Many journalists, myself included, are waiting with bated breath for revelations from the Brooklyn trial of Joaquín Archivaldo Guzmán Loera, better known as “El Chapo.” How many big political names could Guzmán offer in return for the possibility of a lighter sentence? How deeply did his corruption network manage to infiltrate the Mexican government and law enforcement on both sides of the border? What allegations currently floating around Mexico as secretos a voces (rumors) are actually true? How much chaos and drama can his defense create to deflect from the charges?
The trial kicked off Tuesday with statements from Guzmán’s lawyers: Guzmán was not the leader of the Sinaloa Cartel, argued Jeffrey Lichtman; Ismael “El Mayo” Zambada was and remains the man who ran the world’s biggest drug trafficking organization, corrupting the presidencies of Felipe Calderón (2006-2012) and Mexican President Enrique Peña Nieto, who is stepping down in December. Judge Brian Corgan warned the defense against making statements lacking necessary evidence. Both presidents denied the accusations.
Such claims were to be expected from those defending a man who faces charges of drug trafficking, money laundering, torture and homicide. But maybe it’s not what Guzmán knows about politicians that matters most for the post-trial drug war, even if such revelations might satisfy some public blood lust. What he knows about the money laundering and the banks may be more important.
Prosecutors are seeking $14 billion in restitution payments from Guzmán. His wealth is actually incalculable — experts have scoffed at the idea that he is worth that much — but going after his money is still the smartest long-term strategy. It might even appeal to the incoming leftist president, Andrés Manuel López Obrador, even if it would alienate some of the global powers.
There’s an old joke among some residents in the seaside resort city of Acapulco: If the government were to really go after money laundering in the drug trade, Acapulco would collapse into the ocean. It’s possible that the global economy would do the same. It’s now widely accepted that the Sinaloa Cartel helped prop up the global financial system between 2006 and 2009, channeling nearly $1 billion into major banks in spite of the fact that Sinaloa, a northwestern Mexican state, was on a list of flagged areas for large cash deposits. Investigators found that as much as $350 billion in global drug profits was allowed to slip into the financial system in the late 2000s. One bank, HSBC, was slapped with a $1.9 billion fine for its failing to stop the inflow of money from Sinaloa in particular, and made a probation deal with the Justice Department to tighten anti-money-laundering controls over the next five years in order to avoid prosecution.
If Guzmán tells the court how he managed to move his money — reportedly invested in properties from Mexico to Colombia to Eastern Europe, and pour it into the legitimate economy — U.S. and Mexican authorities could use that knowledge, and the sources who once worked the other side, to attempt to choke the cartels. According to former agents from the Drug Enforcement Administration who worked in Mexico during their careers, asset forfeiture is rarely implemented in Mexico; the military or federal police regularly seize assets from drug lords — sports cars, weapons, cash — and display it for the media to see, but according to DEA vets, the assets are most often returned to their original owners a few months later.
When he takes office in December, López Obrador should work to beef up the asset forfeiture process and share financial information with the Treasury Department and U.S. investigators. Any assets seized could be used to fulfill the new president’s promises to create social programs for Mexico’s poor, and some of the money could even be used to promote international business ties, thus placating the global business community that has long been wary of Latin American leftists.