U.S. DRUG KINGPIN BLACKLIST RAISES FEAR OF UNJUST TARGETING

WASHINGTON -- Year after year, Mexican financier Carlos Hank Rhon and
members of his wealthy family -- including his brother in Tijuana -- have
tried to quash rumors that the family is associated with money launderers
and drug-traffickers.

Hank even has gone so far as to hire former Sen. Warren Rudman to protect
his name in Washington.

Now Rudman and others worry that a new law targeting drug kingpins,
co-written by Sen. Dianne Feinstein, D-Calif., could mistakenly damage
Mexican businesses.

The White House yesterday put 12 suspected international drug kingpins --
including two Arellano Felix brothers in Tijuana and four other Mexicans --
on a new U.S. government blacklist aimed at financially isolating
traffickers and their associates.

But the second part of the list, which will name people and businesses
believed to have links with the kingpins, was not released.

That list is what worries the Hanks, Rudman and others.

In recent months, people on Capitol Hill have echoed Rudman's concern that
the administration could erroneously declare that individuals are doing
business with drug cartels and freeze their assets. The most unsettling
aspect, they say, is that it could happen without giving those affected a
chance to rebut the charges before they are made public.

The six Mexicans included on the kingpin list released yesterday include
two sets of brothers. Tijuana-based RamF3n and Benjamin Arellano Felix are
said to be leaders of one of the most violent drug trafficking groups in
Mexico, and U.S. authorities say Jose de JesFAs and Luis Ignacio Amezcua
are major traffickers in methamphetamines.

Rafael Caro Quintero, who has been jailed by Mexican authorities, reputedly
operated out of the Sonora area. Vicente Carrillo Fuentes, a leader in the
Juarez drug operation, is the brother of the late Amado Carrillo Fuentes,
who at the time of his death in 1997 was one of Mexico's most powerful drug
kingpins.

Also listed were Chang Chi-Fu -- also known as Khun Sa -- of Burma; Wei
Hsueh-Kang, a Chinese national who operates in Southeast Asia; Noel Timothy
Heath and Glenroy Vingrove Matthews of St. Kitts-Nevis; and Abeni and
Oluwole Ogungbuyi of Nigeria.

Mexican officials said they are concerned some U.S. lawmakers might use the
new annual release of names of those believed to be associated with drug
traffickers to criticize Mexico's anti-drug efforts.

That list is being prepared by the Treasury Department's Office of Foreign
Assets Control.

These concerns "are understandable," said Sen. Paul Coverdell, R-Ga., a
co-sponsor of the law. "But I think that a few days after the list is
published, the angst will disappear."

Feinstein said the new Foreign Drug Kingpin Designation Act will enable the
government to "hit foreign drug kingpins where it hurts. A similar program
in Colombia was instrumental in dismantling the large drug cartels in that
country."

"The process will be difficult -- gathering evidence against drug dealers
operating worldwide is not easy," she said.

A special commission has been established to monitor the process.

Hank recently won a victory of sorts after Rudman complained vigorously
about "raw, unsubstantiated" allegations about the family. The complaints
prompted Attorney General Janet Reno to discredit a Justice Department
draft intelligence analysis sharply critical of the Hanks. Ultimately, the
author of the report was fired.

Rudman, in a letter to Reno earlier this year, said it was his
"understanding" that the draft Justice Department report critical of the
Hanks was a factor in developing the drug kingpin law.

After Rudman's flurry of complaints, Reno discredited the draft National
Drug Intelligence Center report, which called the Hank family a "threat to
the country."

The center's report was culled from information from the Drug Enforcement
Administration, Customs Service and other sources -- including a task force
in San Diego investigating drug cartels, according to sources.

"All I know about him is he's very legitimate," Rudman said of Hank.

When the draft analysis surfaced a year ago, the family patriarch,
billionaire Carlos Hank Gonzalez, vigorously denied the allegations. Hank
Gonzalez's other son, Jorge Hank Rhon, operates the Caliente racetrack in
Tijuana. The family is known for its multibillion-dollar transportation,
construction and financial empire.

Rudman said he is conducting his own investigation into the leak of the
report, which the attorney claims has hurt Hank's banking interests and
hampered his efforts to deal with an unrelated complaint brought against
Carlos Hank Gonzalez by the U.S. Federal Reserve Board.

The report was written by a National Drug Intelligence Center official, who
eventually was fired after it was disclosed to someone at the Army War
College and then leaked to the media. The NDIC is a Justice Department drug
intelligence center in Johnstown, Pa.

Reno wrote in a March letter to Rudman: "It was determined that the subject
matter of the report was beyond the substantive expertise and area of
responsibility for the NDIC, and the project was terminated."

Carlos Hank Rhon's more pressing concern is a complaint filed by the
Federal Reserve Board accusing him of improprieties in running the Laredo
National Bank in Texas the past decade.

In late 1998, the Federal Reserve Board filed a complaint seeking to have
Hank divest himself of interests in Texas' third-largest independent bank.

Hank, who controls a British Virgin Islands bank holding company,
improperly allowed associates to acquire stock without Federal Reserve
approval, and transferred millions of dollars in equity to his father,
according to the Federal Reserve complaint.

He also failed to disclose business affiliations with at least five
offshore companies in the British Virgin Islands and the Cayman Islands,
the complaint states.

Hank has denied the allegations, which will be reviewed by an
administrative law judge in Washington in the fall.

Hank has been questioned repeatedly over the years about his activities,
according to Federal Reserve documents.

For two days in 1997 and in 1998, Hank met with Justice Department
officials in New York to discuss his business dealings. After those
meetings, the Justice Department officials never called back, Rudman said.

Rudman, a former Republican senator from New Hampshire, has been criticized
for representing Hank on an issue involving intelligence matters. In the
Senate, he served on the Intelligence Committee and now serves as chairman
of the Foreign Intelligence Advisory Board, which reviews intelligence
matters for the president.

"He has ties and oversight to the intelligence community," said Charles
Lewis, director of the nonprofit Center for Public Integrity. "He's one of
the most important citizens in the intelligence world."

Rudman has denied any conflict of interest, saying his client's business
has nothing to do with the advisory board.