Multinational Monitor

APR 2002
VOL 23 No. 4


The Cost of Living Richly: Citigroup’s Global Finance and Threats to the Environment
by Ilyse Hogue

Predatory Associates: Citigroup, Predatory Lending and the Credit Crunch for the Poor and Working Class
by Jake Lewis

Servicing Citi’s Interests: GATS and the Bid to Remove Barriers to Financial Firm Globalization
by Antonia Juhasz


Breaking the Brokers’ Sexual Harassment Culture
an interview with
Pamela Martens

Citi: Suing for Silence
an interview with
Al Giordano

Citi's Interests at EPA
an interview with
Hugh Kaufman



Behind the Lines

The Private Government of Citigroup

The Front
Philip Morris' Trade Card

The Lawrence Summers Memorial Award

Names In the News


Citi: Suing for Silence

An Interview with Al Giordano

Al Giordano is the editor and publisher of Narco News, an Internet news magazine ( that reports on corruption and the drug war in Latin America.

Multinational Monitor: What were the events that led to Banco Nacional de Mexico (Banamex) attempting to sue you in a U.S. court?

Al Giordano: In February of 1999, President Bill Clinton traveled to Merida, Yucatan for a so-called anti-drug summit with then-President Ernesto Zedillo of Mexico. This summit was held at the hacienda owned by Roberto Hernandez Ramirez, the then-owner of Banamex. I went to cover that summit and picked up a copy of the local daily newspaper, Por Esto!, which reported that the host of the Clinton-Zedillo anti-drug summit, Mr. Hernandez, was a narco-trafficker. Por Esto! published photographs of cocaine trafficking evidence and activities on coastal properties belonging to Mr. Hernandez. I published a story in the Boston Phoenix in May of 1999 about that situation. The story was also picked up in various aspects by AP and through them the Wall Street Journal and others.

This was important information that strikes to the heart of the credibility of the U.S. war on drugs in Latin America.

In March of 2000, I was invited to Columbia University Law School in New York to speak on various drug policy issues on a panel of people that included a former New York Supreme Court Justice, a representative from the Washington Office on Latin America and Mario Menendez Rodriguez, the editor and publisher of Por Esto! I spoke of Menendez’ story and his history as one of the most courageous journalists in Latin America. Menendez himself showed graphic evidence, including photos and maps, of cocaine trafficking activities on Hernandez’ land.

Subsequently, I founded the online news journal Narco News Bulletin ( One of our goals is to translate what the Latin American press is reporting about the war on drugs, because frankly they’re doing a better job than the U.S. press. We translated some of Menendez’ articles, articles by other Latin American journalists, and did original stories of our own about the efforts to persecute the press in Mexico for reporting this story about Hernandez and cocaine trafficking.

In August of 2000, unbeknownst to myself or Menendez, Banamex brought suit in New York State Supreme Court against the two of us and the Narco News Bulletin for libel (through the written reports), for slander (for the statements at Columbia University) and for “the interference with economic advantage.” I first heard about the lawsuit in late October of 2000. Banamex never succeeded in serving me the papers, so in February of 2001, I waived service of process in order to go to New York State Supreme Court and face these charges.

MM: When does Citigroup enter the story?

Giordano: During the time that the case was proceeding, Citigroup bought Banamex for $12.5 billion.

Keep in mind that Narco News was not the first source in the United States to accuse Banamex of money laundering. That was done by the U.S. Department of Treasury and other U.S. agencies in what was called Operation Casablanca, in which a sting operation was held against various bankers from various Mexican banks. Two executives from Banamex were charged in criminal court and the Federal Reserve Board seized $3.8 million from Banamex as a corporation. The leader of that operation was then-Treasury Secretary Robert Rubin with the Clinton Administration. He was considered to be the hard-liner on this investigation. Secretary of State Madeleine Albright wrote a letter of protest to Rubin about not informing Mexican authorities of this operation. So this was all a big public issue before Narco News even touched it.

Later, of course, Robert Rubin left Treasury to work for Citigroup. Aside from Sandy Weill, who is the CEO, Rubin is the most important person at the world’s largest financial institution.

So Rubin was prosecuting Banamex for drug money laundering in 1998, but by 2001 according to Citigroup’s own SEC filings, he was negotiating the deal to buy the same bank.

Why is that interesting? Banamex alleged in its lawsuit against us that its business was weakened by journalistic reports. If anything harmed Banamex’s business, it was the prosecutorial actions of the U.S. government and the investigation led by Robert Rubin. In 1998, he was prosecuting them, but by 2001 he bought them for $12.5 billion.

There has been a lot of pressure on Citigroup ever since information about money laundering by the Salinas family came out. Lowell Bergman produced a comprehensive documentary about this for Frontline — “Money, Murder and Mexico.” He showed how Citigroup, through its private banking office and specifically through Amy Elliott, knowingly allowed Raul Salinas, the brother of the president, as well as the Hank family, one of the most powerful in Mexico, and others to use false names in banking and laundering millions of dollars through Citigroup.

Senator Carl Levin, D-Michigan, held hearings. John Reed, who was then the CEO, embarrassed himself in his testimony before Congress. Many people feel that’s what led to his downfall and replacement by Sandy Weill.

After Rubin came in, Citigroup was under enormous pressure from Congress, with new laws and regulations and more scrutiny from the Federal Reserve Bank. So what did they do? Buy Banamex.

All this is happening in the middle of our lawsuit, which showed that we never caused any financial damage to Banamex by telling the truth about its owner’s activities and how that intersected with the activities of the U.S. government and Mexican government. They were trying to destroy us — two journalists with no comparative resources.

MM: How was the case resolved?

Giordano: The very same week that the Citigroup purchase of Banamex was approved and finalized, we had a hearing in the New York State Supreme Court. Akin, Gump — one of the largest law firms in the U.S. — represented Banamex. It did not go well for them that day. The judge asked very pointed questions as to why they were bringing the case to the United States when they had lost it twice already in Mexico.

The judge delivered a decision on our motion to dismiss on December 5, 2001. In it, she dismissed the charges against Menendez based on a lack of jurisdiction.

On the Narco News issues, the judge said the jurisdictional issues would require discovery. But she said she had read all the 500 pages of articles we published at the time of the lawsuit, and concluded that “Narco News’s web site and the writers who post information are entitled to all the First Amendment protections accorded a newspaper, magazine or journalist. Furthermore, the nature of the articles printed on the web site and Mr. Giordano’s statements at Columbia University constitute matters of public concern, because the information disseminated relates to the drug trade and its effect on people living in the hemisphere.”

Thus, for the first time in the history of U.S. courts, the New York Supreme Court extended the protections of Sullivan v. New York Times of 1964 to all internet journalists, and threw the case out of court. So this offers a clear road map for other Internet journalists –– if you follow basic, fair journalistic standards, citing the evidence and sources of information, you can quote what the Latin American press says, just like the New York Times can, without fear of harassing lawsuits by wealthy interests that seek to silence you. It’s not a blanket protection for anyone to just say anything on the Internet. But it is a strong protection for anyone who exercises an authentic journalistic practice. This will have far-reaching effects on how journalism is conducted. It puts a lot more pressure on the commercial press to pay attention to what’s reported on the Internet and extends the First Amendment to Internet reporting.

I spent a year working as a defendant and am now $200,000 in debt for having mounted that defense, and we’re moving towards a countersuit to recover those costs.

MM: Are there other examples where Citigroup has been implicated in activities like money laundering?

Giordano: Citigroup has been implicated in money laundering in other parts of Latin America. We’re published reports on their involvement in laundering money for Montesinos in Peru, for ex-President Carlos Menem and his involvement with arms trafficking in Argentina, and for the campaign of Mexican President Vicente Fox.

During the 2000 election campaign, copies of checks were published by El Universal, the largest newspaper in Mexico, that showed a very strange money laundering scheme in the Fox campaign. A large amount of money that originated in the United States, Europe and other places went through U.S. banks, one of which was Citigroup. The money was cut down into checks of less than $10,000 and then transferred over the international borders to Mexico where it was reassembled and given to TV Azteca and other media to cover some of the Fox campaign’s expenses. What’s significant about that $10,000 figure? Under U.S. law, any transfer of $10,000 or more must be reported. So if you have a sum of $100,000 and divide it into 11 checks, you can evade reporting. That behavior in the Fox campaign was reported by El Universal and elsewhere. We translated that work of the Mexican press and that was one of articles Banamex sued us for.

In my view as a reporter who covers the drug war from the front lines in Latin America, the real kingpins of drug trafficking do not wear sombreros or turbans. They wear suits and ties, go to respectable clubs, give money to all the major parties and are allowed to proceed with great impunity and protection. What this says is that the United States government is not really serious about fighting a drug war, and the prohibition on drugs, like the prohibition on alcohol before it, should be repealed.


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