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U.S.-Mexico Postal Partner Indicted

July 16, 1998

WASHINGTON (AP) _ When the U.S. Postal Service picked a partner for its first experiment to transfer money electronically, it went to Mexico _ a hotbed for drug money laundering. Now the bank it chose two years ago has been indicted.

The Postal Service, whose Dinero Seguro or ``safe money″ program allows customers to send money orders to Mexico electronically, says it is confident that none of alleged illegal activities involved its program though it continues to monitor the situation closely.

But a key member of the Senate Judiciary Committee is pressing to get the post office to suspend the program until it knows the outcome of the U.S. prosecution of the Mexico-based bank, Bancomer.

``At a minimum, I believe that you should consider suspending the partnership with Bancomer until such time as there is a resolution to the U.S. government’s case pending against the bank and its officials,″ Sen. Charles Grassley, R-Iowa, wrote the service on Wednesday.

Grassley chairs the Senate caucus on International Narcotic Control. He first raised concerns about the postal arrangement more than a year ago, long before Bancomer was indicted. The indictments unsealed in May charged Bancomer, two other Mexican banks and 26 banking officials on charges they laundered millions of dollars for Colombian and Mexican drug cartels _ the largest money laundering case in U.S. history.

``It now appears that circumstances have made that concern a reality,″ he said in his letter Wednesday.

Bancomer was nabbed as part of a three-year undercover U.S. investigation code named ``Operation Casablanca.″ The operation already was under way secretly when the Postal Service chose Bancomer in 1996.

The Postal Service said its key decision-makers didn’t know of U.S. law enforcement’s investigation of the bank until the indictments came out.

``When this matter came to the attention of the Postal Service, it reached the very highest ranking officials here and we met with the Justice Department and the Treasury Department. Anybody and everybody who had an interest was immediately consulted,″ spokesman Roy Betts said.

He added that the U.S. Postal inspection service has monitored the situation and met recently with bank officials to review the joint venture. They ``concluded that the program has not been compromised,″ Betts said.

Postal Inspector Dan Mihalko said the Postal Service’s criminal investigative unit was aware of the undercover operation but couldn’t tell its own management because it didn’t want to compromise the secrecy of the investigation.

However, the inspection service kept a watchful eye to make sure those officials inside Bancomer that were suspected of wrongdoing were in no way affiliated with the postal project, Mihalko said. It has found no such evidence to date but would have warned the service to stay away if it had, he said.

``If it looked like the people involved in the Dinero Seguro side of things were involved in this investigation or were targets of the undercover operation, we could not in good conscience let that go through,″ he said.

Despite all the drug trafficking concerns U.S. officials have with Mexico, Betts said the country was selected because of the large commercial demand of 25 million Mexican Americans who want a convenient way to send money back home to relatives, friends or business partners.

``It is our position that this program is not a relevant avenue for money laundering, and our customers love it,″ he said. But he added that the Postal Service is taking Grassley’s concerns seriously and will continue to monitor the program.

Eventually, the Postal Service wants to expand the program to other markets in Latin America, Betts said. Right now, it is limited to 850 post offices in California, Texas and Chicago, and money can be sent only to Mexico.

With old-fashioned paper postal money orders, customers were limited to $700 per order. The new program allows an electronic transfer of up to $2,999, he said.

Betts declined to say how much money has moved through to Mexico under the experiment, citing proprietary concerns. But he said the average transaction is about $300.

Bancomer was indicted as an institution on charges it helped facilitate the laundering of drug money in Mexico and the United States. It has vowed to cooperate.

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