Mexico Collars Ex-Banker, Its No. 1 Fugitive

MEXICO CITY — Mexico’s most hated fugitive wasn’t one of the country’s brutal drug cartel bosses. He was a multimillionaire banker, “the most wanted man in the modern history of Mexico.”

But Carlos Cabal Peniche, who had hobnobbed with presidents, is a fugitive no more. He was captured Wednesday outside his rented seafront mansion near Melbourne, Australia, where he lived with his family under a Dominican alias, posing as a dealer in fine wines, cheeses and Italian olive oil.

Cabal’s arrest after four years on the run is a reminder of the immense cost to Mexico of the legacy of fraud and incompetence that ravaged the banking industry during the 1990s. It’s a scandal that still reverberates in a bitter feud in Congress over how to pay for the $55-billion bank bailout.

But even more, high-fliers like Cabal--who allegedly helped bilk his two banks of as much as $700 million--have become despised symbols of the murky links among politicians, business magnates and perhaps drug dealers that have allowed huge fortunes to be amassed in Mexico.

“The arrest of Carlos Cabal Peniche is a real bombshell in the nation’s political life,” wrote prominent financial columnist Jorge Fernandez Menendez. And now “he may become one of the key pieces to clear up many of the mysteries that have darkened our political landscape.”

Media reports have recently linked Cabal to money-laundering allegations against Raul Salinas de Gortari, brother of former President Carlos Salinas de Gortari. Prosecutors also suggest Cabal laundered money for Gulf Cartel drug boss Juan Garcia Abrego.

Cabal, a paunchy and graying 42-year-old, narrowly evaded capture several times since his 1994 disappearance, apparently thanks to inside information from Mexican friends, as he slipped from Spain to France, Italy, Florida, the Dominican Republic and finally Australia.

He continued to manage pieces of his business empire, even as a fugitive running from a global dragnet that sought him on more than a dozen civil and criminal charges.

The Mexican policeman who helped arrest him, national Interpol director Juan Miguel Ponce Edmonson, said Cabal “is the most wanted man in the modern history of Mexico, not only for the crimes he has committed, but because he has been condemned by society as the cause of an economic crisis that profoundly damaged the Mexican people.”

Ponce Edmonson took some minor dramatic license in blaming Cabal for the December 1994 peso devaluation and resulting fierce recession in 1995.

Cabal vanished just days before his Grupo Financiero Union-Cremi, owner of Banco Union and Banca Cremi, was seized by the government in September 1994 for alleged fraud and mismanagement.

Cabal, his wife and four children made their way to Melbourne with the help of a fake Dominican passport, police said. His mistake, published reports said, was to use his real birth date on the phony document.

Ponce Edmonson accompanied Australian police as they arrested Cabal on the street outside his mansion. Cabal at first insisted he was actually Rafael Cerpit of the Dominican Republic. But Ponce Edmonson replied:

“Give it up. I know you. You are Carlos Cabal Peniche. I’ve spent four years chasing you. Four years ago I said I would find you, and I found you.”

He was arraigned later Wednesday in Melbourne, and Mexican authorities said they would start extradition proceedings.

Yet Cabal’s return to Mexico may make matters more difficult for President Ernesto Zedillo’s government and the long-ruling Institutional Revolutionary Party, known as the PRI.

Cabal was a prominent PRI supporter, and the leftist opposition Party of the Democratic Revolution, or PRD, says Cabal donated millions in questionable funds to Zedillo’s 1994 campaign.

But others saw positive aspects to the arrest. Carlos Gomez y Gomez, president of the Mexican Bankers Assn., said the arrest demonstrated the government’s determination to impose the rule of law, however prominent the suspect.

Cabal’s rise to power and wealth was as dramatic as his fall. The son of a grocery chain owner, he built up fruit plantations, exporting melons, pineapples and avocados. He went on to buy Banco Union from the government when it was privatized in 1991, and merged it with Banca Cremi, which he bought for $560 million. He also acquired Florida-based Del Monte Fresh Produce for $574 million in 1993, his largest of hundreds of disparate business interests.

But in September 1994, just as he was about to pay nearly $1 billion to acquire giant Del Monte Food Corp. of San Francisco, Mexican authorities ordered his arrest.

He was accused of making up to $700 million in loans from his banks to companies he owned--to himself, in effect--thus driving Grupo Financiero Union-Cremi into insolvency. His banks’ bad loans were eventually absorbed into the huge government-held portfolio of past-due loans that now is the subject of the bank bailout.

Even if Cabal does return to Mexico, his fate is far from decided. His lawyer, Alberto Aguilar Zinser, said Wednesday he is confident he has enough evidence to clear Cabal.

Times Mexico City bureau researcher Greg Brosnan contributed to this report.