THE NAFTA GANG:
Coverage in The Los Angeles Times, November 14, 1999

Journal Takes On Powerful
Mexico Family

Allegations of corruption about the Hank clan have drawn mainstream attention to a small California magazine. But the family's lawyers have called the story 'plainly false.'

By ARMANDO ACUNA, Los Angeles Times Staff Writer

SANTA CRUZ--Of all the people to pick a fight with, a feisty, fledgling Latino magazine based in this progressive seaside town chose Goliath--one of Mexico's richest and most powerful families.

El Andar, a bilingual quarterly with a circulation of 10,000, big dreams and a tiny staff, published a story in its fall issue accusing the wealthy Hank family of corruption on both sides of the border. Combining information about the family previously published in American and Mexican media with its own reporting, the magazine pieced together a wide-ranging profile alleging the Hanks' involvement in drug trafficking, animal smuggling, money laundering and the murder of a Tijuana journalist. In doing so, the magazine has stepped on ground not usually explored by mainstream Mexican media, which have traditionally treated the country's most powerful families with deference.

The Hanks, say the magazine's staff members, simply aren't used to critical media treatment and that adds to the cross-border tension. By exercising its 1st Amendment rights in a way that would be difficult in Mexico, El Andar is also striking a blow for California's growing ethnic media and Latino journalism in particular, say the magazine's supporters. But the giant has struck back. A two-page letter from the law firm representing the Hank-owned Laredo National Bank of Texas called the magazine's information "plainly false and misleading." San Antonio attorney Ricardo G. Cedillo demanded a retraction and an apology, $10 million for legal fees and expenses, and approval of all future stories dealing with the Hanks and the bank. The letter ended with the sentence: "Should you elect to do nothing, you act at your peril."

In a prepared statement last week, Cedillo said: "El Andar's article is inaccurate and is of questionable journalistic due diligence. Beyond that, we are exploring our alternatives to protect the interests and reputation of our client." Cedillo's retraction letter demanded, among other things, that the magazine acknowledge that the family "has never been accused of any wrongdoing involving drug or money laundering activities." The magazine's publisher, Jorge Chino, said he "was shocked" by the letter.

"I think they thought . . . we would be so scared we would promise not to do this anymore, but our story is right, our facts are right." The magazine's attorney last month told the Texas attorneys there would be no retraction. The Hanks' clout in Mexico, said the magazine, makes them untouchable by authorities there. The family's business empire, the magazine contended, has spread to the United States and includes control of the Texas bank.

In one of the few aspects of the story that had not been reported elsewhere, El Andar noted that the bank's president attended a White House coffee with President Clinton in 1996 and contributed money to the Democratic National Committee. The binational David and Goliath battle has attracted the attention of the Mexican media, which have circulated El Andar's allegations widely.

In describing El Andar's story, the Mexican media are able to say things about the Hanks that they usually can't say because of the family's influence. Several Mexican reporters have passed on tips to the magazine about the family which they have told El Andar staffers they can't directly publish or broadcast in Mexico.

The Hank family is considered an institution in Mexico. The patriarch, Carlos Hank Gonzalez, is a former governor of the state of Mexico, mayor of Mexico City and secretary of agriculture and tourism. He is widely acknowledged to be the leader of the conservative faction of the long-ruling Institutional Revolutionary Party (PRI), known as the "dinosaurs." He worked his way up the political ladder from modest beginnings, building a business empire of banking and transportation companies. Forbes magazine estimated his wealth at more than $1 billion. His two sons, Carlos Hank Rhon and Jorge Hank Rhon, are also wealthy businessmen.

As for El Andar, it is trying to carve out a niche in the expanding national Latino market by focusing on Latino commentary, literature, cultural trends and politics. It began as a magazine a year ago, after several years as a monthly tabloid targeting regional issues in Northern California. It runs on a shoestring and would have trouble fighting a protracted legal war. A legal defense fund is in the works. Part of the magazine's strategy is to take its story to the media and to seek help and support from media groups. Placing the furor in the spotlight, the magazine's supporters say, also affords El Andar some protection. And if it also raises its 10,000 national circulation, so much the better. The California First Amendment Coalition, for example, put the magazine in contact with a libel lawyer. New California Media, an association of 150 ethnic news organizations, has helped raise the visibility of the dispute in the mainstream press.

Growing Demand for News From Homelands

With more ethnic publications directed at California's growing minority communities, there is great interest in issues from people's home countries, said Sandy Close, founder of New California Media.

"There's a fusion of news that's of interest from the homeland and this country," she said. "More and more, we're a world without borders." Why pick a fight with a politically powerful family? "They are such a legendary family," said Chino, who left his native Mexico as a young man to escape political repression and find economic opportunity. There was great discussion at the magazine about doing the story, he said. In the end, "we decided our strength is to talk about important Latino issues. . . . This is a way for Latino journalism and publishing to gain some respect."

In choosing to write about the Hanks, El Andar picked a family that often has been in the headlines, sometimes for investigations of corruption. U.S. and Mexican officials told The Times in 1995 that the family was the target of investigations in both countries. The family was suspected of serving as a link between the PRI and Mexican and Colombian drug cartels, a connection blamed for political violence in Mexico. No charges were ever filed. In June of this year, the Washington Post, the Dallas Morning News and the Mexican newspaper El Financiero wrote stories about a new report by the National Drug Intelligence Center, a U.S. Department of Justice agency.

According to the stories, the report said Carlos Hank Gonzalez and his two sons were so involved in drug trafficking and money laundering that they "pose a significant criminal threat to the United States."

Family spokesmen denied the report's assertions. The elder son, Carlos Hank Rhon, who owns Laredo National Bank, faces a Federal Reserve Board hearing next summer on allegations that he violated various U.S. banking laws, including making self-funded loans from the bank to his businesses. El Andar noted that the bank's president, Gary Jacobs, met with Clinton at a White House coffee during Clinton's reelection campaign in August 1996 and that he and his wife gave more than $46,000 to Democratic causes.

The younger son, Jorge Hank Rhon, lives in Tijuana and has extensive real estate and business holdings in Baja California, the centerpiece of which is the Agua Caliente race track. He was detained by U.S. Customs in San Diego in 1991. He was stopped for trying to illegally transport a white Bengal tiger to Tijuana and was fined $25,000 for possessing an endangered animal.

The most notorious incident associated with Jorge Hank is the 1988 ambush killing of Hector "Gato" Felix, co-founder and columnist with the respected Tijuana weekly newspaper Zeta. Felix's colleagues, in their writings, have repeatedly accused Jorge Hank of ordering the killing as part of a personal vendetta motivated in part by critical comments made in Felix's column.

Hank has denied the accusations. The former head of security at Agua Caliente race track, and Jorge Hank's longtime personal bodyguard, was convicted of the murder, as was a second man who once worked as a security guard at the track.

El Andar staffers said they plan to write about the family again. Julia Reynolds, the editor, who wrote the Hank story, said the magazine will not be intimidated into silence. "I'm sure they thought we are a tiny little bug they can squash," she said, "but that's not going to happen."
© 1999 Los Angeles Times