Just Hide Me The Money

When Citicorp and Travelers in October 1998 closed what was then the largest merger in history, creating a $751 billion financial colossus, a piece of unfinished business kept resurfacing like a bad odor amid the celebrations and predictions of imminent world dominion. This was the so-called Salinas affair, the curious tale of how a resourceful Citibanker named Amy Elliott helped Raul Salinas move some $100 million into untraceable accounts owned by offshore "trusts" that were in turn owned by dummy corporations in the Cayman Islands.

Salinas, the once high-living brother of disgraced former Mexican President Carlos Salinas, has been jailed in Mexico since 1995 on charges of illegal enrichment and murder conspiracy. He denies all the charges, and the murder case is now under way in Mexico City.

Meanwhile, in a report made public last Friday, the U.S. General Accounting Office, an investigative arm of Congress, concluded after an eight-month probe that Citibank helped Salinas build "a money-managing system that disguised the origin, destination and beneficial owner of the funds involved."

Senator Carl Levin of Michigan, who in January will become the ranking Democrat on the Permanent Subcommittee on Investigations, called for hearings on the GAO's findings. "Are major U.S. banks, wittingly or unwittingly, helping criminals move funds to safe harbors around the world?" Levin asked. "If the answer to that question is yes, then the Congress had better close down the loopholes that allow it." Already this week federal regulators will issue new rules requiring banks to confirm the identities of their customers and the sources of large fund transfers.

Noting that Citibank is cooperating with an ongoing Justice Department investigation of the Salinas matter, bank spokesman Richard J. Howe declined to answer specific questions about the GAO report. He said, without citing specific examples, that the report "contains errors of fact and interpretation" and that "it ignores recent progress in strengthening law and industry procedures, which Citibank strongly supports in keeping with our commitment to combat money laundering." Citibank declined to make Elliott available for comment but has in the past denied that she or the bank violated any laws. She remains a Citibank employee in good standing.

The Salinas affair has obviously embarrassed Citibank, a proud institution widely admired around the world. But the affair has done more: it has opened a door on the multibillion-dollar profits and potential pitfalls that beckon in a slice of the global banking business little known to the general public--a slice of the business that is growing rapidly, and for which Citigroup and its giant international rivals are competing ferociously.