Reno Contradicts U.S Drug Report

They also question whether a new drug-kingpin law that obliges the federal government annually to name the world's top suspected narcotraffickers and to seize their assets in the United States, as well as those of their business associates, will be as effective as it could if the Justice Department is unprepared to put the war against drugs ahead of politics.

For them, the Hank case and the demise of Operation White Tiger is instructive when assessing the prospects of the Foreign Drug Kingpin Designation Act, which was approved last year and requires the administration to provide Congress with an annual list of the suspected top foreign drug traffickers.

In early June, the Clinton administration sent Congress the first annual blacklist under the act, naming a dozen suspected drug barons, including six Mexicans: Ramon and Benjamin Arrellano-Felix, Jose de Jesus, Luis Ignacio Amexcua-Contreras, Rafael Caro-Quintero and Vicente Carrillo-Fuentes.

Following the media revelations about Operation White Tiger, the Hank family, which has denied it is linked to or protecting top Mexican narcotraffickers, lobbied the Justice Department. With the assistance of Republican former U.S. senator Warren Rudman, whom Carlos Hank Rhon hired to represent his interests in Washington, Hank secured from Reno the March letter contradicting the NDIC analysis.

"It was determined that the subject matter of the report was beyond the substantive expertise and area of responsibility for the NDIC, and the project was terminated," Reno wrote.

The attorney general's retraction of an intelligence analysis based on dozens of past investigations on the Hank family and on new lines of inquiry came as a bitter disappointment to members of the San Diego-based Operation White Tiger Task Force.

The Hanks and their supporters insist that Reno's intervention was just and that they have been victims of innuendo spread by their political and business rivals.

From the get-go agents involved in the probe feared that Washington would conclude that Operation White Tiger was too controversial and potentially too disruptive to Mexican-American relations for it to continue. They suspected it would go the way of previous investigations of top Mexican politicians. In their minds was a series of probes launched by individual DEA special agents in charge before the signing of the controversial North American Free Trade Agreement. Those investigations encountered strong Washington disapproval, say former agents Phil Jordan and Hector Berrellez.

Far from lacking substance, agents involved in the inquiry say that financial investigations and information supplied by confidential sources established that Hank family "businesses, corporations and entities, are linked to the major drug-trafficking organizations."

The task force scrutinized an array of business dealings as well as every tie the Hanks ever had with convicted or suspected narcotraffickers -- from friendships to joint ownership of businesses, including the suspected drug-linked commercial airline Taesa and the cargo-shipping firm Transportation Maritima Mexicana, or TMM.

According to Operation White Tiger documents, agents also explored allegations made by confidential sources of Carlos Hank's laundering money through two family-owned Texas banks -- the Laredo National Bank and the South Texas National Bank of Laredo -- and allegations that Jorge Hank Rhon is "providing the service of laundering narcotics proceeds" via the family-owned Agua Caliente Racetrack in Tijuana and off-track gaming interests on both sides of the Southwest border. "Through Jorge Hank Rhon's gambling casino and satellite wagering operations the AFO [Arellano Felix organization] is able to effectively launder [sic] millions of cash dollars made from the narcotics trade," states one document.

The Hank family's response to the allegations against it was immediate and furious and has been unrelenting. At least one major Mexican daffy newspaper spiked a follow-up article written by its Washington correspondent after the family intervened with the paper's owner. Other publications were threatened with legal action, including a small California-based Latino magazine, El Andar, which several months after Insight's expose also secured copies of the NDIC report and published a major article. An attorney acting for the Hank-owned Laredo National Bank of Texas demanded a retraction, an apology and $10 million for legal fees and expenses.

Even so, Rudman is adamant the report is "hogwash." Explaining that Carlos Hank Rhon is a friend of his, the former senator, who is on the President's Foreign Intelligence Advisory Board, says he was asked to take a look at it to see what he thought. "I told them I thought it was spurious. I did a lot of due diligence on it and I can tell you Carlos Hank Rhon is not a drug smuggler." He added: "My representation was very narrow, I looked at it, thought it was dubious and wrote to Reno asking her what she thought. Three months later she released her letter discrediting the report. I am pleased at what I did. You know the sections dealing with the Texas banks, for example, were drawn from open sources down in Mexico where a lot of people have an axe to grind. I think this report was a misuse of the process."

Both in Mexico and the United States the Hank family has lobbied hard, denying the allegations against them and claiming someone is out to get them. Rudman told Copley News Service recently that he is conducting his own investigation into the leak of the NDIC report, which Justice Department officials claim was written by an NDIC official who eventually was fired after it was disclosed to someone at the Army War College and then leaked to the media. In fact, the analysis was based on the work of many hands and several agencies. Asked by Insight whether there were factual error in the analysis, Justice Department spokesman Chris Whatney said: "The letter speaks for itself."

Now both the Hank family and the Mexican government are targeting the new drug-kingpin law, coauthored by Democratic Sen. Dianne Feinstein of California, arguing that the administration could declare erroneously that certain individuals are doing business with drug cartels and freeze their assets. Feinstein disputes this, explaining that a special commission will monitor the law as it is enforced.

But some veteran U.S. drug warriors, dismayed by the whole Hank case, say Justice has been hoodwinked and fear that it may prove timid when it comes to enforcing the new law on foreign kingpins.