Top Mexican official forces Chinese-Mexican businessman to stash millions in mansion

A Chinese-Mexican businessman convicted of the largest drug-related cash seizure in history accused a top Mexican official of forcing him to stash millions in illicit campaign funds in his Mexico City mansion.

Photo: Top Mexican official forces Chinese-Mexican businessman to stash millions in mansion

In the first major accusation linking the administration of President Felipe Calderon to Mexico's drug underworld, Zhenli Ye Gon claims Javier Lozano Alarcon, now Mexico's labor secretary, threatened to kill him unless he stored duffel bags stuffed with at least US$150 million (110 million EUR).

In a written response Monday to The Associated Press, Lozano Alarcon denied the charges and said he was considering a defamation lawsuit against Ye Gon.

Ye Gon is charged in Mexico with drug trafficking, money laundering and weapons possession for his alleged role in illegally importing 19 tons of a pseudoephedrine compound used to make methamphetamine, charges he denies. Mexico considers him a fugitive.

Mexican officials lashed out against Ye Gon on Sunday night after his lawyer sent them a letter making the allegations and suggesting negotiations given "the politically sensitive nature of this issue."

"Delicately handling this `hot potato' is in the best interest of all parties," reads a copy of the letter provided to The Associated Press, adding: "We should sit down and work together towards resolution and settlement of this matter."

Responding to the letter Monday, Calderon spokesman Miguel Monterrubio said: "The Mexican government will not allow itself to be blackmailed."

At his lawyer's office in New York, Ye Gon gave the AP a very different version of the events laid out in the indictment against him. But key details appear to be contradictory, unclear or unverifiable, and a senior U.S. anti-drug official said he knew of no evidence that the Calderon administration - which has sent troops into the streets to fight drug cartels - has any links to organized crime.

As Ye Gon told it, the story began in May 2006, when Lozano Alarcon showed up at his house and threatened to kill him unless he stored millions in cash that purportedly came from the National Action Party's presidential campaign.

Lozano Alarcon was a key player in Calderon's campaign and his transition team following Calderon's narrow victory a year ago.

"Cooperate or `cuello,"' Ye Gon quoted Lozano Alarcon as saying, with a throat-slashing gesture highlighting the Spanish word for "neck." He said additional shipments of cash were later delivered by a henchman.

Ye Gon identified a photograph of Lozano Alarcon only on a secondtry. Hefirst described the man as "Javier Alarcon" - leaving out the first surname, something never done in Spanish. And he initially called him "a client I knew from another city" - an unlikely description for a well-known official and newspaper columnist.

Other details of his story, including the supposed proximity of his home to Calderon's official residence, did not check out. And he offered no good explanation for why he was chosen to hold the money.

If the National Action Party indeed was hiding the cash, it would constitute a serious violation of Mexican campaign laws, which limit private donations to about a third of that amount and capped total campaign spending in the 2006 presidential election to about US$60 million (44 million EUR) per party.

Lozano Alarcon said in an email to the AP that he had no relationship to Ye Gon and called the accusations "slanderous and defamatory."

Eleven people, including several of Ye Gon's relatives, have been charged with drug trafficking and organized crime after Mexican agents intercepted a ship from China that purportedly carried more than 19 tons of pseudoephedrine acetate illegally imported by Ye Gon.

Ye Gon said the substance on the ship was another, proprietary chemical used in cold medicines, showing sales contracts and a ship manifest he says proves it.

He said Mexican officials botched the laboratory analysis, supplying the AP with reports from two American chemists, including a former official with the U.S. Drug Enforcement Administration, who said the testing procedures were flawed.

The chemicals were being imported for Unimed, the pharmaceutical company that Shanghai-born Ye Gon founded in 1997. He said he had been one of the nation's largest licensed importers of pseudoephedrine, an ingredient that is also used in cold medicines, but that he stopped importing it after government controls were instituted in 2004.

As authorities have frozen his bank accounts, Ye Gon has been forced to cut back on what was by any accounts a lavish lifestyle.

The married Ye Gon squired his mistress around in a Lamborghini. During frequent trips to Las Vegas, he said he bet US$150,000 (110,000 EUR) a hand in baccarat, and authorities say he lost more than US$40 million (29 million EUR) to U.S. casinos. He was such a treasured customer that The Venetian Resort Hotel Casino gave him a Rolls-Royce.

Understandably, Ye Gon said he'd like to return to that life.

"I want to make things clear as soon as possible," he said. "If the DEA tomorrow asks me, I will go with them, cooperate with them, or FBI, or CIA. I'd like to talk with them."