Apr.23, 2010

CULIACAN, Mexico — Some Mexican companies complain they are being unfairly accused of money laundering as the United States and Mexico launch new efforts to dismantle the financial empires of drug traffickers.

Since 2006, the U.S. Treasury has nearly doubled the number of Mexican companies listed on its international blacklist of alleged drug traffickers and terrorists, from 121 to 220.

It is also pouring millions of dollars into software and training to help Mexican authorities investigate financial crimes. This week, the administration of President Felipe Calderón asked the Mexican Senate to create a Financial Intelligence Commission to pursue money-laundering investigations.

But some companies say U.S. authorities have gone overboard by blacklisting law-abiding firms and freezing their assets. "A lot of legitimate, innocent people and businesses have been and will be caught up in it," said David Kaloyanides, a U.S. lawyer representing Lomedic S.A. de C.V., a Mexican pharmaceutical distributor.

Targeted firms include the Happy Child Daycare Center in the western city of Culiacán, which has a $40,000-a-month contract with the Mexican government to care for the children of working parents.

The U.S. Treasury Department says Happy Child is a front for Ismael "El Mayo" Zambada, an alleged leader of the Sinaloa Cartel that moves tons of drugs to the United States and, along with other gangs, is fighting a bloody crime war.

Happy Child is partly owned by Maria Teresa Zambada Niebla, El Mayo's daughter. She says the business had no ties to him. "It's been devastating for us; we don't have access to credit or anything else," she said.

The U.S. Treasury Department does not have to tell foreign companies why they are accused or reveal any of the evidence against them. The department would not provide an official for interview about the blacklist, called the Specially Designated Nationals list.

Americans caught doing business with anyone on the list can be punished with up to 30 years in prison and a $5 million fine.

While the Mexican president has used the military to attack drug cartels, the International Monetary Fund says Mexican prosecutors have shown little progress in dismantling the cartels' financial networks or cracking down on businesses that act as fronts to launder profits. From January 2009 to June 2009, seven people in Mexico were convicted of money laundering.

Happy Child is an example of the apparent disconnect between the two countries.

Maria Teresa Zambada Niebla comes from one of Mexico's most notorious crime families. Her father is a fugitive wanted in both the United States and Mexico. Her brother, Jesus Vicente Zambada Niebla, was extradited to the USA in February to face smuggling charges.

On May 17, 2007, the U.S. Treasury Department named Maria Teresa Zambada Niebla, six of her relatives and six family businesses to the Specially Designated Nationals list.

Happy Child and the other Zambada family businesses are "not legitimate businesses, but illegal cash cows that fuel the drug trade, its violence and corruption," former Drug Enforcement Administration chief Karen Tandy said in a statement.

When the United States accused the day care center, Happy Child had a contract with the Mexican Social Security Institute to care for 209 children of working parents. Prompted by the U.S. action, Mexico's attorney general's office said it had opened an investigation into Maria Teresa Zambada Niebla's businesses.

But nearly three years later, Mexico prosecutors have filed no charges, the attorney general's office said. On Jan. 18, the Social Security Institute signed a new three-year, $1.4 million contract with Happy Child.

Like Happy Child, many businesses across Mexico are still operating despite being on the U.S. blacklist. They range from a dairy to an electronics store, a gymnasium and a mining company.

One of the largest companies is Collins Pharmaceutical Products, a medicine maker in the Guadalajara suburb of Zapopan. The company employs 900 people, according to its website.

In October 2008, the Treasury Department accused Collins, Lomedic and other firms of helping divert pseudoephedrine, a key ingredient in methamphetamine, to the Amezcua Contreras Organization drug cartel.

Officials at Collins did not return calls for comment, but its owner has denied the charges, according to the Mural newspaper. Lomedic also says it is innocent, but it has been crippled by the charges, Kaloyanides said.

Mexican banks temporarily closed Lomedic's accounts and cut off credit lines, and the United States froze $2 million the company had in U.S. banks. The company can no longer buy U.S. medicines.

Mexican authorities investigated Lomedic but have taken no action against it, and the company still has large contracts to supply Mexican government hospitals, Kaloyanides said.

Part of the reason the Mexican government has not taken action against many of these companies is because the U.S. Treasury sometimes gets its facts wrong, said Jose Luis Rojas, an expert on money laundering at Salles, Sainz-Grant Thornton, an accounting firm in Mexico.

"The list has a lot of errors and one big defect, which is names that sound the same," Rojas said. Another problem with the list is that it tends to lump honest people in with their crooked relatives, Rojas said.