New York Times
July 7, 1999
By Sam Dillon

MEXICO CITY -- A financier who recently disclosed that he was a donor of large sums to President Ernesto Zedillo's presidential campaign before he broke with the governing party and fled Mexico now says that senior party officials conspired with him in 1994 to arrange $4 million in illegal donations to the Zedillo campaign.

The financier, Carlos Cabal Peniche, said senior aides to Zedillo put pressure on him during the 1994 campaign to direct his troubled banks to pay for $4 million worth of Zedillo-for-President posters and other expenses. The Zedillo campaign sent him invoices and his banks paid the bills, Cabal said.

The transactions, as Cabal outlined them, would have violated campaign finance laws prohibiting donations by banks, election officials said. Cabal made his assertions in a written response to questions passed to him in an Australian prison by a reporter for The New York Times. He is battling a Mexican request that Australia extradite him to face fraud charges.

Opposition politicians Tuesday expressed special outrage over Cabal's assertions that Zedillo's aides were pressing banks for huge donations even though the government knew that the banks were sliding into bankruptcy. The Zedillo administration was eventually forced to provide $4 billion in taxpayer funds to restore the bank to solvency.

Zedillo's spokesman denied Cabal's assertions, as did the current chairman of the governing Institutional Revolutionary Party, known as the PRI. But the president and his party have blocked all outside scrutiny of the party's 1994 campaign finances. And although Cabal's credibility is in question because he has been charged with financial fraud amounting to $700 million, he made public Tuesday, though a spokesman, several canceled checks and receipts issued by the party that appear to confirm some of the apparently illegal payments he described.

Within a year after Zedillo's inauguration in 1994, the first of several businessmen reported donations to the campaign that were not included in party reports. But the Zedillo administration has blocked opposition attempts to organize investigations.

"The PRI and the government are fighting to keep these matters secret because we're discovering how they used the banks like the party's own funding agencies," said Andres Manuel Lopez Obrador, who filed a complaint during his tenure as head of an opposition party, the center-left Party of the Democratic Revolution.

Opposition legislators said Tuesday that Cabal's assertions would aggravate a dispute with the Zedillo administration over the government's handling of the records from Cabal's banks, an issue that some lawmakers say is heading toward a constitutional crisis.

"These are serious charges," Luis Felipe Bravo Mena, head of the center-right National Action Party, said Tuesday. "What Cabal is saying about political donations are sufficiently believable that the public needs a full accounting."

The dispute between the Mexican Congress and the Zedillo administration centers on the work of a Canadian auditor contracted by Congress to investigate Mexico's $80 billion banking bailout. The auditor, Michael Mackey, has requested that the government turn over documents from Cabal's banks, Banco Union and Banca Cremi, related to the campaign donations.

But Tuesday, the Treasury Ministry formally refused to release documents from Cabal's banks, citing banking law secrecy provisions. Fauzi Hamdan Amad, the chairman of the congressional committee overseeing the audits, said a law passed in December obligated political parties to forfeit any money they had received from banks that were later rescued with taxpayer funds and waived the bank secrecy provisions. He ordered the government to turn over documents related to such transactions.

Jose Antonio Gonzalez Fernandez, the governing party's chairman, acknowledged in an interview that Cabal had donated $15 million to a party trust fund in 1993 and the equivalent of $294,000 to the Zedillo campaign in 1994. But he denied that Cabal had arranged $4 million in payments to the campaign by his banks.

Fernando Lerdo de Tejada, Zedillo's spokesman, also denied that the Zedillo campaign had received more than the $294,000 donation. "We reject these new claims by Mr. Cabal," Lerdo said. "He's just playing a game to avoid extradition."

Cabal said the party official who had requested that he make the illegal donations was Oscar Espinosa Villareal, the party's finance secretary. In an interview, Espinosa, who today is Mexico's Tourism Secretary, acknowledged that he had met with Cabal to solicit donations, but denied having urged Cabal to instruct his banks to make direct payments to the campaign. "Both the Colosio and Zedillo campaigns were meticulous in setting up mechanisms that adhered strictly to the law," Espinosa said.

But Espinosa appeared to misrepresent the status of a committee called the National Committee for Financing and Patrimony Strengthening, to which Cabal paid several large checks, insisting that it was a private organization with no formal ties to the party.

The checks that Cabal provided copies of Tuesday were Banco Union checks written to the party. Cabal also provided the receipts for those checks sent to the bank by the committee. The receipts identify the committee as an arm of the party.

In the early 1990s, Cabal was a rising star among the party's business supporters, and President Carlos Salinas encouraged him to purchase the two banks from the government.

Cabal said his admiration for Luis Donaldo Colosio, the man originally nominated as the party's presidential candidate in the last election, inspired his $15 million donations in 1993. Zedillo was Colosio's campaign coordinator and became the candidate after Colosio was assassinated in March 1994.

Cabal said he met Zedillo on Jan. 12, 1994, and pledged $5 million in additional donations. But Colosio's assassination dampened Cabal's interest in politics, and months later his financial situation became precarious because the government began auditing his banks.