believe there’s any structural reason why.
I believe that it’s a problem of the various entities within the U.S.
Government having a well orchestrated plan. If that equipment is
needed for a specific mission, I believe it’s reasonable to assume
that someone in the Government will make sure that, once it ar-
rives, that it can carry out that mission unless there’s clear rec-
ognition on the part of, say, the Mexicans that the equipment will
not be operational. I believe that, in this case, it was—we don’t


49
-2-

xelevant agencies in both countries. Finally, the annual
Binational Commission meetings include meetings between the
two Foreign Secretaries on the most important components of
the bilateral relationship, and a Working Group on Legal
Affairs and Anti-Narcotics Cooperation, headed by the
Attorney General and the ONDCP Director, to focus further on
this vital area.

Providing the operational dimension to this high-level
cooperation, law enforcement officers from the U.S. and
Mexico cooperate at the working level on a daily basis in
the effort to reduce the level of drug trafficking and bring
drug traffickers to justice.

The new structures, while important, are not sufficient
in themselves. Much remains to be done to improve day-to-
day, working level cooperation on the ground. As law
enforcement officers work more closely together -- and this
is happening -- some of the obstacles will diminish. We
remain concerned about the security of U.S. law enforcement
officials in Mexico. Though the Government of Mexico has
made advances in the fight against corruption, there
nevertheless continues to exist evidence of corruption among
police and judicial officials. But new laws, new crime
fighting organizations, new levels of public awareness of
the threat of drugs tc Mexico, and a continuing commitment
by President Zedillo and the highest levels of his
government to a joint battle against drugs, bode well for
the future. I truly believe that the level of effective
cooperation between the United States and Mexico in the
fight against narcotics is greater today than it was last
year and lesser today than it will be next year.


18

documents in storage outside the State Department building. The

Congress will be notified when the document search is completed.


140

multiton quantities of cocaine annually to these areas. However, recent DEA
investigations have shown that the Arellano-Felix Organization has expanded its
control, and they are now transporting and distributing drugs to trafficking
organizations in Chicago, Kentucky, Ohio, and New York.

The Arellano-Felix Organization pays enormous bribes to Mexican law
enforcement officials. Witness statements indicate that the Arellano-Felix
Organization is paying as much as $1 million every week to Federal, state and local
officials in Mexico to ensure they will not interfere with the group's drug
trafficking activities.

Ramon Eduardo Arellano-Felix, considered the most violent brother,
organizes and coordinates protection details over which he exerts absolute control.
On September 11, 1997, he was added to the FBI’s 10 Most Wanted List. Ramon
was indicted in San Diego, California, on charges relating to importation and
conspiracy to import cocaine and marijuana. A Joint Task Force, composed of the
Drug Enforcement Administration, the Federal Bureau of Investigation, and state
and local officers, in San Diego, California, is continuing its investigation into the
Arellano-Felix’s, to include Benjamin Arellano-Felix. Our goal is to investigate
and prosecute the entire Arellano-Felix Organization as a continuing criminal
enterprise that has sent multiple tons of cocaine from Mexico into the United States
in this decade,

JESUS AMEZCUA: The Amezcua-Contreras brothers, operating out of
Guadalajara, Mexico, head a methamphetamine production and trafficking
organization with global dimensions. Directed by Jesus Amezcua, and supported
by his brothers, Adan and Luis, the Amezcua organization is probably the largest
smuggler of ephedrine and clandestine producer of methamphetamine in the world
today. Adan was recently arrested in Mexico, on weapons charges, not drug
charges. Jose Osorio-Cabrera, a fugitive from a Los Angeles investigation until his
arrest in Bangkok, was a major ephedrine purchaser for the Amezcua’s. The
Amezcua Organization obtains large quantities of the precursor ephedrine, utilizing
contacts in Thailand and India, which they supply to methamphetamine
laboratories in Mexico and the United States.

This organization has placed trusted associates in the United States to move
ephedrine to Mexican methamphetamine traffickers operating in the United States.

9


133

Rodriguez Orejuela brothers in Colombia to Amado Carrillo-Fuentes, Juan Garcia
-Abrego, Miguel Caro-Quintero, and the Arellano-Felix brothers in Mexico are
simply the 1990's versions of the mob leaders U.S. law enforcement has fought
since shortly after the turn of this century.

But these organized crime leaders are far more dangerous and influential,
and have a greater impact on our day-to-day lives than did their domestic
predecessors. While organized crime in the United States during the 1950's
through the 1970's affected certain aspects of American life, its influence pales in
comparison to the violence, corruption, and power that today’s drug syndicates
wield, These individuals undeniably influence the choices that too many
Americans make about where to live, or where they send their children to school.
‘The drugs and the attendant violence which accompanies the drug trade, have
reached into American communities across the country and have robbed many
Americans of the dreams they once cherished.

Traditional organized crime in the United States was addressed over time,
but only after Americans recognized the dangers it posed to our way of life. But it
did not happen overnight. American organized crime was exposed to the light of
day systematically, stripping away the pretense that mob leaders were anonymous
businessmen. Today, the organized crime, as we knew it in the United States, has
been eviscerated, a fragment of what it once was.

At the height of its power, organized crime in this nation was consolidated
in the hands of a few major families whose key players lived in this nation, and
were within reach of our criminal justice system. All decisions made by these
organized crime leaders were made within the United States. Orders were carried
out on U.S. soil. While it was not easy to build cases against the mob leaders, law
enforcement knew that once a good case was made against a boss, he could be
located within the U.S., arrested, and sent to jail.

That is not the case with today’s organized criminal groups. They are
strong, sophisticated, and destructive organizations operating on a global scale. In
places like Cali, Colombia, and Guadalajara, Mexico, even operational decisions
are made, such as where to ship cocaine, which cars their workers in the U.S.
should rent, which apartments should be leased, which markings should be on
each cocaine package, which contract murders should be ordered, which officials

2


11

Mr. Chairmen and Members of the Caucus and Subcommittee:

1 am pleased to be here today to discuss our work on the countemarcotics efforts of the
United States and Mexico. “our most recent report on Mexico was issued in June 1996."
My statement today will highlight the preliminary findings {rom our ongoing work to update
that report as requested by Senator Grassley and this Subcommittee. | would like to
discuss three broad topics: (1) the nature of the drug threat from Mexico and results of
efforts to address this threat, (2) the planning and coordination of U.S, countemarcotics
assistance to the Mexican military, and (3) the need to establish performance measures
to assess the effectiveness of U.S. and Mexican countemarcotics efforts. Our final report
‘on these matters will be issued shortly.

SUMMARY

Aintost 2 years ago | testified before this Subcommittee about U.S.-Mexican
countemarcotics issues. During that hearing | stated that Mexico was the primary transit
country for cocaine entering the United States from South America, as well as a major
‘source country for heroin, marijuana, and methamphetamines: That has not changed.
Today, Mexico continues to be the principal transit country for cocaine entering the United
States and, despite U.S. and Mexican countemarcotics efforts the flow of ilegal drugs
into the United States from Mexico has not significantly diminished.

No country poses a more immediate narcotics threat to the United States than Mexico,
according to the State Department. The 2,000-mile U.S.-Mexican border and the
daunting volume of legitimate cross-border traffic provide near-limitless opportunities for
smuggling illicit drugs, weapons, and proceeds of crime, and for escape by fugitives.

‘Dmg Control; _Countemarcotics Efforts in Mexico (GAO/NSIAD-96-163, June 12, 1996).
See also the attached list of related GAO products.


135

with the money from U.S. drug sales. Using landing areas in Mexico, they were
able to evade U.S. law enforcement officials and develop important alliances with
transportation and distribution experts in Mexico.

With intense law enforcement pressure focused on the Cali leadership by
the brave men and women in the Colombian National Police during 1995 and
1996, all of the top leadership of the Cali syndicate are either in jail, or dead. The
fine work done by General Serrano and other CNP officers is a testament to the
commitment and dedication of Colombia's law enforcement officials in the face of
great personal danger, and a government in which drug corruption has penetrated
to the highest levels. The Drug Enforcement Administration (DEA) has profound
admiration for General Serrano and we salute his deep personal commitment to
surmounting the grave obstacles in front of the CNP. General Serrano and the
men and women of the CNP are heroes in anti-drug efforts.

Since the Cali leaders’ imprisonment, on sentences that in no way match the
severity of their crimes, traffickers from Mexico have taken on greater prominence.
The alliance between the Colombian traffickers and the organizations from Mexico
has benefited both sides. Traditionally, the traffickers from Mexico have long been
involved in smuggling marijuana, heroin, and cocaine into the United States, and
had established solid distribution routes throughout the nation. Because the Cali
syndicate was concemed about the security of their loads, they brokered a
commercial deal with the Mexican traffickers, in order to reduce their potential
losses.

This agreement entailed the Colombians moving cocaine from the Andean
n to the Mexican organizations, who then assumed the responsibility of
delivering the cocaine to the United States. Now, trafficking groups from Mexico
are routinely paid for their services in multi-ton quantities of cocaine, making them
formidable cocaine traffickers in their own right.

‘About half of the cocaine entering the United States continues to come from
Colombia through Mexico and across U.S. border points of entry. Most of the
cocaine enters the United States in privately-owned vehicles and commercial
trucks, These organizations now control the distribution of cocaine into the
Wester half and the Midwest of the United States. There is new evidence that
indicates traffickers in Mexico have gone directly to sources of cocaine in Bolivia

4


53

STATEMENT OF ACTING ASSISTANT SECRETARY OF STATE
RAND BEERS BEFORE A JOINT HEARING OF THE

HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
SUBCOMMITTEE ON NATIONAL SECURITY, INTERNATIONAL AFFAIRS
AND CRIMINAL JUSTICE

AND THE
SENATE CAUCUS ON INTERNATIONAL NARCOTICS CONTROL

Narcotics Certification and Mexico
March 18, 1998

Chairmen and Members of the Committee and the Narcotics Caucus:

For those of you who do not know me, I am Rand Beers, the
Acting Assistant Secretary of State for International Narcotics
and Law Enforcement Affairs (INL). I am pleased to have the
opportunity today to meet with you to discuss the annual
narcotics certification process and to respond to your concerns
about the President’s decision to certify to this Congress that
the Government of Mexico fully cooperated with the Government
of the United States in combatting international drug
production and trafficking.

The Administration is well aware of the concern of many in
the U.S. Congress, particularly among Members who follow the
international drug effort closely, that Mexico may not have
done as much as it could have to combat the drug trafficking
organizations which operate from its territory and that it may
not have cooperated as fully with the U.S. Government as it
should have. Before discussing Mexico, I would like to look
first at the certification process and put the Mexico decision
into that broader context.

Certification

International drug trafficking poses severe threats to our
national security, to public health and to public safety. The
human and financial costs are immense. This has generated
among all branches and levels of government a passionate --
apolitical -- commitment to drug control. Recognizing that we
cannot combat this threat alone, we have established a number
of programs and mechanisms, including the narcotics
certification process, to encourage other governments to
strengthen their anti-drug cooperation with the United States
and other countries and to intensify their national anti-drug
efforts.

Combatting international narcotics and organized crime is
among our most important foreign policy objectives. What we
are trying to do with the certification process is to press -~
hard if needed -- to encourage other countries to do more to
help fight drugs and crime. One of the most critical aspects
of this is helping them to understand that it is for their own
security and the welfare of their people that they should work
with us to combat drug trafficking.




172

Ms. WarREN. I'm Justice, and I am one of the cochairs of the sen-
ior law enforcement—

Mr. HasTERT. Well, we'll give you the cochair——

Ms. WarREN. I just don’t want to——

Mr. Hastert. Law stuff, all right?

Ms. WaRREN [continuing]. Be misled there.

Mr. HasTERT. How about we work to get more DEA agents in?
Do you think next year we'll be able to get those in country? Is that
going to happen? Should we expect that? Yes? No?

Ms. WARREN. I don’t know.

Mr. Hastert. How about—do you think next year we'll have at
least some evidence that we’ve extradited some drug felons?

Ms. WARREN. Yes.

Mr. HasTErT. I mean, you gave us this whole——

Ms. WARREN. Yes.

Mr. HasTERT. Good. That’s great. That’s one gold star.

And, how about concrete measures for reduced corruption? On
both sides of the border—I mean, the Justice Department—I have
to tell you, we’ve got DEA agents, we have INS agents, we have
border patrol, we have Customs folks on our side of the border. You
know, a Customs person can sit on that border and bid for that job
for 20 years. I’m not saying anybody’s corrupted, but that sure is
ripe for corruption, and your brother-in-law can live across the bor-
der. We don’t do anything about that. That’s in-house. That’s some-
thing we could do.

Ms. WaRREN. We do.

Mr. HASTERT. What are we doing?

Ms. WaRREN. We have a very rigorous anticorruption effort. Just
along the southwest border there are task forces in anticorruption
that our public integrity unit works with, the internal affairs unit
of the various enforcement agencies, and the U.S. Attorney’s of-
fices. And, we proceed aggressively against those cases, look for
those cases in our larger investigation.

Mr. HASTERT. You know, I’ve been on the border, just this year.
I’ve been at Tijuana along the California border. I’ve been at El
Paso. I’ve been in Nogales in Arizona. I took time to go down and
look at it. Am I wrong, do we have a better rotation on Customs?
Is that happening?

Ms. WARREN. There—I’m not certain of the Customs rotations. I
believe they are more static. I think that has a lot to do with their
collective bargaining agreement. Now, when they’re hiring new
Customs agents, they're forming them into mobile squads where
they, for at least the first 1 or 2 years, will be sent anywhere for
a few days at a time, weeks at a time, and they won't even have
any permanent assignment in those first 2 years, to try and deal
with the problem, to address the problem of having individuals in
one place for a long period of time.

Mr. HasTeERT. Well, let me ask you another question. On the bor-
der, sitting for a couple hours, watching the operations in each of
those places, there’s watchers in El Paso, guys with spy glasses
standing on the bridge, watching where the INS agents are and
where the Customs agents are. Because where the INS agents are,
they can’t open the trucks, so they direct the cars to go through
those lanes. Can we do something about that?


161

necessary equipment and material resources to fully operate against major
narco-trafficking organizations who are capable of deploying hundreds of
individuals and spending tremendous amounts of money on communications,
transportation and security to protect their interests.

DEA cannot estimate the total costs of GOM support. However, if the GOM
assumes the full burden of financially supporting the task forces, DEA
support for investigations conducted by the task forces would be estimated
at approximately $500,000 per year.

To develop the program, the DEA provided the GOM with approximately
$2.9 million USD in 1997, of which $788,000 was obligated for support to
specific investigative expenses regarding targets of mutual interest to the
U.S. and Mexico. In addition to this funding, the USG transferred
approximately $5.6 million USD from a federal asset forfeiture fund to the
GOM in further support of the maintenance of the task forces. To date, the
GOM has failed to illustrate where this shared funding has been spent. In
1998, the DEA appropriated $2.5 million USD, of which $400,000 is for
miscellaneous investigative expenses in support of major targeted cases.

Mexico currently commits approximately $24,380 USD per month to
maintain the task forces. These expenses are basically incurred for the rental
of safehouses, utilities, and telephone lines in all of the Task Forces. The
GOM has also provided vehicles to the task forces at an estimated cost of
$80,000 USD. The DEA does not have access to a total amount spent for the
BTF’s on behalf of the GOM.

For FY 1998, the DEA has obligated $2.5 million USD. This sum is
sufficient to improve the BTF’s operational capability, but Mexico must
fully staff the units and have them adequately trained. All of the BTF’s lack
necessary equipment and material resources to fully operate against major
narco-trafficking organizaticns who are capable of deploying hundreds of
individuals and spending tremendous amounts of money on communications,
transportation and security to protect their interests.

DEA cannot estimate the total costs of GOM support. However, if the GOM
assumes the full burden of financially supporting the task forces, DEA
support for investigations conducted by the task forces would be estimated
at approximately $500,000 per year.


70

Questions for the Record Submitted by

Senator Grassley to
Assistant Secretary Davidow and

Acting Assistant Secretary Beers

Joint Hearing of
Senate Caucus on International Narcotics Control and
Government Oversight and Reform Subcommittee on National
Security, International Affairs and Criminal Justice
March 18, 1998

Question:

2.c. And next, if we have such a strategy and these boats were
part of it, why did we give Mexico two boats that don’t work and
will take more than a year to make them work?

Answer:

The Mexican decision to purchase these two frigates was
clearly based on a cost-effectiveness judgment. A new frigate
would cost around 500 million dollars; at 3 million dollars each,
the Knox-class frigates do not have the capabilities of a new
ship but do provide significant modernization benefits at a price
that the Mexican Government found would fit its budget.

A Mexican inspection team selected the particular vessels
that were purchased. Their condition was clear to Mexico at that
time. The Government of Mexico has expressed no unhappiness
about the frigates and is actively pursuing their reactivation
and options to acquire the additional equipment necessary to make

them operational.


25

RELATED GAO PRODUCTS

Drug Control: Observations on Counternarcotics Activities in Mexico (GAO/T-NSIAD-96-
239, Sept. 12, 1996).

ni in (GAO/NSIAD-96-163, June 12, 1996).

[Lb ions on ies Efforts in Me
(GAO/T-NSIAD-96-182, June 12, 1996).

on V..S. Intemational Drug Control Efforts (GAO/T-NSIAD-95-
194, Aug. 1. 1995)

ati | Strategy (GAO/T-NSIAD-
95-182, June 27, 1995).

I n_ Approach Is Ni With (GAO/NSIAD-
93-152, May 10, 1993).

Drug Control: _U.S.-Mexican Opium Poppy and Maryuana Aenal Eradication Program
(GAO/NSIAD-88-83, Jan 11. 1988).

Gains Made in Controlling lilegal Drugs, Yet the Drug Trade Flourishes (GAO/GGD-80-8,
Oct. 25, 1979).

Opium Eradication Efforts in Mexico: Cautious Optimism Advised (GAO/GGD-77-6, Feb.
18, 197).

(711303)

15


68

several times to explore ways to improve cooperation in this
area. For example, DoD hosted a joint interdiction seminar
in March to facilitate the exchange of information on
trafficking trends and patterns, on successful and
unsuccessful interdiction tactics, and on surveillance
capabilities. Both governments acknowledge that maritime
trafficking is a difficult and challenging problem, one that

does not have easy solutions, but we are making progress.


144

The following cases indicate how far these crime lords will go to corrupt

public officials so that they can continue their trade.

In February 1997, 40 military officers were arrested as part of the Gutierrez~
Rebollo investigation, Not one has been brought to trial or convicted to date.

General Alfredo Navarro-Lara was arrested, by Mexican authorities on
March 17, 1997, for making bribes on behalf of the Arellano-Felix
organization. Navarro-Lara approached the Delegado for Tijuana with an
offer from the Arellano-Felix Organization for bribe money in the amount of
$1.5 million per month -- or $18 million per year.

Colonel Jose Luis Lopez Rubalcava, who had been Director of the Federal
Judicial Antidrug Police under INCD, was arrested in 1997 on charges in
connection with 2.5 tons of cocaine seized in Sombrerete, Mexico in 1995.

The December 1997 appointment, by the Mayor of Mexico City, of Jesus
Carrola-Gutierrez as Chief of the Mexico City Judicial Police was cut
short when his wel] known ties to drug traffickers and human rights
violations became a public issue.

On January 29, 1998, the Organized Crime Unit (OCU) arrested three
Morelos State Judicial Police assigned to the State’s Anti-Kidnapping Unit.
They are suspected of conducting kidnappings and torture of numerous
individuals in the Morelos area. They are identified as Comandante’s
Armando Martinez-Salgado, Miguel Espinoza-Lopez, and Agent Jacinto
Arismendi. The three were arrested as they were preparing to discard the
body of Jorge Nava Aviles. Morelos State Attorney General Carlos Peredo-
Merlo was also detained and questioned in this incident.

On February 23, 1998, Luis Angulo Soto was arrested in Hermosillo,
Sonora, Mexico in connection with the May 21, 1997 theft of 476 kilograms
of cocaine from the PGR office in San Luis Rio Colorado, Sonora.

In order to overcome the problem of widespread corruption in law

enforcement, the Mexican Government replaced civilian authorities with military

3


61

-9-

organizations and to handle sensitive information or
investigations. The U.S. has provided extensive training and
substantial material assistance to these units: the Organized
Crime Unit, Bilateral Border Task Force, the Financial
Intelligence Unit, the military air-mobile special units
(GAFEs), and other specialized units.

We consider the establishment of trusted units to be an
essential factor in the near-term strategy for combatting the
transnational criminal organizations and an important first
step in building a modern federal law enforcement institution.
For our part, we have gained counterparts in whom we have
growing trust and confidence, with whom we can share sensitive
information, and from whom we can receive dependable
information and assistance. Neither U.S. nor Mexican officials
delude themselves that corruption can be defeated in the near
term, but the beginning of an institutional transformation is
underway.

And, progress has not been limited to the Executive
Branch. The Mexican Congress deserves high praise for its
anti-drug and anti-crime reforms over the past several years.
Building on its major accomplishments in passing the Organized
Crime Bill and Penal Code reforms in 1996, it passed
unanimously a law which vastly improves regulation of precursor
and essential chemicals as well as equipment for making
capsules and tablets. The Mexican Congress is also pursuing
further reforms, proposed by President Zedillo, such as
streamlining and modernizing the code of criminal procedures to
further improve the GOM’s effectiveness in drug and other
criminal prosecutions.

In the judicial branch, the traditional system of
appointment of judges by the Supreme Court was changed in 1996
to provide for judicial appointments based on examination; this
new selection method was put into effect for the first time in
1997 as the first group of judges selected by examination was
seated. The Mexican National Judicial Council, created in
1995, initiated a series of conferences and international
professional exchange programs in support of its overall
judicial reform and modernization effort. The Council took the
unprecedented step of recommending that three sitting judges be
indicted for corruption.

Bilateral Cooperation

Despite many challenges, cooperation with Mexico continues
to broaden, and we believe we are moving forward. The U.S.
interagency community has rallied behind our new focus on
strengthening our partnership with Mexico. More law
enforcement, intelligence community, military, and foreign
affairs community assets and talents than ever before are being
directed toward the transnational drug threat, and employed in
support of the U.S./Mexico partnership.


18

Nations and other intemational agreements. In addition, Mexico has taken further action
to control chemicals by limiting the legal importation of precursor chemicals to eight ports
of entry and by imposing regulatory controls over the machinery used to manufacture
drug tablets or capsules.

The impact of the new chemical control law is not yet evident. Currently, the
development of an administrative infrastructure for enforcing it is under way. Various U.S.
agencies including the Departments of Justice and State have provided technical
assistance and training to help Mexico carry out the law.

Actions to Reduce Corruption

It is well established and the President of Mexico acknowledges that narcotics-related
corruption is pervasive and entrenched within the criminal justice system and he has
made rooting it out a national priority.

Beginning in 1995, the President of Mexico expanded the role of the Mexican military in
countemarcotics activities. The Mexican military, in addition to eradicating marijuana and
‘opium poppy, has also taken over some law enforcement functions. For example,
airmobile special forces units have been used to search for drug kingpins and detain
captured drug traffickers until they can be handed over to civilian law enforcement

agencies.

In September 1996, the President of Mexico publicly acknowledged that corruption is
deeply rooted in the nation's institutions and general social conduct. He added that the
creation of a new culture of respect for law must start with public officials and affirmed his
administration's intent to gradually eliminate official corruption. To do so, the President
began to initiate law enforcement reforms.


35

Mr. NELSON. Our information suggests just pervasive, wide-
spread corruption. We did not undertake work to try to determine
whether it’s along the border or in the central part of the country
or at the national level or the Governor level. The information we
have just suggests that it’s very difficult to find a court or a law
enforcement institution that is not—that does not have a major
problem with corruption.

We were told, when in the country, that despite the new wire-
tapping law, there was only one judge that U.S. officials trusted to
go to ask for permission for a wiretap, for fear that it would be
compromised. And that is in the entire country. So our evidence
suggests that there is broad corruption throughout.

Mr. SouDER. One of the things that you had looked at was co-
operation, information sharing, and so on. If what you just said is
true, and given our past history, why would we want to informa-
tion share?

Mr. NELSON. Well, that information sharing, to a large extent, is
at the broad policy level involving high-level United States officials
and high-level Mexican Government officials. I think what we were
told is that at the working level this is a problem because U.S. offi-
cials and U.S. law enforcement individuals do not know who they
can trust. So at the broader, higher level, you have a level of dia-
log, you have a framework for cooperation, but at the working level
it’s difficult because if the institutions are corrupt, if the law en-
forcement agencies are corrupt, you have a very difficult time com-
batting the crime, the organized crime and drug trafficking.

Mr. SoupER. This isn’t a criticism. I’m just asking why you didn’t
seem to focus as much on the question of vetting. In Colombia,
clearly, there’s a substantial difference between national police and
other parts of their society, where the corruption has been, because
they have a strong vetting process. Do you see that starting to
occur in Mexico? Do you think that should occur more? What proce-
dures do you see that they’re doing in that?

Mr. Forp. The answer is, yes, they are starting to do a vetting
process. As I mentioned earlier, they reorganized the Attorney Gen-
eral’s office. Now this information that I have here is as of Decem-
ber, so some of these numbers may have changed some. But of ap-
proximately 370 authorized staff positions, as of December, they
had screened through this process about 86 of those people.

Mr. Souper. And that was a change from previously? Were they
previously claiming to have screened people, too, only they were
not clean?

Mr. Forp. We're not aware of the extent to which screening went
on prior to the reorganization, but they are going through that
process now.

Mr. SoupDER. Thank you.

Mr. HasteERT. The gentleman from Florida, Mr. Barr.

Mr. Barr. The gentleman from Georgia.

Mr. HasTeRT. Georgia, I’m sorry.

Mr. Barr. Thank you.

Mr. Mica may appreciate that slip, but I certainly don’t. [Laugh-
ter.

I appreciate the correction for the record, Mr. Chairman.


155

Residual Disposal: Methamphetamine producers dispose of chemical waste
in any possible way. These include, but are not limited to: concealing in
holes dug in the ground and covered over with dirt, flushing down sinks or
toilets, dumping in bodies of water, placing in dumpsters, or dumping in
isolated areas. Whether methamphetamine is made in the U.S. or Mexico,
traffickers are more likely to discard the residual chemical waste in the area
of the methamphetamine laboratory site where synthesis takes place. To
date, millions of dollars have been spent to clean up chemical dump sites--
and these are only the sites which have come to our attention.

In conclusion, the movement of chemicals by Mexican methamphetamine
trafficking groups is characterized by the acquisition of precursors in the U.S.
and Mexico, the synthesis of methamphetamine on both sides of the border,
and significant contributions to environmental hazards in the U.S. as a result
of illegal chemical disposal. While actual methamphetamine manufacture
and chemical disposal issues may be viewed as constants, they are related to
a group’s capacity to first acquire essential chemicals. The primary variable
which may be manipulated to affect methamphetamine production is
chemical acquisition. The United States has undertaken anti-drug and
environmental legislation which has already resulted in an interruption of the
chemical acquisition process with an expectation for more significant adverse
impact to Mexican methamphetamine production in the future.

QUESTION 2: Based on the International Narcotics Control Strategy
Report (INCSR), the certification process is not only a useful tool, it is a
successful one. It achieves its purpose in promoting cooperation on
drugs. This judgement, I presume, is shared by the Administration,
since this document was cleared. If that is the case, does the Justice
Department stand by this judgement? Do you agree with the INCSR
when it says this process is “unusually effective” and that the “value of
the drug certification process is that every government concerned is
publicly accountable for its actions, including the united states”?

ANSWER: During the course of the certification process, DEA provided
information to the Attorney General that was an assessment of the drug
enforcement situation in the various countries being evaluated for
certification purposes. Our comments are limited to law enforcement issues
and DEA does not make a recommendation to certify or decertify any
country. The Attorney General then makes her recommendation to the


For those who argue that certification is a double
standard, I would make two points. First, the basis of
certification is a determination of whether the U.S. interests
in stopping drugs is being adequately attended to by others
and, if not, whether economic assistance should be withheld.
That seems a reasonable basis for looking at U.S. assistance --
through the prism of a major U.S. national security interest.
Secondly, while we do not use the certification process to
judge ourselves, we publish our national strategy, goals, and
budget, recognizing that other nations, the press and our own
Congress will judge us on whether we accomplish those goals and
use those resources well.

Mexico and Certification

The Department of State is only one of the many agencies
which work on international drug control, so the views of other
agencies factor heavily in the Secretary's recommendation to
the President on certification.

As you will hear from this panel, and others who may
testify before you on this subject, the picture of Mexico's
anti-drug performance is complex. As with any large,
multi-faceted effort involving multiple agencies and military
services, and tens of thousands of people, there are many
different perspectives on how to measure the level of
cooperation between our governments.

The Secretary of State considers each agency's viewpoint
-- and the level of cooperation with its Mexican counterpart --
critically important in preparing a balanced collective
assessment for the President. It is, however, important to
keep in mind -- as you consider the questions to be put to each
witness -- that while all Cabinet agencies concurred in the
final recommendation that should be fully certified as
cooperating with the United States, it is perfectly appropriate
for individual agencies to have different views on specific
aspects of the collective assessment.

Responding to the continuing threat posed by criminal
organizations engaged in large-scale drug trafficking and other
serious crimes, the United States and Mexican governments have
intensified their efforts, both individual and bi-national, to
counter these groups, improving use of existing "tools" -- such
as the Mutual Legal Assistance Treaty -- and developing new
ones where they are needed -- such as the new Protocol to the
Extradition Treaty. Bilateral expert groups oversee and press
ahead in a whole array of important issues, from chemical
diversion control to demand reduction. These groups, in turn,
are overseen by a High-Level Contact Group, which includes
senior officials from all of the major U.S. and Mexican
agencies with counternarcotics responsibilities.


21

In October 1995, the U.S. Secretary of Defense visited Mexico in an effort to strengthen
military-to-military relationships between the two countries. As a result of this visit, the
Mexican military agreed to accept U.S. countemarcotics assistance. Table 1 shows
DOD's countemarcotics assistance provided to the Mexican military during fiscal years
1996-97.

1996-97
Dollars in millions
Source of assistance Value of Type of assistance
assistance
Excess defense articles* $ 5.0 20 UH-1H helicopters
Section 506(a)(2) drawdown® | 37.0 53 UH-1H helicopters, 4 C-26 aircraft, 2-
year UH-1H spare parts package
Section 1004° 26.0 About 70 percent used for training;
femainder for purchase of equipment
Section 1031° 8.0 UH-1H spare parts

"The Foreign Assistance Act of 1961 authorizes DOD to provide excess equipment to the governments of,
‘major drug-producing countries.

"Section 506(a)(2) of the Foreign Assistance Act of 1961 authorizes the President to approve the provision
of U.S. military goods and services to a foreign country for countermarcotics assistance when itis in the
U.S. national interest.

“Section 1004 of the Defense Authorization Act of 1989 authorized the Secretary of Defense to provide
countemarcotics training and other types of assistance to drug-producing countries.

“Section 1031 of the Detense Authorization Act of 1997 authorized the Secretary of Defense to provide $8
milion in countemarcotics assistance to Mexico in fiscal year 1997.

Sources: U.S. embassy in Mexico and the Defense Security Assistance Agency.

All of the helicopters and the C-26 aircraft were delivered to the Mexican military during
1996 and 1997. According to DOD officials, Mexico has also received some logistics and
training support; however, they could not provide us with the exact level of support given

W


142

Examples of drug-related violence on both sides of the border include:

In April, 1997, two agents assigned to Mexico's new Organized Crime Unit
were kidnapped and killed. The agents, who had investigated Carrillo-
Fuentes, were kidnapped on April 4 and found on April 25 in the trunk of a
car in Mexico City. Both had been bound, gagged, beaten, and shot in the
face. Reportedly, the two agents were killed because of the unit’s raid on the
home of Carillo-Fuentes’ son. The OCU’s primary function is to implement
the modem evidence gathering techniques provided for by the new Organized
Crime Law.

On July 17, 1997, Hector Salinas-Guerra, a primary witness in a McAllen,
Texas trial of a major Mexican marijuana drug trafficking organization, was
kidnapped by members of this organization at gunpoint from his place of
business in McAllen, Texas. His tortured, badly decomposed body was found
on July 22, 1997 in an open field in Reynosa, Tamaulipas, Mexico. Salinas
was to testify in a trial that was scheduled to begin on July 21, 1997.
Subsequently, on July 25, 1997, a jury in McAllen, Texas reached a verdict of
acquittal for the seven defendants in this case. This abduction and murder
highlights the violent nature of drug trafficking along the U.S.- Mexico border
and the threats posed not only to U.S. and Mexican law officials, but also to
cooperating sources and witnesses.

On November 14, 1997, two Mexican military officers assigned to the Federal
Judicial Police in Tecate, Baja California Norte were shot and killed while
travelling in an official Mexican government vehicle from Tecate to Tijuana.
Upon arriving at the federal court building in Tijuana, the officers’ vehicle
was ambushed and sprayed with gunshots from AK-47 and 9mm weapons.
The two officers worked in the same office that was responsible for the
November 8, 1997, arrest of Everado Arturo Paez-Martinez, a high-ranking
member of the Arellano-Felix drug trafficking organization.

On November 23, 1997, a shooting incident occurred at the Nogales, Sonora,
Mexico port of entry that left one Mexican Customs official dead, two
defendants and one other Mexican official wounded. The incident began
when a secondary inspection of a blue and gray van revealed a box that
contained $123,000. An accomplice appeared, joined the passenger and,
together, they grabbed the box and ran. Both subjects were subdued and then

i


Answer:

The Abrego Reyna and Romero de Velasco cases are further
examples of how bilateral information sharing and
cooperation is bringing members of trans-national criminal
organizations to justice. In the Abrego Reyna case, for
example, the Mexican government sent officials to Arizona to
work directly with the U.S. Attorney's Office in securing an
arrest warrant to hold the defendant for extradition to
Mexico. The extradition case is now pending in the federal
court in Phoenix. As stated above, Mexico’s strengthened
money laundering control regime, and increasing enforcement
capabilities, has been beneficial to bilateral cooperation
in this area. The regime has not yet been fully
implemented, but Mexico is advancing in this.

ie: ion:

8.d. What steps or signs of progress should the United
States look to see in Mexico in the next year?

Answer:

We anticipate that, in the coming year, Mexico will
establish a special unit to prosecute financial crimes and
that there will be some successful money prosecutions. We
also believe that asset forfeiture legislation now before

the Mexican Congress may be approved into law by 1999.


170

seen their work in now indicted the Arellano Felixes, but they have
provided us with information, shared witnesses with us, that had
never happened before, that, based on that testimony, we have now
been able to proceed in the United States on criminal cases that
we would not have been able to proceed on before. That’s the kind
of confidence that builds.

Mr. Barr. I certainly appreciate the fact that there have been
some extraditions on other types of criminal proceedings, but the
fact of the matter is that no Mexican national—I’m quoting from
the GAO testimony—no Mexican national has ever been surren-
dered to the United States on drug related charges. Does that re-
main a troubling point to the Department of Justice?

Ms. WarREN. It is a troubling point. We have major narcotics
traffickers as priority extradition requests before Mexico. Few of
those have been found extraditable. Most have not been arrested.
But, yes, those are priorities for us.

Mr. Barr. Any thoughts on why they haven't been arrested?

Ms. WARREN. They ‘had a law enforcement counternarcotics unit
that was completely disbanded. They were undertrained, under-
paid, and many were corrupt. Now they're just beginning again.
They're fledgling troops against a very sophisticated trafficking

‘oup.
ote. Barr. What is the problem with submitting the temporary
extradition protocol to the Congress?

Ms. WARREN. There is no problem. It is going through its final
reviews by the treaty lawyers, I believe, at the State Department.
It will be ready in the next couple of weeks and will, I believe, be
sent up with an enormous package of new extradition treaties and
mutual legal assistance treaties. We look forward to that.

Mr. BEERS. That is correct, Congressman Barr. That is the status
of the document.

Mr. Barr. Thanks. That’s exciting. The—and I’m not being flip
about this—it’s very distressing that the testimony is virtually the
same as last year. The phraseology is strikingly similar. One can
point to, I’m sure, a few areas in which one person here, one person
there—and we “vetted”—whatever “vetting” means. I’ve never quite
figured out what it means—but we “vetted” here and “vetted” there
and “vetted” everywhere. Yet, it really doesn’t seem to have had an
appreciable impact. The drugs have not diminished. Mr. McCaffrey
thinks things are just great. But, they really aren’t. And, it never
ceases to amaze me how people can say with a straight face that
things are just great. How we can laud Mexico’s drug fight in light
of what you all are testifying to, lack of progress in these areas is
really amazing.

With regard to the DEA, I do think that Mr. Constantine has a
much more realistic view of the drug situation in Mexico than
State or Justice. I think he stated very clearly, and I commend
DEA for its efforts. I think it’s doing what it can and it is not put-
ting a rosy, glossy political spin on what’s happening down there
and our lack of progress. I continue to be among those who believe
that if we did not come out and constantly laud Mexico, when in
our heart of hearts we know that that is not really warranted, that
we might see some more progress. We might see some extradition.
We might see a meaningful money-laundering statute, which we


42

Mr. NELSON. Well, the results to date have been some declara-
tions, and more cooperation and more discussions on key issues re-
lating to trafficking, money laundering, and other drug-related
issues.

Mr. Hastert. So we've just had testimony here—precursor
drugs, we haven’t done anything on this side of the border on pre-
cursor drugs, and what are we getting out of that with the high-
level group? Nothing?

Mr. KUSHNER. We don’t know that specifically.

Mr. HaAsSTERT. What about, you talk about discussions and high-
level talks. What’s happening? I guess that’s the question. That’s
the frustration. Here’s our own Department of Justice trying to set
up a rapport and we should see some action coming out of that
group, and we don’t see anything. I mean, high-level talks, but
there’s nothing measurably coming out of it.

Mr. NELSON. I would agree with that. The discussions have led
to—I shouldn’t say discussions have led to discussions, but the
meetings have led to discussions on all of the relevant issues, in-
cluding production, distribution, demand. But you’re correct that
those have not resulted in tangible outcomes to date.

Mr. Hastert. Has the Justice Department laid down some meas-
ures, so we can know what’s happening, if there is progress or not?
Have they developed a set of measures?

Mr. KUSHNER. I’m not sure whether the Justice Department has
developed a set of measures, sir, but one of the outcomes of the
high-level contact group that was just recently issued was the
United States-Mexican Binational drug strategy. That was issued
in February. Our understanding from ONDCP is that they are
going to follow the issuance of that strategy with some more spe-
cific performance measures, where you can actually make a deter-
mination as to the progress of Mexico and the United States——

Mr. Hastert. So who are going to develop those measures?

Mr. KUSHNER. My understanding is, that, it’s going to be the
high-level contact group with the United States and the Mexicans
working on the performance measures.

Mr. HASTERT. Well, we’re anxiously looking forward to that.

Mr. Barrett, do you have any further questions?

Mr. BARRETT. Yes; I do, Mr. Chairman, if I may.

On page 4 of the report, you mention some of the actions that
would improve the situation. No. 4 is implementing measures
aimed at reducing corruption, such as increasing the role of Mexi-
co’s military forces in law enforcement activities.

We've talked a little bit earlier about the corruption in the police
force, and Congressman Mica asked you about the arrests, I think,
of five or six generals. Are you confident that the problems that ap-
pear to plague the civilian police force do not plague the military?

Mr. NELSON. We don’t have the ability to make a judgment about
that. The Mexican Government has decided that, given the alter-
natives that they have, that a stronger role for the military in the
counternarcotics is probably their best option. It’s not probably a
perfect option, and in fact, as has been pointed out here, some
members of the military have been implicated in crime and in dru;
crimes. The military is thought to be less corrupt—some units,
should say—than the general law enforcement community at large.


83

official corruption. This ig an important step, but only a
beginning to what’ will be a protracted and profoundly
difficult process. The Gutierrez incident, while disruptive
to Mexico’s anti-drug effort in early 1997, raised awareness
throughout the government of the need to establish better
systems for selecting personnel for sensitive positions and

monitoring their performance and professionalism.

The Office of the Attorney General (PGR), for example,
has instituted a rigorous screening and background check
system for both new recruits and existing personnel assigned
to sensitive units or operations. This includes home
visits, financial checks, psychological profiling, and lie
detector testing. The PGR plans to conduct periodic
security checks thereafter. It is also trying to provide
improved training, pay and benefits, although funding is not
currently available for all of the anticipated improvements.
The U.S. has provided training and technical assistance to

the PGR in these reform efforts.

The Mexican military recognizes that it is not immune
from this problem either. The Secretariat of National
Defense has confronted narco-corruption directly and
severely. In 1997 alone, five current or former general
officers were charged with narco-corruption or related
offenses, including General Jesus Gutierrez Rebollo, who

briefly served as head of the anti-drug police agency.


174

Ms. WARREN. We're one of the few nations of the world who have
that ability, so it would be brand new for them. I know of no other
country that has that ability.

Mr. BARRETT. But, we do.

Ms. WaRREN. But, we do. Yes.

Mr. BARRETT. It’s also my understanding that an 18-man air-
borne antidrug unit was arrested in September 1997, for using the
unit’s planes to smuggle cocaine from the Guatemala border to
Mexico City. I hope they didn’t get that plane from us. Where did
they get that plane from?

Ms. WaRREN. That was a PGR plane and was not ours. But,
those were pilots for the Attorney General's office, hired by the At-
torney General.

Mr. BARRETT. OK. Were they trained at all in the United States?
Do you know?

Ms. WARREN. Not that I know of, but——

Mr. BEERS. I don’t believe so, Congressman.

Mr. BarRETT. Could you check that for me please?

Mr. BEERS. I correct that. They may have received some custom
service interdiction training.

Mr. BARRETT. OK. I would like to have the answer to that please.

Mr. BEERS. OK. We'll get you that, sir.

Mr. BARRETT. And maybe one of you know what the status of
that case is?

Ms. WARREN. I think some of them have—the cases against them
have been dismissed. Others are pending at this moment. I don’t
know the numbers. I could check that.

Mr. BarRETT. Do we track for these arrests—again, Mr. Mica
talked about the generals being arrested or the 18-man unit here.
Do we track if these people have been trained in the United States?

Mr. BEERS. In the Mexican special units?

Mr. BARRETT. The people who have been arrested.

Mr. BEERS. Yes; we track from their—the major traffickers in
any case.

Mr. BarrETT. No; what I’m saying, with respect to the military.
You’ve got this 18-man unit. I’m curious as to which, if any, of
these 18 individuals received military training in the United
States. The five or six generals that have been arrested, I’m inter-
ested in finding out whether they have obtained military training
in the United States. My question to you is: For military personnel
that are arrested in connection with drug enforcement, do you
make any effort to determine whether they have received any mili-
tary training in the United States?

Mr. BEERS. Whether they have received military training?

Mr. BARRETT. Yes.

Mr. BEERS. I'll have to ask the Department of Defense about
that, sir. I’m not sure.

Mr. BarreETT. OK, if you could locate-——

Mr. BEERS. But we do keep records of people who we train, so
it would be something we could check.

Mr. BarRETT. I would appreciate that. There is a recent report
in the Washington Times that the newly appointed minister,
Labastida, had tolerated drug dealers’ activities when he served as


60

-8-

During 1997, the Office of the Attorney General opened
corruption or abuse of authority against over 100 members of
the Federal Judicial Police and over 20 federal prosecutors.
Many are now fugitives. A national system of name checks is
being created to ensure that police agents fired for cause are
not rehired by other police forces. The Mexican Secretariat of
National Defense brought charges against five general officers
and many other military personnel, something unheard of in
years past. Many of these military personnel are now
incarcerated in civilian criminal penitentiaries. Mexican
investigations are also unearthing narco-influence in the
private sector, particularly with respect to laundering or
hiding of drug proceeds. We view this as progress.

While we are convinced that the Zedillo Administration is
committed to taking serious action against drug trafficking,
there is no doubt that Mexico’s justice sector institutions
remain seriously flawed. In a September 1997 speech before the
Chamber of Deputies, Mexican Attorney General Madrazo
acknowledged that,

"...the people’s most serious concern is public security.
The citizens feel impotent against crime and perceive the
authorities as inefficient to combat it. The public is
equally afraid of criminals and the police."

Changing this public attitude can only be accomplished
through changing the nature of the criminal justice system. It
is a monumental task and will require all three branches of
government to work together. It will also require more than
identifying corrupt personnel.

Police and military forces lack many of the tools and
training needed to confront powerful organized crime.
Longstanding institutional weaknesses such as a lack of checks
and balances, integrity controls, and lack of a career civil
service in many agencies. Low pay, uncertain career prospects,
lack of job security and, in many cases lack of physical
security, persist, leaving personnel vulnerable to intimidation
or the lure of bribes by drug trafficking groups.

The Government of Mexico is beginning to take the steps
needed to enhance the capabilities and security of its
personnel, to improve professionalism, offer adequate pay and
benefits, to establish checks and balances within the system,
and to combat entrenched corruption.

As I noted before, there is a new, rigorous screening
system for all personnel assigned to the Attorney General's -
drug enforcement agency (FEADS) and to sensitive units. This
screening process will eventually encompass all personnel. In
the shorter-term, the Government of Mexico will use small,
elite law enforcement and military counter-drug units -- which
have been carefully screened and which are better trained and
equipped than their predecessors -- to attack key trafficking


84

The Mexican feileral court system is also confronting
corruption. In 1994, President Zedillo instituted a major
reorganization of the court system and changed entirely how
judges are selected. Judges are now selected on the basis
of merit. .The National Judicial Council, which oversees the
federal court system, has the authority to investigate
alleged abuses by the courts. In 1997, the Council took the
unprecedented step of recommending that three sitting judges
be indicted for corruption. There are still serious
problems in the courts, but if the reform effort is
sustained over time, traffickers and other criminals will
find it increasingly difficult to evade justice through

bribery or intimidation.

The U.S. has offered a wide array of training and
technical assistance to the PGR, the National Judicial
Council and other Mexican agencies and entities. This is
now the major focus of Department of State programs in
Mexico. In addition to formal programs, countless informal
professional exchanges have been arranged, for example
between Mexican and European and U.S. judges. Such
interchanges providing Mexican reformers with new concepts

and ideas for strengthening their institutions.


119

carefully-selected Mexican members of a specialized task force
that focuses on illegal chemical trafficking.

On an operational level, DEA diversion investigators in
Mexico City are cooperating with Mexican officials on
investigations of rogue chemical firms operating in both
countries. The United States is also continuing its efforts with
Mexican law enforcement to disrupt and dismantle the operations
of major Mexico-based methamphetamine and chemical organizations,
such as that headed by the Amezcua Contreras brothers.

2) Based on the
(INCSR), the certification process is not only a useful
tool, it is a successful o: Bg
promoting cooperation on drugs. judgment, I presune,
is shared by the Administration, since this document was
cleared, If that is the case, does the Justice Department
stand by this judgment? Do you agree with the INCSR when it
says this process is “unusually effective” and that the
wvalue of the drug certification process is that every
government concerned is publicly jountable for its
actions, including the United states“?

We agree with the Attorney General's statement of February
28, 1998, that *(wjithin the law enforcement community, we
believe that the certification process provides the necessary
assessments and rallying points upon which we can move ahead in
cooperation, both domestically and internationally."

The annual certification process is required by Federal
statute and can only be altered through the legislative process.
The transnational nature of the drug threat requires a
multilateral response, and therefore, the Department of Justice
supports the development of a multilateral counterdrug evaluation
mechanism in this hemisphere. The United States is exploring
other avenues to achieve multilateral counterdrug cooperation,
including a monitoring and evaluation system the Administration

and its regional partners in the Organization of American States
have proposed.

Building on the 1994 Summit of the Americas, the United
States and its regional partners in the OAS have proposed a
framework for enhanced multilateral counterdrug cooperation. The
objective of this multilateral system is to enhance cooperation
among our hemispheric partners against drug trafficking, use, and
their consequences. It is not expected that this review would
supplant the certification process, however.


122

investigators and prosecutors needed for the project, leading to
delayed staffing; and (2) agent security issues. It is not clear
when these issues will be fully resolved.

The BTFs were originally conceived as an opportunity for
U.S. law enforcement agents to cooperate with the Mexican
counterparts in a day-to-day exchange of tactical drug
intelligence being collected on both sides of the border. The
relatively senior U.S. law enforcement investigators (DEA, FBI,
and U.S. Customs Service) were intended to “commute” to the
Mexican side of the border each day to join with the newly
"vetted" and trained Mexican officers in the Task Forces and then
work together to develop strong prosecutable cases against the
major traffickers preying on both countries. Because of security
concerns, the U.S. agents are not commuting to the Task Force
sites. In the meantime, some alternative, but less optimal,
courses are underway. For example, some DEA agents who are
assigned as resident in-country agents work with the Task Forces.

In addition, there have been several Mexican officers
working in partnership with U.S. agents in the United States --
particularly in the San Diego area. These joint law enforcement
efforts have been successful and have resulted in the sharing of
important investigative information, but, of course, not to the
extent as expected in the BTF design for operation.

The Government of Mexico has recently assumed the operating
costs of the BTFs that had previously been borne by DEA. In
order for the BIFs to function effectively and efficiently, it is
imperative that the Task Forces are maintained at adequate and
appropriate funding levels. We will continue to encourage the
Mexican Government to maintain steady financial support for the
BIFs and enhance their fiscal commitments to the effort.

In addition, the U.S. Government will continue to work with
the Mexican Government to ensure that Mexican personnel working
in the BTFs are properly “vetted” and trained. At the present
time, officers of the Mexican Special Prosecutor’s Office for
Crimes Against Health (FEADS) must be fully *vetted” -- including
an extensive background check, comprehensive financial disclosure
statements, urinalysis drug testing, and a polygraph examination.
In addition, DEA -~ in coordination with the FBI, U.S. Customs
Service, and the Criminal Division -- has provided substantial
training for new BIF officers.

We intend to continue working with our Mexican counterparts
to enhance the capabilities of the BTFs with the hope that they
will reach their full potential.


29

I am very sympathetic with the difficulties they are faced with.
I think we ought to focus on the United States, however, and what
our reaction should be.

With regard to the $76 million that Mexico received, Mr. Nelson,
is that the $78 or $76 million they received—the chairman asked
about who supervises our relationships with them. Who distributed
that money and who is accountable for ascertaining whether or not
that money is used wisely?

Mr. NELSON. Well, the assistance that’s been provided, or that
was provided in fiscal years 1996 and 1997, was the Defense De-
partment. Now the issue of who’s to supervise it, I think that goes
to the heart of the coordination problem that we identified, is that
the in-country program, of course, is the responsibility of the em-
bassy in conjunction with the Office of Drug Control, and of all the
U.S. agencies involved there in the country, it just seems that with
the assistance that the plans and strategies for how that assistance
was going to be used in the counternarcotics mission didn’t seem
to be well-organized.

Senator SESSIONS. Well, it seems like to me you're having dif-
ficulty even saying who is responsible. Do you know? Does the Gen-
eral Accounting Office know who is responsible for managing the
$78 million?

Mr. Forp. Mr. Senator, yes, we do.
bi Senator SESSIONS. You indicated Washington. Washington is a

ig place.
ir. FORD. No; the assistance was provided by the Pentagon
under various authorities that they have. Much of the assistance
is excess defense articles or articles authorized under 506(a), which
is an emergency drawdown provision.

If you turn to page 11, if you have our statement there, it has
a table that shows you the equipment that was sent down to Mex-
ico during fiscal year 1996 and fiscal year 1997, the value of the
equipment. The equipment itself, once it is sent down to Mexico,
is basically monitored by the military assistance group and the De-
fense Attaché’s Office at the Embassy. So those are the folks that
have the basic responsibility, once the equipment is sent to Mexico.

Senator SEssIONS. Do they understand that? Did you ascertain
whether they fully understood they had a responsibility to see that
the merchandise is being well-utilized?

Mr. ForD. Yes; I think they understand that responsibility, yes,
sir.

Senator SESSIONS. I think, Mr. Nelson, you well said at the be-
ginning that some laws have been passed that have the potential
to help—potentially. But having been involved in the history of the
relationship with nations who have been involved heavily with
drug distribution, it’s difficult for them to get out of business as
usual and actually begin to show results.

So I’m concerned about that, and I guess I would just want to
ask, isn’t it a fact that Mexico has laws against drug distribution
and drug possession?

Mr. NELSON. That is correct.

Senator SESSIONS. There’s no doubt that they have the ability to
prosecute someone who’s involved in drug distribution and produc-
tion and possession?


154

Recent environmental legislation which controls the use and availability of
certain forms of freon will continue to have an adverse impact on
methamphetamine traffickers’ ability to obtain this chemical domestically.
Currently, the commonly diverted forms of freon can no longer be purchased.
legally in the United States. Recycling is possible, but only for commercial
purposes. Moreover, it is predicted that the availability of freon will decline
internationally and continue to drop even further domestically. While
Mexican trafficking groups will soon be forced to exclusively obtain freon
in Mexico where it is widely available, the market is expected to recede there
also, provided that Mexico adheres to United Nations’ guidelines.

Rather than risk drawing attention by purchasing large volumes of hydriodic
acid, many of the Mexican methamphetamine groups make their own
hydriodic acid from iodine and red phosphorous. Iodine is readily available
in Mexico. As stated in a 1997 Report to Congress, DEA continues to assess
the quantities of iodine crystals exported to Mexico from the U.S. Ifit is
determined that current iodine supplies in Mexico exceed levels consistent
with legitimate need, DEA will review the need for export controls on iodine.
Although the Methamphetamine Control Act specifically exempted export
requirements on iodine, DEA has the regulatory authority to administratively
bring exports of iodine under control through notice and comment rule
making.

Synthesis: Once chemicals are acquired by Mexican methamphetamine
trafficking groups, the next major step is synthesis. The first phase of
synthesis in many cases is preparation of certain precursors requiring special
handling. Pseudoephedrine and ephedrine are rarely acquired in a form
-where traffickers may immediately use them to produce methamphetamine.
Usually, traffickers must extract the pseudoephedrine and ephedrine from
tablets. This process involves adding water or chemicals (i.e. methanol or
anhydrol) to separate the precursor from binders and other inert fillers.
Noting that this process may be time consuming and possibly dangerous
(depending on the chemicals used), many enterprising Mexican illicit groups
are paid large sums by methamphetamine producers for this activity. Known
as pseudoephedrine or ephedrine “extraction laboratories,” DEA has noted
that many of these operations are controlled by Mexican nationals in both
Mexico and the U.S.


177

have a policy of noninvolvement in Colombia at all. We have a very
active policy. Colombia, as you know, is the largest recipient of
State Department International Narcotic and Legal Affairs [INL]
funds in the world. There is, in the question of Colombia, a very
confused political situation there, in which there are politically mo-
tivated guerilla groups, financially motivated guerilla groups in-
volved in narcotics, groups made up of some of each, antiguerilla
groups which are ideologically motivated, and antiguerilla groups
which are financially motivated. And then you have Colombian se-
curity forces, not all of which the motives are easily identifiable on
any given day. So, it is a complex picture.

hat we've got to be clear about in Colombia is that we are dedi-
cated to fighting narcotics in that country. I do believe that the de-
cision that was taken to grant the national interest waiver to Co-
lombia in this year’s certification process is going to facilitate
greater activity on our part in terms of providing support, in terms
of supporting those elements of the Colombian community both
within government and outside of government that are on the right
side in terms of the narcotics fight. And, in effect, this national in-
terest waiver puts us in, I think, a better position to deal with, on
a more cooperative level, the new Colombian President, who will be
elected in a few months.

The issue of, specifically, of the helicopters is a complex one, and,
as I said, Mr. Beers is probably better capable of talking about it,
because the money actually comes from his pot that he controls.
They don’t let me control any money, which is probably fortunate.

fe want to do the best job in antinarcotics, not only in Colombia
but in other countries, particularly Peru, Bolivia, Mexico, that we
can, with the limited resources that we have. We're not crying pov-
erty but, as you know, there is a fixed amount, and the question
becomes: Can we provide the kinds of resources or material that
you would like us to provide in one case without severely damaging
what we're doing elsewhere. And, I know there’s a political debate
on this and there are some who would argue we'll take the mone
from_somewhere else, Bosnia being often mentioned as a possibil-
ity. The fact of the matter is what we're trying to do is to come up
with responses to the concern that’s manifested in your legislation
in a way that meets those concerns for greater mobility, greater
lift, but at less cost, and if we still have time, I’d like Mr. Beers
to talk about this, if you’re interested in pursuing it.

Mr. SouDER. Mr. Chairman, if you will yield—if I may put one
other question in, and then I would like to hear the specific follow-
up on that, given the fact that it is something that passed Con-
gress. It wasn’t given as an option. And, the Bosnia question, is
there—because that money, in fact, came out which could have cov-
ered most, or at least a large percentage, of the helicopter question.

But, the followup is that, Mr. Ambassador, you said that there
are different types of things going on in Colombia, but I think it’s
clear that increasingly in these countries, whether it’s Shining
Path or whether it’s the FARC in the other dissension groups, that
drugs are becoming the financial source and becoming the driving
force, and President Zedillo also told us that the biggest threat to
democracy in Mexico is narco-terrorism, yet in certain rebellions in
Mexico, similar types of concerns.


5

counterparts on the border. I have been told by people who know
that there is not a single example of Mexican authorities tipping
off their United States counterparts about a shipment of drugs
headed toward the border.

In addition, the much-touted bilateral border task forces essen-
tially exist only on paper. Corruption, lack of funding, and insuffi-
cient concern for the security of U.S. agents have all prevented
these task forces from being fully operational. DEA agents still can-
not carry weapons for their own self-defense on the Mexican side
of the border.

Extradition—it’s a very important benchmark. I say, without fear
of contradiction, to date, not a single Mexican national wanted on
drug chi s has been extradited to the United States. Now it is
true that there have been efforts and extradition papers have been
signed, but not a single Mexican national wanted on drug charges
has to date been extradited.

Corruption remains endemic in the ranks of Mexican police, mili-
tary, and government; 870 Federal police officers were fired over
corruption charges in 1996; 700 of them have been rehired. Even
some fully vetted agents have been arrested for corruption. With
very few exceptions, United States drug agents do not have Mexi-
can counterparts that they have confidence in.

Enforcement—Mexico’s seizures of cocaine have increased, but
seizures of heroin, methamphetamine, and ephedrine are all down
sharply. Drug-related arrests declined from an already low 11,283
to 10,622. Less than half as many weapons were seized in 1997 as
in .

The final benchmark is money laundering. Mexico’s new money
laundering statutes have yet to be fully enforced, and have not re-
sulted in any successful prosecutions yet. Mexico has decided to
make violations of new banking regulations as noncriminal viola-
tions, which severely undercuts the deterrent factor.

Has Mexico cooperated in some areas? Of course. There are one
or two new police units which seem to have trusting relationships
with the DEA. New vetting procedures are beginning to be imple-
mented in the hiring of new police officers. Mexico and the United
States have agreed on a bilateral drug strategy, although it is a
vaguely worded document that will take years to evaluate whether
it’s been successful.

But let’s be honest with ourselves: The Statute asks the Presi-
dent to certify that the country has cooperated fully with the
United States. If Mexico has cooperated in 3 or 4 areas and not co-
operated in 10 or 12 others, can we really call that full cooperation?
T don’t believe so.

What should our response be? In my view, the correct response
of the administration would have been to decertify Mexico, but ex-
ercise the vital national interest waiver that would hold sanctions
in obeyance. Mexico is a friend, an ally, and I treasure that friend-
ship, and we do have significant interests in a strong, healthy rela-
tionship. But, frankly, and for me, the significant part of this is the
growth of the Mexican cartels, the inability to arrest the leaders,
the inability to break up those cartels, and the spread of corruption
northward up through our border, certainly into my State, Califor-
nia, and then flowing out into the rest of the United States.


137

Two major DEA investigations in 1997 demonstrated the impact that the
Carrillo-Fuentes cocaine distribution organization has on American citizens. The
first investigation, Operation RECIPROCITY, showed that just one Juarez-based
organized crime cell shipped over 30 tons of cocaine into American communities
and retumed over $100 million in profits to Mexico in less than two years.
Distribution of multi-ton quantities of cocaine, once dominated by the Cali-based
drug traffickers, is now controlled from Mexico in cities such as Chicago, Dallas,
Denver, Houston, Los Angeles, Phoenix, San Diego, San Francisco, and Seattle.

A second investigation, known as Operation LIMELIGHT, targeted a
Chicago-based transportation and distribution cell of the Carrillo-Fuentes
organization. This cel] was responsible for the monthly smuggling of at least one
and a half tons of cocaine from Mexico to the U.S. The investigation resulted in the
arrest of a Mexican distribution cell operating in New York which delivered
hundreds of kilograms of cocaine to Dominican and Colombian traffickers in the
New York area. The investigation culminated with the seizure of over 1,600
kilograms of cocaine and $1.3 million from the Mexican organization in New York.

‘These investigations revealed the manner in which new drug trafficking routes
are established by the Carrillo-Fuentes cells in the U.S. This trend is constantly
growing and changing. Despite increased intelligence efforts targeting the command
and control and identifying the leaders of the Carrillo-Fuentes organization, key
lieutenants have not been apprehended in Mexico. For example, Eduardo
Gonzalez-Quirarte has been identified as a key manager for the Carrillo-Fuentes
organization along the border. He is responsible for arranging shipments of cocaine
across the border and ensuring that money is transferred back into Mexico. He has
links to corrupt elements of the Mexican military and the law enforcement

community which makes him a significant leader in future Carrillo-Fuentes
operations.

Like their Colombian counterparts, the Carillo-Fuentes traffickers use
sophisticated technology and counter surveillance methods. The syndicate employs
state of the art communications devices to conduct business. We have recently
documented attempts by the Carrillo-Fuentes Organization to expand its operations
into the lucrative East Coast market that has traditionally been dominated by
traffickers from Colombia.


145

officers. Recent experience has shown that military officers, once exposed to the
extraordinary opportunities for corruption are equally susceptible as civilians.

LAW ENFORCEMENT COOPERATION WITH MEXICO

The Government of Mexico has made some progress by reconstituting its
drug law enforcement infrastructure since the disclosure of the scandalous drug
corruption of General Gutierrez-Rebollo last year. General Gutierrez-Rebollo was
convicted and sentenced in Mexico on March 3, 1998, to thirteen years and nine
months in jail for unauthorized use of firearms. There are currently four additional
criminal charges pending against Gutierrez-Rebollo. The Mexican Government
must also be credited with placing the law enforcement pressure on the Amado
Carrillo-Fuentes organization that led, at least in part, to the death of Amado
Carrillo-Fuentes, although his organization continues to operate, and a reign of
violence has been unleashed as his would-be successors battle for control of the
organization.

‘The Mexican Government has also made progress in several law
enforcement cases. Former Jalisco state Governor Flavio Romero de Velasco was
jailed on January 24, 1998 in connection with his ties to drug lords Rigoberto
Gaxiola Medina and Jorge Abrego Reyna Castro. Romero is accused of laundering
drug money, accepting bribes, and providing a safe haven for drug lords in his
western state between 1977 and 1983. In February 1998, DEA arrested Jorge
Alejandro Abrego Reyna Castro, in Phoenix. The Mexican government had
ordered Abrego Reyna’s arrest on criminal association and money laundering
charges in connection with the case of former Jalisco governor Flavio Romero de
Velasco, and requested his extradition. The case is pending, with the U.S.
government continuing to cooperate with Mexican counterparts. The case is a
good example of how law enforcement can cooperate when criminals are
identified.

The Mexican Government secured extradition to Mexico of Alfredo
Hodoyan Palacios and Emilio Valdez Mainero, to stand trial as paid killers for the
Tijuana cartel. Valdez was a top operative of the Arellano-Felix Organization.
Hodoyan is wanted in connection with the broad-daylight assassination of top
federal drug prosecutor Emesto Ibarra Santes in September 1996. The case was

14


151

. Implementation of the Multilateral Chemical Reporting Initiative in
which the U.S. provides notification of each shipment of List i
chemicals (ephedrine, pseudoephedrine and phenylpropanolamine are
on this list).

. Mexico has reduced the number of ports permissible for entry of
chemicals from 18 to 7, so that such shipments can be monitored more
easily.

. US. Customs is providing the Mexican government with an Ion Track
Itemize (particle detector) which can distinguish among 40 drugs and
explosives and can be programmed to detect chemicals.

. U.S. Customs has offered 6 day training seminars in Miami, Florida
and Laredo, Texas which will highlight methods for locating false
compartments in vehicles and freight container inspection techniques,
compromising legitimate cargo, altered and/or falsified official
documents, targeting inspections, analysis of seized material, and
southern border interdiction issues.

. Increased cooperation between U.S. and Mexican agencies with
respect to sharing criminal investigative information and case support.
This has resulted in the arrest of 3 Mexican methamphetamine
traffickers for which the U.S. issued 2 provisional arrest warrants to
Mexico, the indictment of 17 additional targets by the Mexican
government, and the imminent (summer 1998) expectation of
additional indictments of critical targets by the U.S. with the
subsequent issuance of provisional arrest warrants to Mexico.

. The continual vetting, by the U.S., of hand picked Mexican task force
members.

. DEA has selected a second diversion investigator to be transferred to
the U.S. Embassy in Mexico City in the near future.

The U.S. and Mexican Binational Working Group With Technical Expertise
in Chemical Control continues to meet to address issues and promote greater
cooperation.


44

frontation between the Director of DEA and the drug czar over the
contents of DEA’s analysis of the cooperation level of Mexico?

Mr. NELSON. No, sir, we did not address that in our work, and
we are not aware of the facts or specifics regarding that issue.

Senator SEssIONS. You didn’t ask for the report that DEA had
apparently prepared to review when you made your analysis?

Mr. KUSHNER. We have asked for and have seen a number of re-
ports from DEA. I’m not aware of the specific report that this sup-
posed confrontation was about.

Senator SEssIons. Mr. Chairman, it’s troubling to me that there
is a difference of opinion and that the drug czar would be muzzling
the law enforcement agency who’s actually involved in trying to es-
tablish cooperative relationships with Mexico.

I thank Mr. Nelson. I salute you for saying you do not believe
that Mexico was giving absolutely superlative cooperation in the
drug effort. That was, however, the statement of the drug czar not
too many weeks ago, and I do not believe it’s a justified statement.
And, I would agree with your analysis of that.

In conclusion, I would just say that it is a troubling situation. I'm
not sure that this cycle of year after year having these hearings to
fuss about this relationship is the best way to go. I think, perhaps,
we need, as Congressman Shays suggested, some additional analy-
sis on how to deal with the relationship with our neighbor to the
south. They are good neighbors in many ways. It just so happens
that we’ve not been able to work out a cooperative jaw enforcement
agreement that works in anything like what was contemplated
when we started this process a number of years ago.

I do believe if we could stop sending money out of this country
and stop buying drugs, we could break the cartels. And if every sin-
gle person in this country—recreational drug user—a term I de-
spise—every one of them who spends any money, buys any drug,
and expends funds for it, supports the drug cartel, in my opinion,
is a member of the drug cartel.

Thank you, Mr. Chairman.

Mr. HASTERT. Thank you, Mr. Senator. Senator Feinstein.

Senator FEINSTEIN. Thank you very much, Mr. Chairman.

Gentlemen, let me return to something you said and ask—I think
you mentioned that there’s only one judge that authorities believe
they can have confidence in to authorize a wire tap and that that
tap won’t be compromised. I’m not going to ask you your specific
source, but, do you believe that source, and is that a credible state-
ment in your professional view?

Mr. NELSON. In my view, we would have no reason to doubt the
credibility of the individual who made that statement to us.

Senator FEINSTEIN. Does that come from American law enforce-
ment or Mexican law enforcement?

Mr. NELSON. From American law enforcement.

Senator FEINSTEIN. Thank you very much.

Let me turn to the section on page 13 of your report, which, inci-
dently, I think tells it like it is, and I, for one, am very grateful
for that because I think there’s been a lot of covering up—that
somehow we're anti-Mexico if we don’t, you know, say things ina
lot of platitudes. And this report, I think, speaks to basic facts and
for that, I’m grateful.


4

Senator FEINSTEIN. Thank you very much, Mr. Chairman.

T want to thank you for holding this hearing. I think in light of
the fact that the Senate will, in all likelihood, be bringing up a res-
olution to disapprove the President’s decision to certify Mexico
within the next week, this hearing could not be more timely.

I want to say a word in support of what has been a much ma-
ligned certification process. I believe that it forces the executive
branch, Congress, and other nations at least once a year to face
squarely the overwhelming threat posed by drug trafficking and
the effort that’s required to confront it. Without. this process, these
discussions and this debate and this airing of issues and possible
solutions might never take place.

Is it the source of hard feelings? I suppose so. But we can’t shy
away from honest assessments of the effort that’s being made by
our allies and the recipients of our foreign aid. So I think we need.
make no apologies for the certification process.

As he did last year, the President has fully certified Mexico as
fully cooperating with the United States in the war on drugs. As
we all know, last year’s decision sparked an intense debate be-
tween the administration and what was, in all probability, a major-
ity of Congress who did not believe that Mexico had earned certifi-
cation.

I’ve looked long and hard at all the evidence available. I rep-
resent a State that the transportation of narcotics has a major ef-
fect upon, and I’ve come to the conclusion that, once again, the de-
cision to certify Mexico is incorrect. While we should give credit to
Mexico for limited progress it has made, there remain gaping holes
in its counternarcotics effort.

There has been insufficient progress or no progress at all on a
vast range of key elements of an effective counternarcotics pro-
gram. ether due to inability or lack of political will, these fail-
ures badly undermine the urgent effort to keep the source of drugs
off our streets. Ignoring these failures or pretending they’re out-
weighed by modest advances doesn’t make them go away.

Let me just touch on a number of key areas. First of all, the car-
tels: the leading Mexican cartels are in fact more powerful today
than they have ever been. The scope of their drug trafficking is

ater, stretching all the way to the East Coast of the United

tates and penetrating U.S. street gangs. We’re preparing some

charts to detail this on the floor of the Senate, when the subject
comes up, hopefully, next week.

There’s evidence that the cartels are investing in mainstream
shipping companies and infrastructure development in order to in-
crease their ability to smuggle drugs as trade increases across the
Southwest border due to NAFTA. Just yesterday, a San Diego
newspaper reported rumors that a cartel has actually bought a
bank. And Mexican authorities have arrested none of the major
cartel leaders in the last year.

Law enforcement cooperation. This is where the rubber hits the
road in counternarcotics cooperation, not in agreements reached at
the political level. Unfortunately, law enforcement cooperation from
Mexico has been severely lacking. Intelligence flows in only one di-
rection at the border, and that’s south, because there’s next to no
information provided by Mexican authorities to the United States


38

on an individual-type basis where you have faith and trust in the
person you are dealing with.

Mr. Mica. Let me ask you this: One of the things that concerns
me—and I have part of your report; I haven't seen it all, and I
didn’t have the benefit of being here. I had another meeting during
prior questioning. One of the things that concerns me is that no
major drug trafficker has been extradited to the United States. Is
that contained in your report?

Mr. KusHNER. I don’t think we make the statement no major
drug trafficker has been extradited to the States——

Mr. Mica. Is that correct? I’ve read conflicting reports.

Mr. KUSHNER. We say in our statement, sir, that no Mexican na-
tional has been extradited to the United States on drug charges.
We don’t define whether it’s a major—

Mr. Mica. Don’t we have 20 pending requests?

Pe KUSHNER. There are about 27 pending requests as far as we

OW.

Mr. Mica. They still have not extradited one Mexican national
who’s been involved in illegal narcotics trafficking violations?

Mr. KUSHNER. That is correct.

Mr. NELSON. The government has approved requests to extradite
four, but not one has actually been surrendered to the United

tates.

Mr. Mica. The other question that I have is—and I’m not sure,
again, how you address this—is the Government of Mexico’s will-
ingness to target major traffickers. For example, despite being

laced on the FBI’s 10 Most Wanted List, I guess they've got
Ramon Arellano-Felix who still remains at large. Did you note in
your report, that the Government of Mexico is still unwilling to tar-
get major traffickers?

Mr. KUSHNER. What we note in our statement, sir, is that no
major drug trafficking organization has been dismantled nor any
major disruptions of narcotics trafficking across the border has
taken Place. We do not specifically refer to Ramon Arellano-Felix.

Mr. Mica. The other point that I’m concerned about is the quan-
tity of drugs that’s flowing into the United States from Mexico. Can
you tell me, any of you, if your report addressed the quantity? Tell
me, first, heroin—what percentage of heroin coming into the
United States now is coming through or produced in Mexico?

Mr. KUSHNER. Let’s see, I’m not exactly sure of the specific num-
ber, but, again——

Mr. Mica. We were told 52 percent now. I guess that’s based on
seizures.

Mr. KUSHNER. Cocaine is between——

Mr. MIca. Let’s go for heroin——

Mr. KUSHNER. Cocaine is between 50 and 60 percent, based on
the information we've received.

Mr. Mica. Cocaine?

Mr. KusHNER. Cocaine.

Mr. Mica. Fifty to sixty percent? How about heroin?

Mr. KusHNER. I don’t have that information specifically handy at
this point in time, but we——

Mr. Mica. The problem we have is heroin was just about a 10
percent factor coming in from Mexico about 5 years ago. Now it’s


1) a) Towa, my state, is inoreasingly the target for

methamphetamine. This is increasingly the drug of
choice, and most of it is marketed by Mexican gangs.
In your view, where is most of this meth coming from?
Is it made in Mexico and smuggled into the United
states? Or do the Mexican criminal gangs import th
precursor chemicals for meth and then cook it in labs
Th thie country?

According to DEA, Mexican-based trafficking organizations
dominate the illicit production and sale of methamphetamine in
the United States. U.S. law enforcement authorities report that,

nt, traffickers appear to prefer to smuggle the precursor
s into the U.S. and process the methamphetamine in
clandestine laboratories here, rather than in Mexico. This is
possibly because the penalties for trafficking, if caught, are
much lower for smuggling chemicals than for smuggling
methamphetamine or amphetamine itself.

Mexican organizations operating laboratories in the U.S.
obtain their chemicals, especially tablet-form pseudoephedrine,
primarily from domestic chemical sources. Although there is
strong evidence that methamphetamine laboratories operating in
Mexico predominantly used ephedrine up through 1996, they began
to smuggle larger amounts of pseudoephedrine tablets from the
U.S. into Mexico in 1997 and 1998. Mexican methamphetamine
organizations do not appear to use any exclusive source to obtain
emicals.

b) = What are we doing with Mexico to close this trade down?
What actions has the United states taken or plans on
taking to control the international smuggling of the
precursor chemicals?

In order to eliminate chemical diversion and/or trade
between the U.S. and Mexico, the United states is encouraging
Mexico to be a committed participant, along with other nations,
in the international effort to prevent the illicit diversion of
Precursor chemicals and is assisting the Mexican Government in
establishing a meaningful and effective chemical control program.
Actions that have been taken to achieve these goals include:
the formation of the Bilateral Chemical Control Working Group;
training in the areas of precursor and essential chemicals
control, chemical identification, law, and international
treaties; the establishment of a secure, electronic intelligence-
sharing connection between DEA and the Mexican narcotics control
agency, CENDRO; the donation of an Ion Track Itemizer (particle
detector) by U.S. Customs; and the continued “vetting” of



17

Mexico also needs to develop a cadre of competent and trustworthy judges and
prosecutors that law enforcement organizations can rely on to effectively carry out the
provisions of the organized crime law. Several U.S. agencies are assisting Mexico in this
area.

Moni nin

In the May 1996 organized crime law, money laundering was made a criminal offense,
with penalties of up to 22 years in prison, The law requires banks and other financial
institutions to report transactions over $10,000 U.S. dollars and to obtain and retain
customer account information. Under the prior law, money laundering was a tax offense,
there were no reporting requirements, and violators were only subject to a fine.

However, U.S. and Mexican officiais are concemed that the new law does not cover so
called "structuring’--intentionally making transactions just below the $10,000 reporting
threshold. In addition, there is no reporting requirement on currency leaving the country.

Between May and December 1997, the Mexican government initiated 27 money
laundering cases. To date, one case has been prosecuted, and the remaining 26 cases
are still under investigation. In the one case that was prosecuted, the charges were
dismissed because a federal judge ruled that no link could be established between an
illegal activity and the money. The Mexican government has appealed the judge's
decision.

Chemical Controls

The May 1996 organized crime law also made trafficking in drug precursor and essential
chemicals a criminal offense. Although some chemicals that the U.N. recommends be
controlled were not included in the law, Mexico passed additional legislation in December
1997 that included all chemicals, thus bringing Mexico into full compliance with United

7


12

Since my last testimony on this subject, Mexico, with U.S. assistance, has taken steps to
improve its capacity to reduce the flow of illegal drugs into the United States. Among
other things, the Mexican goverment has taken action that could potentially lead to the
extradition of drug criminals to th8 United States and passed new laws on organized
crime, money laundering, and chemical control. It has also instituted reforms in law
enforcement agencies and expanded the role of the military in countemarcotics activities
to reduce corruption--the most significant impediment to successfully diminishing drug-
related activities. While Mexico's actions represent positive steps, it is too early to
determine their impact, and challenges to their full implementation remain. No Mexico
national has actually been surrendered to the United States on drug charges, new laws
are not fully implemented, and building competent judicial and law enforcement
institutions continues to be a major challenge.

Since fiscal year 1996, the Department of Defense (DOD) has provided the Mexican
military with $76 million worth of equipment, training, and spare parts.’ The Mexican
military has used this equipment to improve its countemarcotics efforts. However, due, in
Part, to inadequate planning and coordination within DOD, the assistance provided has
been of limited effectiveness and usefulness. For example, the UH-1H helicopters
provided to Mexico in 1996 and 1997 have limited utility for some countemarcotics
missions, and delays in delivering spare parts for these helicopters have resulted in
operational rates of between 35 and 54 percent. Similarly, the two ships that the U.S.
Navy sold to the Mexican military have remained inoperable, as they were not properly
outfitted when they were delivered. We believe that improved planning and coordination
could improve Mexico's countemarcotics effectiveness.

*Between fiscal years 1996 and 1997, the State Department provided about $11 million to
support Mexican law enforcement efforts and plans to provide another $5 million in fiscal
year 1998.


OVERSIGHT OF UNITED STATES/MEXICO
DRUG COOPERATION

WEDNESDAY, MARCH 18, 1998

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON Na-
TIONAL SECURITY, INTERNATIONAL AFFAIRS, AND CRIMI-
NAL JUSTICE, COMMITTEE ON GOVERNMENT REFORM
AND OVERSIGHT, JOINT WITH U.S. SENATE, CAUCUS ON
INTERNATIONAL NARCOTICS CONTROL,

Washington, DC.

The subcommittee and caucus met, pursuant to notice, at 2:10
Bm in room 2154, Rayburn House Office Building, Hon. J. Dennis

astert (chairman of the Subcommittee on National Security,
International Affiars, and Criminal Justice) and Hon. Charles E.
Grassley (chairman of the U.S. Senate Caucus on International
Narcotics Control) presiding.

Present: Representatives Hastert, Souder, Shays, Barr, Mica,
and Barrett, and Senators Sessions, Grassley, and Feinstein.

Subcommittee on National Security, International Affairs, and
Criminal Justice staff present: Robert B. Charles, staff director/
chief counsel; Sean Littlefield, professional staff member; Am:
Davenport, clerk; and Early Green and Jean Gosa, minority st:
assistants.

Senate Caucus on International Narcotics Control staff present:
William J. Olson, staff director.

Mr. HASTERT. The Oversight of the United States/Mexico drug
cooperation is about to begin, and this committee will come to
order.

This joint hearing before the Subcommittee on National Security,
International Affairs, and Criminal Justice and the Senate Caucus
of International Narcotics Control will come to order.

Good morning, everyone, and thank you for coming.

First, before I open with my opening statement, I want to recog-
nize Senator Feinstein for her opening. Senator, you’ve certainly
been a leader in this effort against illegal drugs, and serving as
your party’s participant here today, welcome. Please proceed.

[The prepared statement of Hon. J. Dennis Hastert follows:]

qa


130

nization, was kidnapped at gunpoint from his place of business in
McAllen, TX. His body, which showed evidence of torture, was
found a few days later in an open field in Mexico. The prosecution
in this case was deprived of its main witness, and, as a result, a
McAllen jury reached a verdict of acquittal for seven defendants in
this case.

On January 20, 1998, the Mexican press reported the death of
MFJP Commandant Hector Morela. He was gunned down inside
his vehicle in a parking lot in Juarez, Mexico. His vehicle and his
body were reportedly hit with a total of 51 rounds from a machine
gun. An article in a Mexican publication, “El Norte”, reported that
Morela had ties to drug traffickers. I think, for me, this is an excel-
lent example of the traffickers edict that if they cannot rule
through intimidation or bribery, they will rule through violence.
Few citizens are willing to cooperate when police commandants,
prosecutors, elected officials and members of the press are intimi-
dated, threatened, tortured, and even gunned down in broad day-
light.

The criminal drug organizations throughout the world have also
traditionally placed a major emphasis on the corruption of public
officials, and they’ve demonstrated an ability to corrupt officials
serving in high-level positions. I will try to give you a few examples
of this as it has been seen in Mexico.

First, Mexican Army Gen. Alfredo Navarro Lara was arrested by
Mexican authorities in March 1997, for making bribes on behalf of
the Arellano Felix organization. A colonel, Jose Luis Lopez-
Rubalcava, who had been director of the Federal judicial antidrug
police, was arrested in 1997, on charges in connection with 2¥2
tons of cocaine seized in Mexico in 1995. In December 1997, the ap-
pointment of Jesus Carrola Gutierrez as chief of Mexico City judi-
cial police was cut short when his ties to drug traffickers and
human rights violations became a public issue. And, to follow up
on_my previous comments about violence and intimidation, it’s sig-
nificant to note that Mario Garcia, the reporter who broke the story
about Carrola, was murdered in Mexico City on February 20, 1998.
He was shot eight times in the head. The Mexican press has re-
ported that he might have been killed as a result of his article
about Carrola’s ties to drug traffickers.

The Government of Mexico has made, in my estimation, some
substantial progress by reconstituting its drug law enforcement
structure. The Mexican Government also has to be credited, I
think, with placing law enforcement pressure on Amado Carrillo
Fuentes and at least contributing, in part, to his death. The Mexi-
can Government has also made progress in several law enforce-
ment corruption cases such as Gov. Flavio Romero that Mr. Beers
talked about. As a followup to that investigation, DEA, working
with Mexican authorities, arrested a Jorge Abrego in Phoenix, AZ.
This case is a good example of how law enforcement cooperation
can and should work.

There have been a number of positive changes in the Mexican
Government’s structures as it reconstitutes its institutions that are
charged with enforcing drug laws. For instance, the development of
the new drug law enforcement agency within the PGR, accom-
panied by attempts to professionalize that agency. The creation of


108

7

Another special unit that holds great promise is the Organized Crime Unit (OCU)
charged with developing compelling cases and prosecuting the major traffickers under the
new Mexican Organized Crime law. The OCU, led by Samuel Gonzalez Ruiz, has begun
some innovative and appropriately aggressive investigations leading to recent charges being
filed against the Arellano Felix Organization leadership and top lieutenants, The OCU has

worked closely with U.S. federal law enforcement agencies and prosecutors in southern

California against these and other targets. -

While our shorter term bilateral efforts are focused on specialized units, neither the
United States Government nor the Government of Mexico can lose sight of the longer term
requirement to implement broader effective law enforcement reforms. As part of the general
reorganization of the Mexican PGR, FEADS is to be staffed with 2,300 vetted agents. The
integrity and effectiveness of FEADS will be much greater when it is fully staffed with
vetted personnel. The U.S. and Mexico are working together to design a training program
aimed at modernizing the basic curriculum and instruction of the Mexican federal police
academy and federal prosecutors training center. This training plan and follow-on efforts
will be funded by the State Department.


67

Questions for the Record Submitted by
Senator Grassley to
7X: sistant retary
Joint Hea: of

Senate Caucus on International Narcotics Control and the
House Government Reform and Oversight Subcommittee on
National Security, International Affairs
and Criminal Justice
March 18, 1998

Question:

2.a. Does the United States have a clearly developed and

workable strategy for maritime control? If there is such a

strategy, please include a copy as part of your response.
wer:

The U.S. and Mexico have been working very closely over
the past three years to improve our mutual understanding of
the drug situation, exchange information and experiences,
and to develop a comprehensive joint strategy. The
Bi-National Drug Threat Assessment (attached) which was
released in May 1997, and the Bi-National Drug Strategy,
released in February 1998, highlight the increased maritime
drug trafficking threat and identify actions that the two

governments will undertake to combat that threat.

The strategy is, however, a very basic outline of our key
objectives and goals, and requires further work in terms of
specific activities and operations, resource requirements,

and measures of effectiveness. We hope to produce jointly a
more detailed operational plan later this year. Responsible

civilian and military personnel from both countries have met


22

because this data was not readily available, DOD plans to provide about $13 million
worth of countemarcotics assistance under section 1004 of the Defense Authorization Act
of 1989 to Mexico's military in fiscal year 1998.

Furthermore, the Mexican military used its own funds to purchase two Knox-class frigates
from the U.S. Navy through the Foreign Military Sales Program.‘ These two frigates were
valued at about $7 million and were delivered to Mexico in 1997.

While some of the equipment has helped improve Mexico's capabilities, some has been
of limited usefulness. Additionally, inadequate logistic support to the Mexican military has
hindered its efforts to reduce drug-related activities in Mexico. The following examples
illustrate some of the problems.

~The U.S. embassy has reported that the UH-1H helicopters provided to Mexico to
improve the interdiction capability of Mexican army units are of lttle utility above
5,000 feet, where significant drug-related activities, including opium poppy
cultivation, are occurring.

~The average operational rates for the UH-1H helicopters have remained relatively
low, averaging between 35 and 54 percent, because of inadequate logistics
support such as delays in the delivery of spare parts.

~The four C-26 aircraft were provided to Mexico without the capability to perform the
intended surveillance mission.° U.S. embassy officials stated that the Mexican

“The Arms Export Control Act authorizes the Defense Department to sell U.S. defense
articles and services to eligible countries. The countries may procure items using their
own funds, U.S. grant funds, or U.S. loan funds.

SThe C-26 aircraft is a military version of the Fairchild metro 10-passenger turboprop
aircraft used by the Air National Guard. It was provided by the National Security Council
to enhance the surveillance capability of the various drug-producing and -transit

12


141

Amezcua-connected groups are now operating in California, Texas, Georgia,
Oklahoma, lowa, Arkansas, and North Carolina.

The Amezcuas’ involvement in the U.S. methamphetamine trade was
exemplified by a recently concluded DEA multi-district wiretap investigation that
targeted a significant U.S. methamphetamine organization. The investigation,
known as Operation META, proved that the domestic organization had links to the
Amezcua-Contreras organization in Mexico. The Amezcua Organization supplied
the U.S. elements of the organization not only with methamphetamine and precursor
chemicals, but also with some of their cocaine. The Amezcuas’ precursor chemicals
came from Colima, Mexico. Associates of the Amezcua organization were also
involved in producing methamphetamine in Los Angeles, California.

This investigation resulted in the arrest of 101 defendants, seizure of 133
pounds of methamphetamine, dismantlement of three methamphetamine
laboratories, seizure of 90 gallons of methamphetamine solution (converts to 270 -
540 pounds of methamphetamine), 1,100 kilograms of cocaine and assets totaling
over $2.25 million. One of the seized laboratories was operating within 200 yards of
a day care center and private school; the other was located in an equestrian center in
Acton, California. These laboratories’ estimated production capabilities exceeded
300 pounds of methamphetamine. Showing the blatant disregard for public safety of
this organization, the individuals responsible for the production and manufacturing,
of the methamphetamine fled the area, but continued the potentially dangerous
cooking process.

IMPACT OF THE MEXICAN TRAFFICKING ORGANIZATIONS

The violence that is an essential part of these ruthless and powerful
organizations impacts innocent people who live in the United States. The
traffickers’ willingness to murder and intimidate witnesses and public officials has
allowed these organizations to devefop into the present day threat they are to the
citizens of the United States and Mexico. Drug traffickers continue their brazen
attacks against both U.S. and Mexican law enforcement officials and their sources of
information


8

contact group is encouraging. So are the improvements that we
have seen in coordinating maritime interdiction, improving over-
flight and refueling rights for U.S. aircraft.

e temporary extradition protocol, which was finalized during
President Zedillo’s visit to the United States in November, needs
to be approved by both the United States and Mexican Congresses.
If enacted, it will allow a fugitive facing charges or convicted in
Mexico to be temporarily extradited to the United States for trial.
Both countries must move forth on that.

These are all improvements, and they should not be lost in our
examination of cooperation in the drug effort, but we still have se-
rious problems with extradition requests. Pervasive corruption con-
tinues to interfere with law enforcement efforts.

The Government of Mexico needs to work harder to go after
known traffickers and to prosecute public corruption cases, and the
Bilateral Border Task Forces are not, by all indications, staffed and

erforming as planned. This appears partly due to the United
tates law enforcement agencies’ justifiable refusal to send their
agents over the border without sidearms, as the Mexican Govern-
ment would have them do.

I look forward to hearing from our witnesses today on these and
other issues. Again, Mr. Chairman, I thank you for being here.

Senator SESSIONS. Thank you, Mr. Barrett.

At this time I’d like to welcome our first witnesses, and I’ll intro-
duce them. Mr. Nelson is the Director of International Relations
and Trade Issues, U.S. General Accounting Office. I’'d also like to
recognize other senior GAO presenters for support here: Mr. Jess
Ford, Associate Director of GAO, and Mr. Ron Kushner, Assistant
Director of GAO.

It’s the rule of this committee that we swear all our witnesses.
Would you stand, please, and raise your right hands?

[Witnesses sworn.]

Senator SESSIONS. Thank you very much. Let the record show
the witnesses have answered in the affirmative.

Mr. Nelson, any remarks at this time?

STATEMENT OF BENJAMIN F. NELSON, DIRECTOR, INTER-
NATIONAL RELATIONS AND TRADE ISSUES, NATIONAL SECU-
RITY AND INTERNATIONAL AFFAIRS DIVISION, U.S. GEN-
ERAL ACCOUNTING OFFICE, ACCOMPANIED BY JESS T.
FORD, ASSOCIATE DIRECTOR, AND RON KUSHNER, ASSIST-
ANT DIRECTOR

Mr. NELSON. Mr. Chairman and members of the caucus and the
subcommittee, I’m pleased to be here today to discuss our work on
the United States and Mexico’s counternarcotics efforts. Our most
recent report on Mexico was issued in June 1996. My statement
today will highlight preliminary findings from our ongoing work to
update that report, at the request of Senator Grassley and this
subcommittee.

My testimony covers three broad topics: First, the nature of the
drug threat from Mexico and the results of efforts to address that
threat; second, the planning and coordination of United States
counternarcotics assistance to the Mexican military; and, third, the
need to establish performance measures to assess the effectiveness


139

from the interior of Mexico to the northern state of Sonora, which borders southem
Arizona. There is repeated information that indicates a variety of municipal, state,
and federal officials in Mexico are bribed to allow Caro-Quintero’s organization
access to airfields throughout the vast desert of Sonora.

Once the narcotics are stored in the northern zone of Sonora, the
organization utilizes horses and human backpackers to smuggle multi-ton
quantities per month over desolate sections of the international border, spanning
from San Luis Rio Colorado, Sonora and Yuma, Arizona in the west to Agua
Prieta, Sonora, and Douglas, Arizona in the East.

The July 31, 1997 arrest of one of Miguel’s immediate relatives, identified as
Alberto Caro-Quintero, further illustrated this organization’s capability to smuggle
ton quantities of cocaine. The investigation leading to Alberto's arrest in Cancun
revealed that he was planning to transport 1,500 kilograms of cocaine from the
Gulf coast of Mexico to Sonora for ultimate destination in the United States.

THE ARELLANO-FELIX ORGANIZATION. Based in Tijuana, this
organization is one of the most powerful, violent, and aggressive trafficking groups
in the world. More than any other major trafficking organization from Mexico, it
extends directly from law enforcement and judicial systems in Mexico, to street-
level individuals in the United States. The Arellano-Felix Organization is
responsible for the transportation, importation, and distribution of multi-ton
quantities of cocaine and marijuana, as well as large quantities of heroin and
methamphetamine in the United States.

The Arellano-Felix Organization has been responsible for the murder of
several Mexican law enforcement officials, journalists, and informants, and for
threats directed towards DEA/FBI Agents and a U.S. Prosecutor. They are an
extremely powerful and aggressive organization which utilizes San Diego and
Tijuana street gangs as assassins and enforcers. They have been known to utilize
sophisticated communications equipment, conduct counter-surveillance, and
maintain a well-equipped and well-trained security force.

The Arellano-Felix Organization has been traditionally thought to control
drug distribution in the western US. Interviews of defendant witnesses reveal that
the Arellano-Felix Organization is responsible for the importation and distribution of


27

Mexico from Colombia and other places, and you have traffic in the
Caribbean, the western Caribbean, it all comes from other places.
I don’t know how somebody gets a handle on that, if one agency
has one jurisdiction and another agency has another jurisdiction.

Mr. NELSON. That is a problem. At one time I believe there were
proposals to consolidate some of the responsibility, but those pro-
posals have not advanced.

Mr. Hastert. Thank you. I will turn this over to Mr. Barrett, the
gentleman from Wisconsin.

Mr. BaRRETT. Thank you, Mr. Chairman.

I think the bottom line, at least for me, is what kind of improve-
ment Mexico has made in the last year. I know that you’ve stated
that at the present time there’s no system in place to assess the
effectiveness of some of the actions that have been taken by the
Mexican and the United States Government. What’s your feeling?
Has Mexico made any improvement in the last year? Both in terms
of cooperation and in terms of effectiveness?

Mr. NELSON. I would say that if you look at the criteria that the
United States State Department has applied or stated that it will
use in assessing Mexico’s performance, clearly, they have made
some progress on some of the elements, some of the requirements
that we have placed on them. They have passed money laundering
laws. They have laws on the control of precursor chemicals, and
they can now go after—they have more weapons to go after the
drug criminals. There is a new wiretapping capability, the ability
to use paid informants. All of these are tools that can be used to
improve Mexico's capability.

It is not clear the extent to which those tools will be used to actu-
ally arrest and convict drug traffickers. To date, no major cartel
has been brought down, and the flow of drugs continues.

The units that have been set up to deal with the problems have
not made much progress in that regard. Those units are still ham-
pered by the age-old problem of lack of resources, one could say
maybe lack of commitment, but they have not been effective in ad-
dressing the problem. So while there have been some institutional
reforms, those reforms are yet to result in any major, on-the-
ground results.

Mr. BARRETT. I realize it may be difficult for you to answer, but
you think that the failure to have any significant improvements is
the result of the lack of resources or a lack of commitment?

Mr. NELSON. It is difficult to give you a summary answer. I be-
lieve that it’s some of both. Of course, you must be committed to
assure that you’re providing the resources, and without the re-
sources, it’s difficult to establish whether there’s a strong commit-
ment. In our work it is difficult to isolate which of those factors is
the cause of the limited success toward the counternarcotics effort.

Mr. BARRETT. One of the greatest embarrassments I felt last
year, shortly before the certification ruling came out, was the ar-
rest of Gen. Gutierrez Rebollo. At that time I felt it was an embar-
rassment, frankly, to both countries. What changes have taken
place that would safeguard against that type of incident or what
types of internal corruption devices have been instituted in Mexico
to make sure that does not reoccur?


164

ANSWER: The concept of vetting, as discussed in the preceding answer, is
not new-- in fact, vetted units have a proven track record. This has been
demonstrated by other agencies of the USG who have successfully developed
and utilized this technique. That said, however, it must be recognized that,
while definitely a step in the right direction, the vetting process is no
panacea. For example, while DEA works with vetted groups, we have no
control over the chain of command and eventual dissemination of our
information. For that reason, we are particularly circumspect in the sharing
of information with our Mexican counterparts. Also, the vetting process
must be systematically revalidated to maintain the integrity of the group.
Unless the units are trustworthy, informants who cooperate will not be safe,
undercover investigations will be compromised, and the intelligence sharing
process will not function in a secure and effective manner.

Although rebuilding of law enforcement institutions is underway in Mexico,
this is a difficult and lengthy process that may take decades. As discussed
in the previous answer, several programs have been initiated, but the
institution-building process is just beginning. There are now some
individuals and small units with whom we are able to interact on specific
cases. We limit this exchange, however, to ensure that the information
shared will not put our agents or sources of information at risk.

The ultimate test of any progress is measured by successfully apprehending
the major drug syndicate leadership and bringing them to justice.
Unfortunately, the GOM has made very little progress in this regard, as the
key organization heads continue to operate with relative impunity within
Mexico.

(5b): Some of the personnel hired for this new counternarcotics force
have previously been fired for corruption and unsuitability. Do you
believe adequate controls are in place to prevent and detect any future
corruption among those already vetted?

ANSWER: Under its new Public Security Act, the GOM has stated its
intention to set up a National Registry for Police, to track those individuals
who have been dismissed from police forces for corruption. If this registry
was fully operational, the rehiring of previously dismissed employees would
presumably decrease considerably.


96

Questions for the Record Submitted by

Senator Joseph Biden to
Assistant Secretary of State Jeffrey Davidow

Senate Caucus on International Narcotics Control and Government
Reform and Oversight Subcommittee
March 18, 1998

Question
1. President Zedillo is undoubtedly committed to combating the
drug trade. Is this commitment shared by the opposition,
including the leadership in the Mexican Congress?

Answer:

There is general agreement in Mexico that narcotics
trafficking and associated corruption present a serious threat to
the nation. Accordingly, the Mexican Congress passed the
Executive’s budget for counternarcotics programs last Fall.

While opposition leaders generally share the government's
commitment to combat this threat, some may differ on the details

of some specific counternarcotics programs.


138

Since Amado Carzillo-Fuentes’ death in July 1997, a violent power struggle
has ensued as rivals and associates sorted out business arrangements and turf in an
effort to control the lucrative Juarez smuggling corridor. Another major Mexican
trafficking organization, the Munoz-Talavera organization, is apparently
attempting to capitalize on the perceived weakened state of the Amado Carrillo-
Fuentes organization. The ensuing power struggle has resulted in over fifty drug-
related murders in the Juarez area since Amado Carrillo-Fuentes’ death.
Approximately 30 of these murders occurred in the last 4 months of 1997. The
victims of these murders have included four doctors, two Attorneys, and one
Federal Comandante. The violence associated with these murders was never more
apparent than during the gangland style machine-gun shooting at the Max Fin
Restaurant in August of 1997. This shooting resulted in the murders of six (6)
known drug traffickers and two innocent bystanders

On February 19, 1998, another murder occurred in Juarez as a result of this
ongoing turf battle. Attorney Jesus Emilio Lopez Rose was gunned down in a
vehicle while travelling on a Juarez city street. His vehicle was hit from the rear by
AK-47 automatic gunfire and .45 caliber rounds. Lopez died instantly in the
attack. His driver was wounded in the assault and fled the scene on foot.

THE CARO-QUINTERO ORGANIZATION: Miguel Caro-Quintero’s
organization is based in Sonora, Mexico and focuses its attention on trafficking
cocaine and marijuana. Miguel, along with two of his other brothers, Jorge and
Genaro, run the organization. Miguel was arrested in 1992, and the U.S. and
Mexican Governments cooperated in a prosecution, in Mexico. Unfortunately, that
effort was thwarted when Miguel was able to use a combination of threats and
bribes to have his charges dismissed by a federal judge in Hermosillo under
questionable circumstances. He has operated freely since that time.

The Caro-Quintero organization specializes primarily in the cultivation,
production, and distribution of marijuana, a major cash-crop for drug groups from
Mexico. Despite its specialization in marijuana cultivation and distribution, like
the other major drug organizations in Mexico, this group is polydrug in nature. It
also transports and distributes cocaine and methamphetamine.

Caro-Quintero’s drug-smuggling is based on his capability to coordinate air
operations utilizing small single-engine aircraft to transport marijuana and cocaine

7


89

Questions for the Record Submitted by
Senator Grassley to
Assis: of State Beers

Joint Hearing of

Senate Caucus on International Narcotics Control and the

House Government Reform and Oversight Subcommittee on
National Security, International Affairs
and Criminal Justice
March 18, 1998

Question
9.a. Suggestions have been made in the past to provide
assistance and training for Mexican maritime interdiction
efforts. It has been argued that Mexico could benefit from
training offered by the U.S. Customs Service and U.S. Coast
Guard in port inspections and vessel boarding practices.
Has there been a shift in US policy to address the increased
maritime threat?
Answer

U.S. agencies, including Customs and Coast Guard, have
provided assistance and training to Mexican authorities on
maritime interdiction, cargo inspection, and related matters
for several years, and this has increased in response to the
increased threat of maritime smuggling. This concern
figured in our formal approaches to Mexico over the past
several years, as well as informal exchanges between law
enforcement and military personnel. We have found the
Mexicans very interested in pursuing an expanded dialogue on
this subject.
9.b. Has there been a shift in resources or in policy in
Mexico to deal with the increased maritime threat?
Answer:

Mexican counter-drug policy and its operations have also
shifted to respond to the increasing maritime threat.

President Zedillo, for example, increased the role of the


9

and progress of United States and Mexican counternarcotics ef-
forts. Our final report on these matters will be issued shortly.

Almost 2 years ago, I testified before this subcommittee about
United States-Mexican counternarcotics issues. During that hear-
ing I stated that Mexico was the primary transit country for co-
caine entering the United States from South America as well as a
major source country for heroin, marijuana, and methamphet-
amine. Senators and Congressmen, that has not changed.

Today, Mexico continues to be the principal transit country for
cocaine entering the United States, and despite United States and
Mexican counternarcotics efforts, the flow of illegal drugs into the
United States has not diminished. No country poses a more imme-
diate narcotics threat to the United States than Mexico, according
to the United States State Department. The 2,000-mile United
States-Mexican border and the daunting volume of. legitimate
cross-border traffic provide near unlimited opportunities for smug-
gling illicit drugs, weapons, and proceeds from crime, and for es-

of fugitives.

ince my last testimony on this subject, Mexico, with United
States assistance, has taken steps to improve its capacity to reduce
the flow of illegal drugs into the United States. Among other
things, the Mexican Government has taken actions that could po-
tentially lead to the extradition of drug criminals to the United
States and has passed laws on organized crime, money laundering,
and chemical control. It has also instituted reforms in law enforce-
ment agencies and expanded the role of the military in counter-
narcotics activities to address corruption problems—the most sig-
nificant impediment to reducing drug-related activities.

While Mexico’s actions represent positive steps, it is too early to
determine their impact, and challenges to their full implementation
remain. It is worth noting that no Mexican national has actually
been surrendered to the United States on drug charges. New laws
are not yet fully implemented, and building competent judicial and
law enforcement institutions continues to be a major challenge.

Since fiscal year 1996, the Department of Defense has provided
the Mexican military with about $76 million worth of equipment,
training, and spare parts. The Mexican military has used this
equipment to improve its counternarcotics efforts. However, due in
part to inadequate planning and coordination within the Depart-
ment of Defense, the assistance provided has been of limited effec-
tiveness and usefulness.

Helicopters provided to Mexico in 1996 and 1997, for example,
have limited utility for some kinds of narcotics missions, and
delays in delivering spare parts for these helicopters have resulted
in operational rates of between 35 and 54 percent. Similarly, ships
that the United States Navy sold to Mexico for counternarcotics
missions have remained inoperable, as they were not properly out-
fitted when they were delivered to the Mexicans.

We believe that better planning and coordination would improve
Mexico’s counternarcotics effectiveness. Although the Mexican Gov-
ernment has agreed to a series of actions to improve its counter-
narcotics capacity, and the United States has begun to provide a
larger level of assistance, at the present time there is no system
in place to assess their effectiveness. Even though the United


95

Question
10.c. Do you believe the temporary extradition agreement
will be used as a’ route to avoid permanent extradition of
Mexican nationals to the United states?

Answer:

No. Under the Protocol, the temporary surrender
mechanism only applies in cases where Mexico (or the United
States) has already agreed to extradite the person. The
Protocol merely allows the extradition for purpose of
prosecution in the Requesting Party to occur before the
person has completed his or her sentence in the Requested

Party.


100

underpaid and undertrained workers and that they have few re-
sources, especially when measured against the enormity of the
problem, and certainly in comparison to the traffickers’ wealth.

The arrest of Gutierrez Rebollo was a dramatic moment in our
cooperation. It was a setback to know that the highest level of drug
law enforcement in Mexico was connected to one of the cartels. At
the same time, it was an immediate and decisive action taken by
President Zedillo to remove him, to have him arrested, and, there-
after, to completely reform the counternarcotics force within Mex-
ico. However, progress of the United States-Mexico law enforce-
ment cooperation was set back with this arrest and the subsequent
reorganization of Mexican counterdrug authorities. It took time.
There was a sense of loss of confidence that now has to be regained
and is being regained slowly.

I can state as I review our progress of the last year or so, area
by area, that on balance, I believe we have a reasonable basis for
guarded optimism. I'd like to review some of the areas of particular
concern for the Department of Justice.

Those special law enforcement task forces—because it’s not pos-
sible to reform Mexico’s law enforcement and judicial system over-
night, United States law enforcement has focused on developing
and working with special segmented trusted units that are better
trained, staffed by vetted officials, and were promised to be ade-
quately funded. The United States-Mexico border task forces that
several have spoken of, regrettably, have not realized their poten-
tial effectiveness yet. They have been trained, selected fully vetted
through a more rigorous screening procedure than was ever avail-
able in Mexico before, and one which the United States authorities
provided support and advice. They have been trained in Mexico and
then with additional training here in the United States.

Unfortunately, the issue of security for both the Mexican and
United States law enforcement officers remains paramount for both
countries. That’s not unfortunate; that’s a fact. But, it has not been
resolved for our officers, as yet, and has slowed our participation
in the bilateral task forces. We've tried to find alternative means
of working in the meantime. One way is that some of our resident
in-country agents are working with those bilateral task forces. This
is not optimum. This is not the design of those task forces, and we
hope the issues will be resolved so they can work as they were
originally designed.

Another unit, however, really has been remarkable, and that’s
the organized crime unit, charged with developing compelling cases
and prosecuting the major traffickers under the Mexican organized
crime law. They have proceeded on some innovative and appro-
priately aggressive investigations leading, for example, to recent
charges being filed against the Arellano Felix Organization, its
leadership, and its top lieutenants. The organized crime unit has
worked closely with U.S. Federal law enforcement agencies and
prosecutors in southern California against these and other targets.

Let me speak briefly about the new organized crime law, as men-
tioned before. There is an important rationale for the new orga-
nized crime law that provides plea bargaining, paid informants,
controlled deliveries, witness protection, and court authorized wire
taps for the first time in Mexico. Without these evidence-gathering


116

15
no provision for seizure of assets where the criminal suspect has died or absconded. The
Zedillo Administration introduced a new forfeiture bill in the Mexican Congress just before
the recess at the end of the year, which we understand would provide authority for

international asset forfeiture assistance in conformity with the 1988 Vienna Convention.

Corruption

‘As mentioned, in the past, effective cooperation with Mexico was frequently
undermined by pervasive corruption within the Mexican law enforcement community and by
Mexico's closed door assertions of its sovereign separateness. Although corruption remains
widespread and disabling within all Mexican government institutions, including the criminal
justice system, and Mexico's concems about sovereignty continue to be raised frequently in
cour bilateral discussions, the Government of Mexico during the Zedillo Administration has
taken concrete actions aimed at bolstering the integrity of its law enforcement and criminal
justice regimes, enhancing and modernizing its criminal laws, procedures, and investigative
capabilities, and improving Mexico's domestic and international initiatives in the
apprehension, prosecution, and extradition of criminals and fugitives. Bilateral cooperation
has consequently increased, but careful attention to the relationship must continue to ensure
that the momentum of change and the growth of trust are not lost. I have already mentioned
the arrest of General Gutierrez-Rebollo. In March, General Alfredo Navarra-Lara was also
arrested for bribing another army general who was head of the Tijuana Attorney General's

Office. Unfortunately, when public corruption had been detected and uncovered in recent


63

-11-

-- Important changes are underway in criminal justice reform,
but they will take time to institutionalize, particularly
anti-corruption measures and improvements in the personnel
systems (improved payscales, career ladders, ongoing
security screening, etc.).

-- The special investigative units, such as the Bilateral
Border Task Forces, need to be further developed.

-- The money laundering control regime is beginning to take
shape, with tougher laws and regulations now in place.
Mexico still needs to implement new suspicious and large
currency transaction reporting requirements in order to be
able to conduct effective investigations and, ultimately,
to be able to deter money laundering.

-- Passage of an Asset Forfeiture law could eventually
provide much-needed resources for improved training and
salaries and equipment, but Mexican units need funding and
support now, not after protracted court battles.

-- The new Protocol to the US/Mexican Bilateral Extradition
Treaty should help in bringing criminals charged in both
countries to justice in both, although it will not resolve
extradition backlogs. We must press ahead in all aspects
of this area of cooperation.

-- To be able to work closely and effectively with Mexican
law enforcement against transnational organized crime,
security provisions for U.S. personnel assigned to Mexico,
particularly to bilateral task forces, must improve.

Conclusion

I know that this hearing was called precisely because many
Members of Congress had doubts about Mexico’s counter-drug
performance and about the level of cooperation between U.S. and
Mexican authorities in this area. As I indicated at the
beginning of my presentation, however, we did not approach this
as an exercise in finding fault with our partner, nor was it an
exercise in covering up faults which both governments
acknowledge are there.

The President determined that the Government of Mexico
cooperated fully with the U.S. in counternarcotics and took
steps to comply with the goals and objectives stated in the
1988 UN Drug Convention, which are the bases of U.S.
certification.

Mexico faces very serious drug-related problems, including
significant production, transshipment and money laundering, as
well as drug-related corruption, but the Government of Mexico
has implemented a broad-based strategy to address these
problems. It has passed new legislation to control the
diversion of chemicals, released new regulations to strengthen
its money laundering control regime, increased cocaine seizures
and drug crop eradication, and initiated meaningful
institutional reforms in its criminal justice system.


69

Questions for the Record Submitted by

Senator Grassley to
Assistant Secretary Davidow and

Acting Assistant Secretary Beers

Joint Hearing of
Senate Caucus on International Narcotics Control and
Government. Oversight and Reform Subcommittee on National
Security, International Affairs and Criminal Justice
. March 18, 1998

Question:

2.b. I am also puzzled by the fact that we sold Mexico two Knox-
class frigates for maritime interdiction. How did we decide that
these aging, slow boats would help in a maritime strategy?

The Mexican decision to purchase two Knox-class frigates was
made in October 1995, and thus had been in process before our
joint counterdrug initiative. The Government of Mexico decided
to acquire these ships for their general maritime military
applications as part of a move to modernize Mexico’s general
maritime forces, not necessarily tied solely to drug
interdiction. It was recognized, however, that one role the

frigates could fulfill was narcotics interdiction.


14

for evaluating Mexico's countemarcotics cooperation as part of the 1998 certification
process: (1) reducing the flow of drugs into the United States from Mexico, (2) disrupting
and dismantling narco-trafficking organizations, (3) bringing fugitives to justice, (4) making
progress in criminal justice and anticorruption reform, (5) improving money laundering and
chemical diversion control, and (6) continuing improvement in cooperating with the United
States. In February 1998, the President certified Mexico as fully cooperating with the
United States.

PROGRESS OF MEXICO'S
COUNTERNARCOTICS EFFORTS

Since our 1996 report, Mexico has undertaken actions intended to enhance its
countemarcotics efforts and improve law enforcement and other capabilities. The results
of these actions are yet to be realized because many of them are (1) in the early stages
of implementation and (2) some are limited in scope. According to U.S. and Mexican
officials, it may take several years or more before the impact of these actions can be
determined. Some of the actions include (1) increasing countemarcotics cooperation with
the United States; (2) initiating efforts to extradite Mexican criminals to the United States;
(3) passing an organized crime law that enhanced the govemment's authority against
money laundering and illegal use and diversion of precursor and essential chemicals; and
(4) implementing measures aimed at reducing corruption, such as increasing the role of
Mexico's military forces in law enforcement activities.

US.-Mexico Countemarcotics Cooperation

With respect to U.S.-Mexico countemarcotics cooperation, since we reported on these
matters in 1996 additional activities have taken place. For example, the High-Level
Contact Group on Drug Control, comprised of senior officials from both govemments
responsible for drug control, has met several times. Results of these meetings include


158

The BTF’s, as originally envisioned, never really got started. They were
plagued with corruption of Mexican agents and comandantes suspected of,
and even arrested for, their ties to the criminal organizations they sought to
remove. The BTF’s never received the repeatedly promised funding from the
GOM, which left DEA to carry the full funding costs. DEA continued
funding the BTF’s through September 1997. Although slow in coming, it
appears that the GOM has begun to meet some of it’s financial obligations
to the BTF’s since the implementation of the new integrity procedures and
the work by the present leadership. For example, in 1998, the GOM has
budgeted $293,000 dollars to support the BTF’s; however, this is still well
short of the $2.5 million allocated by the DEA for fiscal year 1998 to support
training, equipment and investigative expenses for the BTF’s.

Due to the constant threat against law enforcement in Mexico, the USG has
sought to resolve the issues surrounding the safety of the “commuter agents”
while working in the BTF’s. Because this situation has not been resolved to
the satisfaction of the USG, the DEA, FBI, and the USCS have not allowed
their respective “commuter agents” into Mexico to work in the BTF’s.

In an effort to resolve the dilemma surrounding the commuter agents, the
GOM granted Consular Immunity to the twenty-two U.S.-based “commuter
agents” in order for them to participate with the BTF’s in Juarez, Monterrey,
and Tijuana. Although DEA recognizes the effort by the GOM, this level of
immunity only accredits DEA personnel, but does not adequately protect
them from personal, criminal or civil actions while performing their mission.
In another attempt to resolve this situation, the GOM authorized the increase
of six DEA agents and six FBI agents assigned as “in-country” agents. The
DEA Special Agents will support the BTF’s from the new DEA Resident
Offices in Tijuana and Juarez.

To counter the corruption problems historically associated with the BTF’s,
the GOM with significant U.S. support, has initiated an integrity assurance
program known as the “vetting process”. This “vetting process” consists of
the GOM law enforcement personnel undergoing a battery of background
checks, psychological testing, urinalysis, polygraph examination, financial
background investigation, and a home visit of the candidates.

The FEADS have stated that their plan calls for having a total of 3,000
employees who will be fully “vetted” under Mexico standards. The FEADS
anticipates having this accomplished by the end of their fiscal year which is


97

'd_ Su! ed_by
nator
Actin istant Secr ers

Joi . £
Senate Caucus on International Narcotics Control and the
House Government Reform and Oversight Subcommittee on
National Security, International Affairs
and Criminal Justice
March 18, 1998

Question:

1. One measure of the level of a commitment of a government
to the anti-narcotics battle is the level of financial
resources that a government is willing to expend. After a
Senate Foreign Relations Committee hearing last October, I
asked a question for the record about Mexico’s level of
budgetary commitment. The answer I received -- from General
McCaffrey’s office -- was that the Mexican government “does
not disclose the amount of funds expended for
counternarcotics efforts." The level of funding is not, of
course, the only measurement of a government’s commitment,
but it seems to.me to be an important one.

-- How do we know if Mexico is committing enough
budgetary resources?

-- Have we asked Mexico to make public its budget, as
our government does?

The Government of Mexico does not publish a breakdown of
its counter-drug budget, and individual agency drug budgets
do not pass through a centralized clearing point as we have
in the U.S. However, we have learned from a variety of
sources, including the Mexican Congress that law
enforcement, public safety, counternarcotics, and related
agencies and programs are among the only programs which have
received budget increases in the current tight fiscal

situation in Mexico.


19

First, the primary Mexican goverment agency involved in countemarcotics-related
activities has been reorganized. In 1996 the Attomey General's office, commonly called
the PGR, began a reorganization connected to a long-term effort to clean up and
professionalize federal law enforcement agencies. As part of this action, the State
Department reported that over 1,250 officials were dismissed for incompetence and/or
corruption. U.S. and Mexican officials stated that about 200 of these officials have
subsequently been rehired by the PGR because Mexico's labor laws prevented the PGR
from removing some of these personnel.

Further, in February 1997, the Mexican military arrested General Jesus Gutierrez Rebollo,
the head of the National institute for Combat Against Drugs~the Mexican equivalent of
the Drug Enforcement Administration--for corruption. In April 1997, the Attomey General
dissolved the institute and dismissed a number of its employees. A new organization,
known as the Special Prosecutor for Crimes Against Health, was established to replace
the Institute. This organization includes two special units: *

~The Organized Crime Unit, with an authorized strength of 300, was established
under the organized crime law to conduct investigations and prosecutions aimed at
criminal organizations, including drug trafficking activities.

+ The Bilateral Task Forces, with an authorized strength of 70, are responsible for
investigating and dismantling the most significant drug-trafficking organizations
along the U.S.-Mexican border.

Finally, in 1997, the Attorney General instituted a screening process that is supposed to
cover all PGR personnel including those who work for the special units. This process
consists of personal background and financial checks, medical and psychological
screening, urinalysis, and regular polygraph testing. However, U.S. embassy officials

®These units were carried over from the Institute upon its dissolution.
9


48

Testimony of Assistant Secretary of State
Jeffrey Davidow
Senate Caucus on International Narcotics Control
March 18, 1998

Senator Grassley and members of the Senate
International Narcotics Control Caucus: I am pleased to
submit this testimony for the record.

Bilateral counternarcotics cooperation between the
United States and Mexico has improved slowly but steadily
over the past several years. It is anchored by a network of
institutional arrangements that keep it on track and provide
mechanisms for resolving issues that inevitably arise
between two nations in such a complex and sensitive area.
These mechanisms also provide the means to continually work
on improving the effectiveness of bilateral cooperation.

The recognition by both governments that drug trafficking is
a shared threat that must be combatted jointly provides the
basis for overcoming controversies in the counternarcotics
and law enforcement relationship and moving forward to
strengthen it in meeting common goals.

Our good cooperation starts at the top.
Counternarcotics cooperation has been prominent on the
agenda between Presidents Clinton and Zedillo in meetings
last year in Mexico City and Washington. In the 1997 Mexico
City meeting, the two Presidents issued a Declaration of
Alliance against drugs which has formed the basis for an
intensive elaboration of cooperative planning during the
past year. We issued the Binational Drug Threat Assessment
in May 1997 and the Binational Drug Strategy in February
1998. Currently we are following up these efforts by
developing specific performance measures of effectiveness
with which to judge our progress in the fight against drugs.

In addition te this cooperative approach at the
presidential level, Secretary of State Albright and Attorney
General Reno have excellent working relationships with their
Mexican counterparts and are in frequent direct contact with
them about managing and improving our bilateral
counternarcotics and law enforcement cooperation.

Regular high-level meetings provide the framework of
established mechanisms for our bilateral cooperation.
Periodic meetings of the High Level Contact Group on Drug
Control are one such example. In addition, regular meetings
throughout the year of the Senior Law Enforcement Plenary
bring together senior law enforcement officials from the


re e Bes

Joint aril
Senate Caucus on International Narcotics Control and the
House Government Reform and Oversight Subcommittee on
National Security, International Affairs
and Criminal Justice
March 18, 1998

Question

10.a. Leaders of major Mexican drug trafficking responsible
for the control of the flow of heroin, cocaine, and
methamphetamine to the United States have been identified.
In fact, U.S. law enforcement agencies have investigated and
indicted in the U.S. just about all of these leaders of drug
organizations. The Justice Department has filed provisional
arrest warrants for the most significant of these
traffickers in Mexico. Even though some have been arrested,
others remain at large and none have been extradited to the
U.S. Do you see this delay as intentional, or just a matter
of time?

We consider the Mexican government’s agreement to
extradite a number of its citizens, including five fugitives
accused of drug-related crimes, a measurable success. These
individuals, as well as five Mexican nationals accused of

other criminal offenses, have filed legal challenges to the

Mexican order or face other legal actions in Mexico.

We believe the Government of Mexico is serious about
combatting drug trafficking and organized crime but faces
numerous challenges in locating, arresting, prosecuting and,
where relevant, extraditing these individuals abroad.
Mexico, like many countries, has constitutional restraints
on the extradition of nationals. Mexico’s legal system also

offers a strong “habeas corpus" provision (called an


31

modifying each one of them costs at least $3 million. I mean, you’d
think we'd at least provide equipment that’s fully operational at
the time it’s provided, and not expect a government that’s having
a tough time with all of this to have to modify it.

Then you go to say the two Knox-class frigates, when they were
delivered in 1997, lacked the equipment needed to ensure the safe-
ty of the crew; thus, rendering the ships inoperable. The United
States Navy estimated it would cost the Mexican Navy about
$400,000 to procure this equipment, and then it will take at least
2 years before the ships will be operational. DOD began providing
the Mexican Navy with about $1.3 million worth of training to 110
personnel related to the two Knox-class frigates.

Now this raises a question that I'd like to ask you gentlemen.
We've got to realize that drugs in America are really the greatest
national security threat we have at the present time. Therefore, it
would seem to me that to deliver equipment that is fully oper-
ational, able to be put in the field, and be effective is an important
part of any delivery system. Would you agree with that?

Mr. NELSON. Absolutely.

Senator FEINSTEIN. I don’t mean to put you on the spot, Mr. Nel-
son.

Mr. NELSON. Absolutely. Yes, it’s clear that there’s a need for
better coordination with the U.S. Government on the provision of
assistance. But one would think that if we’re serious about the ef-
forts, then steps would have been taken by someone to make sure
that the equipment provided is operable and that it is suitable for
the mission.

Senator FEINSTEIN. I agree with that 100 percent. I’m surprised,
disappointed, and somewhat shocked that our Defense Department
wouldn’t take this thing a little more seriously.

Let me turn, if I might, to your section which is something I have
been getting more and more interested in, and that’s money laun-
dering. You state, “However, the United States and Mexican offi-
cials are concerned that the new law does not cover so-called struc-
turing, intentionally making transactions just below $10,000 re-
porting threshold. In addition, there is no reporting requirement on
currency leaving the country.”

Could you go on a little bit and tell us more about what’s being
done with this structuring and why it’s being done. Second, if you
have any suggestions as to a reporting requirement that might be
effective, what would that be?

Mr. NELSON. Certainly, laundering the profits from drugs is very
important to get them into the commercial banking and money
channels. The money laundering statute is a new tool, but our evi-
dence suggests that only one person has been brought to trial
under that money laundering statute, and the judge threw that one
out.

The structuring that we referred to is a practice that law enforce-
ment people expressed concern to GAO about, and that is the in-
tentional use of transactions that are just below the $10,000 report-
ing requirement, these $9,998, $9,995 type of financial transactions
that do not have to be reported, as well as the lack of any reporting
requirement on money leaving the country, which is——


166

Mr. Hastert. Thank you.

Mr. Davidow, would you say the No. 1 goal in the State Depart-
ment is drugs, or is it trade? What do you concentrate on in Mexico

‘ity?

Mr. Davipow. Mr. Chairman, we have a wide relationship with
Mexico. It seems to me that, in terms of the activities of the Em-
bassy in Mexico City, there are probably more people involved in
dealing on the issue of narcotics and cooperation with the Mexican
Government than on any other issue. Trade, obviously, is impor-
tant as well, as are other issues.

Mr. BEERS. I would add to that, sir. If you look across the range
of government agencies and activities in their relationship with
Mexico, that is echoed more broadly, which is not to say that trade
isn’t an important issue.

Mr. Hastert. I’m just perplexed. I have been working on this
now, not as long as you have, but for 3 or 4 years and this has been
one of my major emphases.

We have crossing our border between 200 and 300 metric tons
of cocaine—I’m only talking about cocaine here—a year, coming
across our borders, just rolling across. In trucks. In rail cars. On
the backs of human mules. It’s pretty frustrating, and it ends up
on our street corners, and you've heard this story before. It’s our
kids that end up dying. And, it’s our money that ends up going to
Mexico, or to Colombia, or to Bahamas, or someplace.

What do we have to do different? I mean, what do we have to
do different? How can we reorder—it’s not working. Especially with
Mexico, especially a frustration.

Mr. Davipow. It is frustrating. And, in the previous panel, there
was a question asked and answered, which I thought was very in-
teresting, and the term “wide-open border” was used. I don’t be-
lieve the border is wide open nor should it be wide open. There is
a greater flow of trade than there ever has been before. There are
lower tariffs. There’s the whole NAFTA mechanism.

What we have to do, it seems to me, is to make sure that the
vigilance on the border, in particular by U.S. Customs Service,
which is trying to do a great job given the increase in flow, has to
be supportive of one of the things that there’s a great deal of con-
versation about right now, is giving Customs greater tools, more
manpower, bigger and better machines.

Mr. HASTERT. X-ray machines.

Mr. Davipow. X-ray machines. I think it is a question of re-
sources, in part, and organization. But, it does seem to me that this
is something that is attracting—and legitimately so—sufficient at-
tention.

Mr. BEERS. But, Congressman, you're also correct in your frus-
tration, and I think that as we in the administration look at this
issue, it is a defense in-depth, or a layered effort that we have un-
derway here, which starts in the source countries and goes through
the transit zone and the transit countries to the borders of the
Qnited States, and then at the borders and within the United

tates.

It isn’t any one particular area, and I don’t mean to diminish the
importance of Mexico in this process. It isn’t any one particular
area that is absolutely critical or essential. They all are, and it’s


131

the organized crime unit that’s already been referred to—these are
positive steps, I believe.

There is still, however, a long way to go. In the meantime, most
of command and control figures in the major organizations in Mex-
ico continue to operate. The reconstitution of their law enforcement
institutions is a difficult and lengthy process. It may take decades,
but there are now some individuals, small organizations, with
whom we can work on a limited basis.

The ultimate test—just to conclude very quickly—the ultimate
test of our success will come, I think, when we are able to bring
to justice these drug lords that control their empires of crime. They
must be arrested, tried, convicted, and sentenced either in their
own countries or extradited to the United States to face American
justice.

Thank you, Mr. Chairman, and I'll try to answer any questions
you may have.

[The prepared statement of Mr. Marshall follows:]


15

- a U.S.-Mexico Binational Drug Threat Assessment was issued in May 1997, which
addressed illegal drug demand and production, drug trafficking, money laundering,
and other drug-related issues;

” a joint U.S.-Mexico Declaration was issued in May 1997 that includes pledges from
both governments to work toward reducing illegal drug demand, production, and
distribution; improving interdiction capacity; and controlling essential and precursor
chemicals, among other issues; and

- on February 6, 1998, issuance of a joint U.S.-Mexico binational drug strategy.

Executive and Legislative Actions

Mexican executive and legislative actions include instituting extradition efforts, passing
various laws to address illegal drug-related activities, and passing several anticorruption

measures.

Extradition

The United States and Mexico have had a mutual extradition treaty since 1980. Although
no Mexican national has ever been surrendered to the United States on drug-related
charges, since 1996, Mexico has approved the extradition of 4 of 27 Mexican nationals
charged with drug-related offenses. Two are currently serving criminal sentences in
Mexico, and two are appealing their convictions in Mexico, The remaining drug-related
extradition requests include 5 persons currently under prosecution in Mexico and 14
persons stil at large. It is not clear whether any Mexican national will be surrendered on
such charges before the end of 1998.

Another example of increased cooperation is the November 1997 signing of a joint United
States and Mexico “temporary extradition protocol.” This protocol allows suspected

5


59

-7-

-- Arturo Everardo Paez-Martinez, a prominent member of the
Tijuana Cartel (U.S. extradition request pending) ;

-- Rodrigo Villegas Bon, an assassin for the Tijuana Cartel
(accused of involvement in the May 1993 killing of
Cardinal Juan Jesus Posadas Ocampo at the Guadalajara
airport) ;

In past years, many of Mexico’s drug-related arrests
failed to develop into successful prosecutions, and trafficker
assets were rarely forfeited. In 1997, the GOM improved its
conviction rate, and sustained more convictions on appeal, than
in previous years; fewer traffickers were able to secure their
releases by Mexican courts.

For example, Hector ("El Guero") Palma Salazar, who
regularly succeeded in getting charges against him dismissed
since his 1995 arrest, was convicted on appeal on multiple
counts and was sentenced to 19 and a half years in prison.
Other major drug traffickers tried and sentenced in 1997 were:
Joaquin ("El Chapo") Guzman Loera (21 years in prison); Arturo
("El Texas") Herrera Martinez (40 years); Miguel Angel Felix
Gallardo (40 years); Raul Valladares del Angel (29 years), Jose
Luis ("El Cabezon") Sosa Mayorga (19 years); and Gaston ("El
Gas") Ayala Beltran (9 years). However, there were also some
setbacks, including Humberto Garcia Abrego’s release and Rafael
Caro Quintero’s successful overturn of part of his drug
conviction, although he remains subject to several decades of
incarceration for others.

The number of confirmed instances of major drug
traffickers who have continued to be able to exercise effective
control of the activities of their organizations, while
incarcerated in Mexican federal maximum security facilities, is
very small.

Corruption

The Government of Mexico, particularly at the most senior
levels, recognizes that justice sector and anti-corruption
reforms are critical not only to U.S.-Mexican relations, but to
Mexico’s national security and public safety, and to gaining
the trust of the Mexican people.

As Mexico's institutional reforms and investigations into
alleged abuses of authority have progressed, there has been an
increase in public revelations about corruption and corrupt
practices. The arrest in early 1997 of the head of the
nation’s drug law enforcement agency, General Jesus Gutierrez
Rebollo, and other current and former government officials,
including former governor of Jalisco, Flavio Romero de Velasco,
raised the level of awareness of the extent of the problem of
narco-influence, and served as a catalyst for further reforms.


128

Foreign Assets Control (OFAC). In researching new potential
targets in Colombia, the Department has found that (1) the
Government does not possess either the same volume or quality of
information that can be attributed to open sources vis-a-vis
other traffickers to meet the standard of “reasonable cause to
believe" that they "play a significant role in international
narcotics trafficking,” and “constitute an unusual and
extraordinary threat to the national security, foreign policy,
and economy of the United States;* (2) not all traffickers invest
their money in the same manner as the leaders of the Cali cartel,
so that the Department is unable, in many cases, to identify any
holdings (and particularly any holdings that have international
business and trade connections), and therefore, the impact of a
designation would be minimal; (3) much information that the
Department posse: is either unverifiable or derived from
sensitive or classified sources; (4) using some of the
information that is available could jeopardize ongoing criminal
investigations or asset forfeiture actions in the United states;
and (5) many other countries do not have the centralized
information regarding businesses and their owners that Colombia
has, enabling the program to gather information on which to base
designations and to continue to track designated companies as
they change names and straw owners.

The Department is aware that the use of IEEPA sanctions as a
tool against the Cali Cartel has been very effective. We are
continuously working with other law enforcement agencies,
the intelligence community, and OFAC to expand the SDNT program.

1


112

MW
extraditable in 1995, are now pending appeals or the resolution of their Mexican charges.
Five of those found extraditable in 1997, and the one found extraditable in 1995, are sought
in the U.S. on drug trafficking charges. Two other significant Mexican traffickers,
Florentino Blanco-Meza and Arturo Paez-Martinez, have been arrested for purposes of
extradition to the United States. With respect to the rendition of persons from the United
States to Mexico, during 1997, a total of 23 persons were surrendered, 21 by means of
extradition and two by means of deportation. Two of the 23 persons surrendered were U.S.
citizens, and 21 were Mexican nationals. Three of the 21 persons extradited by the United

States to Mexico were extradited for drug-related offenses.

So far in 1998, Mexico has extradited three fugitives to the United States: a U.S.
citizen on drug charges, a Spanish citizen for bank fraud, and a Mexican national for crimes
of sexual assault on minors. They also expelled to the United States a U.S. citizen on bank
(armored car) larceny charges. The U.S. has extradited three to Mexico to date in 1998 ~

two Mexicans and one U.S. citizen -- all on murder charges.

In November 1997, the U.S. and Mexico negotiated a protocol to their bilateral
extradition treaty to authorize the temporary surrender of persons for trial purposes and their
retum after prosecution to complete the process or sentence against them in the country of
their initial arrest. The protocol, although signed, has not yet been ratified.

‘The Mutual Legal Assistance Treaty with Mexico was used with increasing frequency


114

‘An area that we are just beginning to confront in the context of our relationships with
Mexico is the diversion of pharmaceutical preparations from Mexico for illicit distribution in
the United States. The most troublesome drugs diverted from Mexico to the U.S. are
anabolic steroids, benzodiazepines (including Valium and Rohypnol, which has been
associated with “date rape”) and methylphenidate (Ritalin). We have initiated bilateral

discussions at the working level to explore possible solutions to this significant problem.

Money Laundering,

Mexico remains a money laundering site of choice for the major international
trafficking organizations ~- especially for the initial placement of drug proceeds into a
financial system. Once the funds are entered into a financial system, they are much harder
to detect and may be commingled and transferred, often by wire, back into the United States,
to the source country, often Colombia, or elsewhere throughout the world. In March 1997,
the Mexican Hacienda issued regulations establishing legal requirements for financial
institutions concerning customer identification. Other regulations concerning the recording
and reporting of large value currency transactions and suspicious transactions were
promulgated in January, will become effective in April, and will be monitored for
compliance some months later in 1998. While the addition-of money laundering regulations

is welcome, there have been disappointingly few investigations and prosecutions for


Congress of the United States Soe

‘Wouse of Representatives Sirona
‘COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT =
2187 Ravaunn House Orne Buna a
Wastiwaron, OC 20515-8143 rane
OPENING STATEMENT OF

CONGRESSMAN J. DENNIS HASTERT
“Oversight of US/Mexico Drug Cooperation”
March 18, 1998

Drug abuse in America, especially among our youth, is at tragic
levels; and international drug trafficking remains a growing national
security threat. Between 14 and 20 thousand Americans loose their lives
each year to drugs and drug crime. Despite a healthy and vital relationship
with our ally to the South, two-thirds of the cocaine on America’s streets
crosses our Southwest border. In addition, a great deal of the “black tar”
heroin, methamphetamine, and marijuana that is consumed in the U.S.
comes into the U.S. from Mexico,

Drugs undermine our communities, spread and finance gang violence,
and destroy young lives. These are innocent, often unsuspecting young kids
— kids who look up to us for leadership. They are the ones at the center of
this whole issue — and we owe them our leadership.


91

the DoD-hosted interdiction seminar in March. Both
governments recognize that maritime trafficking is a
difficult and challenging problem, one that does not have

easy solutions, but we are making progress.

In the year ahead, we anticipate that there will be
further policy and operational-level exchanges aimed at
outlining the scope of this new area of cooperation. With
increasing attention, information exchanges, and operational
activities, we expect that there will be more maritime drug

seizures in the months ahead.

The Bi-National Drug Strategy highlights the maritime
smuggling issue, committing the two nations to improve
information exchange and coordination of interdiction and to
identify the mechanisms for improving flexibility and
coverage of interdiction operations.

ues: :

9.d. Despite some recent cooperative efforts, there remains
one major problem: a lack of a comprehensive maritime
agreement. Specifically, what is missing that a
comprehensive agreement would encompass? How does the lack
of a comprehensive maritime agreement affect US-Mexican law
enforcement efforts?

Answer:

U.S./Mexico maritime cooperation is still at a fairly
basic, exploratory stage. The only formal arrangement in
place at present is a maritime communications agreement. We
have not sought a formal maritime cooperation agreement with

Mexico and do not believe that it would be appropriate at

this time. The comprehensive maritime agreements we have in


36

Mr. Nelson, I was reading over your testimony here, and it seems
to comport with m; view of the situation down there; that corrup-
tion in Mexico and law enforcement matters, including drug mat-
ters, is ‘probably, at best pervasive. Would you agree with that?

Mr. NELSON. Absolutely.

Mr. Barr. Although much was made last year of our President

etting together with their President and patting each other on the
Back, not much has happened since then. It’s my understanding,
for example—and I see that your testimony confirms this—there
still has not been a single Mexican national ever surrendered to
the United States on drug-related charges, correct?

Mr. NELSON. That’s correct.

Mr. Barr. I’m also concerned with the money laundering, and I
believe the Senator from California was asking about money laun-
dering also. Much was made a couple of years ago about Mexico en-
acting 2 money laundering statute. It seems to lack teeth, to put
it mildly.

I see in your testimony here that, between May and December
of last year, the Mexican Government initiated 27 money launder-
ing cases. To date, only one has been prosecuted, and that one was
thrown out; the charges were dismissed. In the area of money laun-
dering, they apparently, despite all the publicity given to the fact
on both sides of the border about their money laundering statute,
it apparently doesn’t seem to have had much effect either.

I also see—and this is something I had not been aware of, and
I don’t know whether you touched on this—that the task forces
that were to be implemented to combine law enforcement units, to
gather intelligence, and attack the cartels, were never really imple-
mented because of corruption and lack of security. That’s according
to testimony or statements I see quoted here by DEA Adminis-
trator, Mr. Constantine.

Is there anything in your view that one could point to that would
justify the congratulatory statements that we see coming out of
this administration toward the Mexican drug enforcement effort?

Mr. NELSON. Well, one of the items that we have focused on for
years is the cooperation and having a binational strategy for ad-
dressing the counternarcotics problem. When you also look at the
criteria that the State Department prescribed for Mexico as con-
nected with the certification, they've made some progress on two or
three of the requirements, and on others there’s been little
progress.

Mr. Barr. Were you able to identify those areas where there has
been significant progress? Or maybe it isn’t significant?

Mr. NEtson. I have no bases for describing it as significant or
insignificant.

Mr. Barr. Nor do I.

Mr. NELSON. Yes.

Mr. Barr. In what areas have there been progress, in your view?
Is there any way of quantifying it?

Mr. KUSHNER. There has been some progress made legally, or
legislation being passed, and I'll refer speci ically to the organized
crime law which has given the Attorney General's office more tools
to conduct counternarcotics-type activities. There are still proce-
dures and guidelines that have to be developed, referring specifi-


156

Department of State. There are also a number of other issues besides law
enforcement which ultimately become part of the certification decision
making process. | believe the current role of law enforcement in the
certification process is acceptable. Any additional information on the
certification process and the Administrations position may better be
addressed through the Department of Justice or the Department of State.

QUESTION 3a: The Bilateral Border Task Forces represented at one
time perhaps the most promising effort to enhance cooperation on the
operational front. However, there is much disagreement over the status
of the forces. Last year, the attorney general of Mexico and I discussed
these task forces. He informed me that Mexico was committed to fully
supporting-- both financially and logistically-- these border task forces.
I know President Zedillo has made similar public comments. Do you feel
the Mexican Government is supporting the Border Task Forces to the
fullest of its capability? Where is support lacking?

ANSWER: In spite of recent public statements made by the Government of
Mexico (GOM) that the Task Forces are in full operation, a recent DEA field
survey indicates a different view of the facts. For example, assistance
provided by the GOM is divided into three areas of resources: manpower,
equipment, and funding. Of the nine Task Forces, five are substantially
understaffed with PGR agent personnel. These task forces are presently
staffed with only 48 vetted, U.S.-trained personnel. This is well short of the
GOM’s stated goal of 84 agents. GOM-provided equipment is limited to one
vehicle per two to three agents and mobile radios for some, not all, of the
Task Forces. In fact, the San Luis Rio Colorado unit, which is composed of
five agents, operates on two mobile radios-- both of which have been
personally provided by the chief of this unit. Although intelligence support
is provided to the Task Forces by CENDRO units, DEA is providing all of
the technical equipment utilized by the Task Forces at this time. The GOM
currently budgets approximately $293,000 USD per year to support all nine
Task Forces. In addition to this funding, DEA has budgeted approximately
$2.5 million USD this year for Mexico’s vetted units.

Investigative targets of the Task Forces are major drug-trafficking
organizations who have significant influence in the trafficking of narcotics
from Mexico to the United States. A DEA assessment showed that, in most
of the task forces, the major trafficking organizations originally targeted have
not been disrupted by the investigative activities of the task forces. For


123

5) a) ‘Since the ar of General Gutierres Rebollo, Mexico
has started afresh in re-organising a counternarcotics
institution, With a new, more thorough vetting process
and other structural changes, they hope to create a
corruption-free force to fight narcotics traffickers
and organized crime in Mexico. Do you believe the
vetting process that has been created to insure the

reliability of those joining this new counternarcotics
force is effective’

b) Some of the personnel hired for this new
counternarcotics force had previously been fired for
corruption and unsuitability. Do you believe adequate
steps have been taken to either insulate th
individuals from sensitive information or they have
been adequately vetted? Do you believe adequate
controls are in place to prevent and detect any future
corruption among those already vetted?

President Zedillo has acknowledged the severe and pervasive
problem of drug-related corruption within his government.

Several Mexican Government officials have been arrested and are
being prosecuted on corruption charges, including the brother of
the previous President, the head of the national anti-drug law
enforcement agency, a Cabinet official, and a former Mexican
state governor. The removal and prosecution of General Gutierrez
Rebollo and others implicated in the investigation, while
disruptive of Mexico’s counterdrug efforts, has heightened the
Government’s attention to improve systems for personnel selection
and monitoring their performance.

On April 30, 1997, the Mexican Attorney General’s Office
announced that it would reorganize its counterdrug efforts into
the Special Prosecutor’s Office for Crimes Against Health
(FEADS). EADS officers must be fully “vetted” before taking
that position; “vetting” involves an extensive background check,
comprehensive financial disclosure statements, urinalysis drug
testing, and a polygraph examination. We believe that these
initial’ screening procedures, which are to be complemented by in-
service integrity checks, will maintain a sufficient level of

reliability that the integrity and security of FEADS officers can
be reasonably assured.

We will continue to work with the Mexican Government to
ensure that Mexican personnel working in the BTFs are properly
"vetted." In addition, we will continue to provide training to
Mexican FEADS officers, as well as technical assistance with
respect to ongoing integrity and security checks.

Prior to the PGR reorganization, some of the counterdrug
officers had been discharged based upon allegations of corruption


98

Mexico's financial commitment to combatting drug
trafficking and related crime is clearly seen in the massive
numbers of military and police personnel dedicated to
counter-drug activities. We would estimate the cost of this

effort at well into the tens of millions of dollars.

For example, the Office of the Attorney General (PGR)
maintains one of the largest law enforcement air fleets in
the hemisphere, dedicated almost exclusively to eradication
and drug interdiction. Operational costs for this fleet,
which my Bureau once funded, run well over $20 million a
year; Mexico assumed this expense in 1993. Over the past
year, the PGR has established several new investigative
units, each of which has required specially screened and
trained personnel, computers, vehicles, and other
equipment. The U.S. provided greater assistance to the
special units but the operational costs of these units are
now borne by the Mexican’ government. Military costs run
even higher; the army alone dedicates up to 25,000 personnel
to eradication missions during critical times in the growing

season.


39

absolutely shot off the charts—I’m not talking about domestic. I’m
talking about transit, I guess coming primarily through Colombia
and other countries.

Mr. KUSHNER. Well, heroin—Mexico is a major source country for
black tar heroin. Poppies are grown in Mexico. It is also a source
country.

Mr. Mica. But we're getting more, but you're not able to tell me
what percentage?

Mr. KUSHNER. I don’t have the specific percentages.

Mr. NELSON. Not precisely.

Mr. Mica. But it’s increased dramatically, has it not?

Mr. KUSHNER. Our understanding is that it has increased.

Mr. Mica. Finally, I want to ask you another question; I don’t
know if you addressed it in your report. I haven’t seen the whole
thing. We passed NAFTA and it provided even financial assistance
to build roads and transportation, to assist with infrastructure to
expedite trade. Did you address what this opening up has done for
the influx of illegal narcotics from Mexico in your report?

Mr. KusHNER. No, sir. We did not look at that particular issue.

Mr. Mica. What’s happening? I mean, you did not look at it. Now
this isn’t a consideration? Now that we have a wide-open border
basically, I don’t know how you could miss that.

Mr. NELSON. I think it’s widely recognized that the wide-open
border and more trade between the two countries provide greater
opportunities for drug transactions to take place. However, we did
not specifically focus on identifying the growth or extent to which
that is occurring, but I believe that the law enforcement commu-
nity generally assumes that that is the case.

Mr. Mica. Thank you, Mr. Chairman.

Mr. Hastert. I thank the gentleman from Florida.

At this time I’d like to recognize the cochairman of this hearing,
Senator Grassley from Iowa.

Senator GRASSLEY. First of all, as a matter of explanation to ev-
erybody as to why I have not been here until well after the meeting
started, we’re in the process of marking up our budget resolution
in the Senate, and we do not have proxy voting on that committee,
which is probably a very good thing.

So being here, of course, I have a responsibility as chairman of
the Drug Caucus, as we call it in the Senate, to thank Chairman
Hastert for agreeing to hold a joint hearing. This is a very impor-
tant subject and deserves our closest attention.

Arguably, Mexico is the single most important country to our na-
tional interest. Mexico, of course, is our second largest trading
partner. It’s a country of 100 million people. It is on our borders
obviously. It is, with Canada, our closest neighbor. We share a
2,000-mile land border, and generations of interactions at all levels.
Many of our citizens, and a growing number of our citizens, are of
Mexican ancestry. Many more are the newest arrivals from Mexico.

What happens in and to Mexico is of critical importance to us.
In addition to these concerns, however, is also the troubling reality
of the international crime and drug trafficking. We have to begin
with a very important understanding. Although we will have many
critical things to say today, and probably have already been said
about Mexico’s role in drug trafficking, we must grasp an essential