Factual Background
6 Carlos Efrain de Jesus Cabal Peniche (Cabal) is a citizen of Mexico. He describes himself as an entrepreneur. He was born in 1956 in the south-eastern State of Yucatan at a place called Merida but grew up at Villahermosa in the State of Tabasco. His father was a grocer. Cabal went to primary school in Villahermosa from 1960 to 1967. During that time his father became a significant local businessman. He diversified his store, opened Tabasco's first supermarket in 1965, a real estate business in 1966, a hotel in Villahermosa in 1967 and in the same year became President of the Chamber of Commerce. Cabal spent his last year of secondary education at a Catholic school in Mexico City. In 1974 he began studying for a degree in business administration in tourism at the Universidad Anahuac.
7 Marco Pasini Bertran (Pasini) was born in Mexico City. His sister, Teresa, is married to Cabal. The Pasini family was involved in construction and steel smelting businesses started by his maternal grandfather who came to Mexico from Spain after the Spanish civil war. Pasini went to University Novo Mondo from which he graduated in engineering in 1989. For a couple of years after graduation he worked for a company involved in the production of pumps. Subsequently he started his own franchise business called "Lasergraphics". This and similar businesses in which he became involved were successful.
8 In 1976, the year in which Cabal met his wife to be, Teresa Pasini, his father's business suffered from devaluation of the Mexican currency. While still at University Cabal took over the running of his father's chicken processing business in Mexico City. When the Mexican economy improved in the course of what he called the "oil boom" years, he expanded and modernised the chicken business. He acquired refrigerated transport trucks to provide fresh produce to Mexico City markets. In 1977 he opened a new warehouse. With that opening he became a major chicken distributor in Mexico.
9 Subsequently, however, with the growth of his business he suffered from what he called a "price war" initiated by a large competitor. At one point his plant was closed by the Department of Health of the State of Guanajuato on the grounds that it was too close to a primary school. He contends that the Department of Health was headed by a member of the family that owned his major competitor. He eventually reopened the plant but had taken on a greater debt burden during its closure. As a result of devaluations of the Mexican currency in 1982 his business debts, which were in US dollars, doubled and then trebled. His father also experienced economic problems at that time. In the event, Cabal says he had to close down his chicken business, his father sold their house in Mexico City and he returned to Tabasco. In 1981 he was charged with issuing a cheque with insufficient funds and was arrested. The charge was dismissed or withdrawn in 1984 following a change in the law. Cross-examination and documentary evidence tendered about this incident before the learned magistrate went to whether there had been a failure by Cabal to comply with conditions of bail while the charge was pending. It was said to go to his credibility. It has at best a marginal significance for these proceedings.
10 Cabal claims that by the end of 1983 he had put in place repayment agreements with all of his outstanding business creditors and started work on some subdivision projects on two parcels of land free of any charges. One parcel was in Yucatan and the other in Veracruz. These subdivisions were successful so that by 1984 almost all of his creditors were repaid and he had some start-up capital for a new business venture. He gives an account of his involvement in the shrimp business. He made contact with co-operatives of shrimp fishermen in Campeche which is located between Tabasco and Yucatan. He offered to incorporate a company in the United States that would buy shrimp direct from them. He bought a plant on the Island of Ciudad del Carmen off the coast of Campeche and arranged for export of the produce to a company in Florida called Ladex Corporation, owned by a family of Cuban Americans. However his first shipment was stopped at the border by Mexican authorities who claimed that he had inadequate documentation. Cabal says he organised a meeting of all the co-operatives in Campeche, told them this was their only opportunity to become independent from the government monopoly buyer and to get better prices for their product. The fisherman agreed to support him and, on his account of it, all 350 shrimp boats went on strike in support of the release of his shipment. He negotiated with the relevant Minister of the Mexican Government who agreed to release his container on the basis that he would never organise another strike, that he would buy only a limited amount of shrimp and that if other co-operatives wanted to export through his company it would have to be subject to agreement with the principal wholesaler.
11 In 1985, according to Cabal, he had reached the position that almost all co-operatives were selling to his company. He opened two shipyards so that when fishermen arrived at port they could take their ships direct to the shipyards for urgent repairs. He claimed that the operation was very efficient, the fishermen were happy and exports were increasing and he was employing around 400 people. By 1986 his shrimp business had become one of the most important export industries of the region. At or about that time he was visited by representatives of an investment banker called Rodrigo Rocha who was interested in investing in Mexico and particularly in the export business. He made Cabal a good offer, which he accepted, for thirty per cent of his shrimp businesses. Subsequently Rocha took over the whole of the business.
12 Cabal began looking for new business opportunities. He became involved in banana production. He acquired land in Tabasco and hired somebody knowledgeable in the business. He ran into industrial difficulties with unions. These were not able to be resolved by negotiation. He claims that the governor of Tabasco, Salvador Neme, became concerned that he would become too powerful to be controlled and tried to have him shut down by using the disruptive good officers of a union organiser, Isido Morales. Subsequently however through the intercession of Patrocinio Gonzales, the Govenor of Chiapas, Cabal's relationship with the State government improved.
13 The first containers of bananas from the plantations went to the United States in 1988. The marketing vehicle was a company called Continental Fruit. However the quality of the product delivered into the United States was affected by Cabal's dependence on road transport over poor quality roads. So he leased cargo ships to transport the produce by sea. This involved reopening a port near Villahermosa called Frontera Port. The arrival of the first ship and the reopening of the old port was, he said, an important political event. He started getting invitations from the State Governor to attend conferences and meetings. In 1988, Carlos Salinas was elected as President of Mexico.
14 Cabal diversified from bananas to pineapples and papayas and subsequently began an export joint venture with other producers. Under the joint venture agreement he would manage their plantations and they would receive a certain amount for each box of bananas produced from their land. This was, he claims, the first partnership between different families in the south east and it was, in his view, a remarkable achievement to get them all to sit together at the same table. He made technology transfer agreements with other growers and charged a commission on the sale of their bananas on the basis that his companies would harvest their product. This enabled him to get enough bananas to keep the ships working. He developed a close relationship with the Governor of Chiapas where he bought land to establish banana plantations. He began travelling more to Chiapas to promote agriculture. He claims to have had more and more contact with the ethnic Indian community in Chiapas, to have learned about the many serious problems facing them and the sorts of social and economic development that was needed to improve their living and working conditions. By the end of 1989 Cabal said he had established a good relationship with the south-eastern governors, that is the governors of Tabasco, Chiapas and Campeche and other politicians in the region. He had also, in his view, consolidated his relationship with his financiers, Eastbrook. They had a thirty per cent equity in his plantation business. By this time his third child was born. He was running close to 10,000 hectares of banana plantations on land which he owned, land which he had access through joint ventures and land belonging to third parties. These ventures employed about 20,000 people. By this time, according to Cabal, he was the fifth largest exporter of bananas to the United States.
15 Cabal entered into other export ventures including parquetry and marble. He developed those businesses by importing technology from Germany and Italy and exporting the finished products to the United States. He established training courses in the new technologies that he had brought into the region. He became actively involved with the Catholic Church and in particular a French Priest who had come to Mexico seventeen years earlier. The Priest was running a Foundation which was established to help poor priests in Mexico. Cabal claims to have developed a concern about the people of the south-eastern States of Mexico. He thought there was a need to develop that region of Mexico. One of the obstacles was the attitude of the business people there.
16 In 1991 President Salinas, visited the State of Campeche and through the intercession of the Governor of Campeche officially opened the parquetry plant. This was the first contact that Cabal had had with the President. He admired him for the way he had changed Mexico's international image. He knew of its improvement by virtue of his involvement with the US side of his operations. He saw Salinas as trying to enhance Mexico's international standing and participation in global markets by promoting the formation of companies and businesses that could compete internationally. He also saw him as having been important in the establishment of a free trade agreement with the United States. In 1990 Salinas had announced his intention to privatise Mexico's banks. At that time all of them were government owned. Those which had been in private hands had been nationalised by President Portillo in the early 1980's. General rules governing the auctioning of the banks were published which set out decentralisation of banking services as one of the government's objectives. (T 4451) At the opening of the plant on 13 June 1991, Salinas invited investors to participate in the privatisation program he had announced the previous year. He encouraged Cabal and other businessmen to organise a group to buy a bank that could help finance development in the south-east. Cabal took what he said seriously and organised a group to bid for one of the banks.
17 Cabal gave evidence to the magistrate that at this time he had formed what his counsel described as "political beliefs". In summary these beliefs were as follows:
1. He should have the right to work and develop his region free from any political interference or from vested interests including groups with political and economic power in the country.
2. He had a right to an opinion as to the role of government in the growth of Mexico.
3. He had a right to support or not support candidates for political office based on their policies.
4. He was entitled to resist instructions from government when the instructions involved abuse or excess of power.
These beliefs he conceded "might seem rather simple" but they "involved a number of difficulties when they were held in Mexico due to the way that country's politics was conducted". There is no evidence of any public expression of these opinions prior to an open letter written by Cabal in November 1994 to which reference is made later in these reasons.
18 Cabal arranged a group of like-minded investors to tender for the acquisition of one of the banks, then known as Banco BCH. His stated objective was to support investment and development in the south-east which had been of little interest to traditional money centres in the Centre and the North. He registered his group of investors with the Mexican Ministry of Finance as prospective tenderers in about September 1991. Two people with whom he had to deal in connection with that tender were the Under Secretary, Guillermo Ortiz (Ortiz), and the Minister himself, Pedro Aspe (Ape). Cabal described Ortiz as a powerful man who effectively ran many areas of the Ministry of Finance and who was the official charged with carrying out President Salinas' bank privatisation program. Both Aspe and Ortiz were described in evidence from Professor Roett, a Professor of International Relations at John Hopkins University as "classic technocrats". This was a term he used to describe senior public officials with degrees in planning economics obtained from leading United States universities.
19 On 11 October 1991, Aspe and Ortiz visited Tabasco in company with one Eduardo Creel. They wanted to meet the south-east investors group. Cabal met them at the airport. Aspe introduced him to Creel whom he described as a person with experience in the financial sector. After the meeting with the investors, Ortiz is said to have told Cabal to have a meeting with Creel to work out an agreement under which Creel could become part of the group so that he could participate in the bid for the bank. Cabal gave evidence that the group of investors he assembled to bid for the bank had no previous experience in the banking industry and that they had always thought that professionals who had that experience would be in charge of managing the bank. However it was elicited in cross-examination that Cabal was in fact a board member of a local bank (T4522), that one member of his group was president of the Regional Council for Bank Banpais in Tabasco (T4523), another member, Mr Naumann, was a member of the Regional Bank of Bancomer in Chiapas (T4523) and another, Mr Elek, had twenty years experience as Director-General of Citibank Mexico with great experience in the financial sector and had been an Assistant Director of the National Bank of Mexico (T4524-4525).
20 Cabal met with Creel in Mexico City on 14 October. He concluded after the meeting that the objective of the proposal was for the Creel family to assume control of the bank. Creel wanted to be Director-General of the Bank and his father-in-law to be Chairman. It was Cabal's intention and that of his group that the south-east investors should control the bank and avail themselves of professional assistance in technical areas. He declined to take Creel in as a partner. On 7 November 1991, the day before the tender was submitted, he was asked by Ortiz to come and see him at his office in the Finance Ministry. Oritz asked him how much he would be offering for the bank. Cabal said that he and his group had considered offering 2.65 times the capital of the bank as at September 1991. Ortiz said that Creel's group was seen as the strongest group to purchase the bank and if Cabal didn't win the tender he would probably have the opportunity to win a tender for a subsequent bank. Cabal explained, however, that since his group was just beginning in the financial field it would be very difficult for him to keep it together if it didn't win the tender. In the event, on the following day, he tendered a higher figure than that which he had indicated to Ortiz, namely 2.67 times the bank's capital. When the tenders were publicly opened on 8 November, his was the highest. On the following day he was called in again to meet with Ortiz. Also present was Victor Miguel Fernandez, the Vice-President of the National Banking Commission. Ortiz, he said, indicated "some great irritation" when Cabal entered the room asking why he had lied to him with regard to the price they were willing to offer. Cabal said what he had quoted was an approximate amount and that on subsequent consideration after 7 November, he and his group had decided that the price actually offered was in fact the most suitable one. Ortiz said he would have to consult with Aspe and the President as to what would be done. When Cabal left the room Fernandez who accompanied him to the door, said that his offer was the highest. Creel's offer was 2.66 times the bank's capital. The margin was very small and some deliberations would have to occur to see what was to happen.
21 At about midday on Sunday, 10 November, Cabal received a telephone call at home from Aspe who said words to the effect of "You might not believe this but you've won the bid". Aspe told him he should meet with Ortiz in the next few days to close the transaction which would be a matter of the signature and payment for the shares. Creel was subsequently given a licence to establish a new bank in the south-east to compete with BCH Bank. This was to be called the South-East Bank.
22 The tender for the BCH Bank was governed by specific bidding rules published in a document referred to in cross-examination as the "Official Diary of the Federation". The rules provided, inter alia, that if the two highest bids were within five per cent of each other then it was open to the National Banking Commission to award the tender to either bidder. It was accepted by Cabal in cross-examination that the difference between his bid and Creel's lower bid was less than five per cent. So if the government had been determined to favour Creel over Cabal, it could have done so within the terms of the bidding rules. The suggestion that somehow Cabal had engendered some long term resentment on the part of government because of his tactics in relation to the bid appears to be without any foundation.
23 In March 1992, Cabal and his board were contemplating appointing a new managing director to the bank to replace the person who had been the incumbent at the time of purchase. At a meeting he had about that time with Ortiz he informed him of their intentions. Ortiz recommended that a Mr Reyes Retana, be appointed. However the board of Banco Union, including Cabal, decided to appoint another candidate, Camberos. When Cabal informed Ortiz of this decision at a meeting at the Bankers' Club in Mexico City, he expressed great displeasure. Cabal said it wasn't a personal decision of his, but one made by the Board of Directors. Ortiz said that he had had other plans for Camberos. Ortiz told Cabal that he would have to get used to receiving and obeying instructions.
24 The Bank undertook an aggressive program to open new branches, seven or eight in the south-east and in other states to give it a national presence. It also relocated some other six branches throughout the country. One of Cabal's first priorities was to invest in a modern computer system. It was a major concern of his that the Bank should be connected on-line with all its different branches. He met regularly with Ortiz although they were not friendly. Ortiz insisted on being informed in advance of any proposed funding in any of the south-eastern states. Cabal explained to Ortiz that he thought the Credit Committees of the Regional Boards should be able to decide whether the relevant state governments were in fact worthy of receiving credit. Cabal said he did not comply with Ortiz' request on all occasions, although if he were aware of a particular state credit, he might inform Ortiz. In general however, he left it to the Credit Committees in each state.
25 In 1992, the United States fresh food conglomerate, Del Monte Fresh, became available for purchase. Cabal promoted the possibility of an acquisition amongst other Mexican businessmen and, in particular, the National Finance Organisation. On 6 August 1992, President Salinas attended a meeting at the Port of Dos Bocas in Tabasco with a group of businessmen, including Cabal, who were interested in undertaking the acquisition. The price was of the order of $500 million. It would be impossible for such a transaction to proceed without presidential blessing and the backing of the National Financiera and other financial interests. Salinas seemed to be very interested so Cabal began to work on the process of putting together a bid. On 20 August a consortium which he had assembled acquired Del Monte Fresh for half a billion dollars. He was assisted by a Mr Cosio, appointed by the National Finance Organisation.
26 Shortly after the successful bid for that company Cabal attended the Eighth Banking Convention held in Acapulco from 23 to 26 August. He was asked to make a presentation about the project to the bankers attending the Convention. In the course of that Convention Aspe who was attending it, found the opportunity to speak privately with him and told him that he must understand that the possibility of the Del Monte acquisition being successful was basically dependent upon the government support that he was receiving. He was reminded of what Ortiz had previously told him, namely that he should be aware that he had to follow the instructions and follow the line, an expression which Cabal described as "very common in Mexico". The acquisition of the Del Monte company was finalised on or about 5 November 1992.
27 On 30 April 1993, a letter was sent to Banco BCH from the National Banking Commission of Mexico advising that the Commission wanted to undertake a routine audit under Article 123 of the Credit Institutions Act. (T 4544) An audit was carried out and on 27 July 1993 a letter sent to the Bank advising of irregularities. (T 269/T4547) The letter was marked for the attention of Mr Jamie Collantes Ortega, the Director-General of the Bank. According to Cabal, Collantes did not raise the letter with him. In June 1993, the Bank's name was changed from BCH to Banco Union.
28 In late June or early July 1993, Ramundo Florez, Chairman of the Board of Banca Cremi, called Cabal to discuss the possibility of merging the two banks. He asked him to gather together a group of shareholders in Banco Union who might be capable of purchasing a ninety per cent interest in Banca Cremi. The object was to purchase the Cremi Finance Group, which included Banca Cremi. Because of the magnitude of the proposed acquisition which involved about $550 million, it would require the approval of the President and of the Finance Minister, Aspe. In August 1993, Cabal and his connections presented a proposal to Miguel Monserra, the Director of the Bank of Mexico. Cabal himself met again with President Salinas to discuss the transaction on 31 August 1993. Approval was granted for the purchase of Banca Cremi and that purchase took place in November 1993. Subsequently Cabal tried to obtain necessary approvals for the merger and float of the two banks.
29 In 1993 there was a presidential election due in Mexico. For nearly seventy years the country had been governed by one party, the Institutional Revolutionary Party (PRI). It is only since 1997 that opposition parties have been represented in the Mexican Congress. The position of president was one of considerable power, described by Professor Roett as "all powerful". The President was said to control all appointments to public office including the effective nomination of his successor. The latter was a process called Dedazo. (T1828)
30 The three leading candidates for PRI endorsement as its candidate to succeed President Salinas were Pedro Aspe, Luis Donaldo Colosio and Manuel Comacho. Colosio was the Minister of Social Development. He was responsible for programs which brought basic facilities to many Mexicans. Cabal had been introduced to Colosio in 1992 by the Governor of Chiapes, Patroccinio Gonzalez. Colosio was at that time implementing social programs in that State. He told Cabal then and also in 1993, of his social policies. These centred around encouraging self-sufficiency and wealth creation by providing education and training for people. He also supported equitable development of the regions in Mexico and the creation of a true multi-party democracy. He wanted to limit the power of the President. All of these policies were attractive to Cabal. (T4269) Cabal described Colosio in his evidence as "…a very pleasant person, a very simple person, a very humble person" and a popular candidate with the people of Mexico. He was a person of both Spanish and indigenous blood and in that sense, according to Cabal, "a common Mexican".
31 Towards the end of June 1993 Cabal was visited by Senator Carlos Salez Guteriez seeking a contribution to the PRI for the presidential election. He says he agreed to arrange for contributions totalling $US15 million. He told Guteriez that he was willing to do so in the belief that Colosio would be the endorsed candidate. He gave instructions to Collantes, the then Managing Director of Banco Union, that he should make an arrangement with PRI officials to open up a trust account in the bank and that he should endeavour to organise the shareholders and partners in the bank so that the necessary funds could be placed into that trust. A trust deed was created for that purpose. The donation was made on or about 26 July 1993. Cabal did not regard the amount as significant when compared with the standard contribution which was in excess of $US25 million.
32 On 20 November 1993, Collantes resigned from the Bank. He died about a month later. On 30 November 1993 there was a meeting of a committee referred to in evidence as the Board of Administration of the Bank. A minute of the meeting was translated in cross-examination by Alberto Zinser, Cabal's principal Mexican lawyer who appeared as a witness in the s 19 proceedings. At that meeting a proposal was put for the creation of a Management Committee that would be the administrative and executive organ responsible for the day to day operations of the Bank. (T2714) It would also be in charge of the direction and administration of the Cremi Financial Group and Banca Cremi. The proposed committee was to be subject to the direction of the Board of Administration of Banco Union. It was to comprise the most senior officers of the Bank. It would function as a high level Credit Approval Committee with power to approve credit to what was described as "the maximum legal limit" based on the net capital of the borrower. In the case of corporations this was thirty per cent of their capital and in the case of individuals, ten per cent. (T2716) There was apparently already in existence at this time a High Credit Committee of Banco Union. Cabal, who was to be a member of the proposed committee, was to have a casting vote. Other members of the committee included Mr Robert Bailey as President, Joaquin Alcala Herroz, Ricardo Armas Arroyo, Guillermo Barboso, Garza Alfredo Castaneda Breton and Ernesto Malda Maza. (T2719) Robert Bailey was an American banker whose services had been engaged by Banco Union with a view to effectively managing the post-merger financial group. Cabal explained that he wanted Bailey to take charge of the post-merger financial group but given the requirement the General Manager be a Mexican citizen, the Management Committee was formed under Bailey's chairmanship with Alcala acting as the General Manager of the Bank.
33 Colosio was endorsed as the official PRI presidential candidate on 8 December 1993. Cabal says he was the first businessman to go and congratulate him. He had agreed to support Colosio's campaign. He provided him with a house where he could make appointments, conduct meetings and carry out his campaign. He also gave him transport assistance and organised meetings of south-eastern businessmen.
34 Colosio's campaign co-ordinator was Ernesto Zedillo. At a meeting with Zedillo at the beginning of 1994, Cabal offered additional support to Colosio's campaign to the value of $US5 million. His assistance to Colosio extended to accompanying him on a tour to Tabasco at the end of February 1994 and on part of his tour in the north-east of the country. In the course of their travels they had conversations about Colosio's plans for Mexico. As Cabal put it "…. he wanted Mexico to have a true democracy and he wanted to improve the standard of living of Mexicans in general". He was very worried about the concentration of the population in Mexico City and wanted to promote decentralisation of powers and redistribution. On 23 March 1994, however, Colosio was assassinated. As a consequence Salinas nominated another successor, in this case Ernesto Zedillo.
35 Following Zedillo's endorsement as the new presidential candidate, Cabal met with Oscar Espinosa, Finance Secretary for the PRI, on 13 April 1994. Espinosa asked him to make good his offer of $US5 million which he had previously mentioned to the campaign co-ordinator. Cabal explained that the candidate had changed. It was now Mr Zedillo. Moreover the economic situation wasn't so good. He asked for a few days to see what he could do to organise the additional donation. On 20 April 1994 in the course of a visit to Mexico by Cabal's Japanese partners in Del Monte Fresh, he met with President Salinas in Loz Pinos. Salinas asked him to support Zedillo. He indicated that Cabal should provide financial support because it was mid campaign.
36 On 29 April 1994 a letter was sent by Jose Camargo Ascencio, Director General of Supervision of the National Banking Commission to Banco Union. The letter was marked for the attention of Robert D Bailey as President of the Committee of Direction of the Bank. The letter referred to certain irregularities and allowed the Bank five days to explain what it intended to do about them. Cabal said that as far as he could remember Bailey had never said to him that he had received such a letter. (T4548)
37 At the beginning of May 1994, Cabal was phoned by Espinosa who asked him to make the $US5 million previously offered available, as money was needed to meet Zedillo's campaign costs. He asked that the contribution be in cash or by way of small deposits made into the trust because of electoral laws regulating campaign contributions. (T4400) Cabal replied that the group of businessmen with whom he was associated had difficulty in providing further funds for the campaign and that he was somewhat disappointed with the state of affairs in Mexico. In the event Cabal said he would get Alfredo Castaneda, an officer of Banco Union, to get in touch with Espinosa to see if something could be arranged. His own attitude was that he was not keen to provide cash or to organise his associates to promote Zedillo's campaign. Nevertheless he spoke to Castaneda and told him to work out a solution in response to the pressure that was being applied by Espinosa for contributions. He didn't personally want to support Zedillo, he just wanted to find a way of avoiding problems. He told Castaneda to meet with Espinosa or Espinosa's people to work something out.
38 On 12 May Cabal met with Espinosa and, faced with his insistence that Cabal contribute cash, he offered a personal contribution to the extent of the limit permitted by recently introduced campaign contribution laws. The maximum amount permitted was one million pesos which, at that time, was the equivalent of about $US300,000. Cabal deposited the amount by way of a cheque into a trust account in Banca Cremi. (T4409) The deposit was made on 26 May 1994. A receipt for that deposit was issued and was received in evidence before the magistrate. (C44) In the same month, Cabal received calls from one Mariano Palacios, a former State Governor, requesting further support for Zedillo's campaign. Cabal told him the Bank was already contributing to the campaign and was unable to give any more support.
39 At this time, June 1994, the merger of Banco Union and Banca Cremi had still not proceeded as necessary approvals had not been received. Cabal blamed the delay on Ortiz and another official, Thomas Ruiz. They constantly imposed requirements. He said that when specified requirements were fulfilled, further requirements would be raised.
40 Cabal's involvement with the Zedillo campaign was heightened when he was asked to accompany Zedillo on his tour to Tabasco on 12 June. He travelled with Zedillo in a private plane together with some other people. His relationship with Zedillo however was not close.
41 On 21 July 1994, Cabal met with Espinosa and went through with him the file relating to the trust account in Banca Cremi. Espinosa had asked for the documentation relating to the operations of the Bank with regard to the PRI trust so Cabal took along to the meeting the trust information together with some information on expenses. The expenses related to promotional material in support of the Zedillo campaign, including the publication of a booklet and the production of key rings.
42 A few days after his meeting with Espinosa, Cabal and the General Manager, Joaquin Acala, were asked to attend upon Ortiz. The meeting took place on 26 July at the Finance Ministry. The purpose of the meeting was to discuss the irregularities said to have been discovered by the audit which had been carried out by the National Banking Commission. At the meeting, according to Cabal, he and Acala were told that they should make all efforts to clear up where the irregularities had occurred but that they should maintain absolute secrecy about the administrative intervention by the Commission as the elections were very close and it was not desirable that it should be known in that environment that a bank was subject to intervention. Mr Bailey was not to be made aware of the intervention. Ortiz asked Cabal and Acala to sign a document of formal notification of the intervention. Cabal raised the question of authorisation to have the Bank's shares listed on the Stock Exchange but was told that while the irregularities were under investigation, the Bank shares would not be able to be listed. On his account of it, he signed the notification of intervention as it was the only way that ultimately the float would be able to proceed. Ortiz told them that they would have every opportunity to clear up any alleged irregularities. He said he had no difficulty with that as the Ministry was aware of all the Bank's operations in any event.
43 The document signed by Cabal and Acala was in the following terms, as translated orally to Her Worship by Rudolfo Dela Guardia Garcia, a legal attache to the Mexican Embassy in Australia:
"1. In meetings held in on the 8th and 17th of June 1994 the National Banking Commission made known to the officials of the aforementioned credit institutions various irregular operations which were detected in the process of supervision which is being undertaken by such organisation. Likewise the observation was reiterated on loans granted for the purchase of shares of Banco Union SA and Grupo Financiero Cremi SA de CV without the fact that to that date such irregularities may have been sufficiently made clear or clarified nor resourced.
2. Dated 21st of July 1994 Messrs Lic Carlos Cabal-Peniche and public accountant Hoakim El Kala Heros verbally accepted before the Chairman or President of the National Banking Commission the existence of irregular operations at Banco Union SA which implied the financing, the excessive financing to various people in relation to the acquisition of companies. (T1162)
3. In view of the above at an extraordinary meeting of the Board of Management of the National Banking Commission dated 24 July 1994 the aforementioned Board agreed on the administrative intervention of Banco Union and Banca Cremi, appointing for this purpose as intervenor Mr Public Accountant Jose Camargo Ascencio under the terms as provided for in Article 137 of the Credit Institutions Law as well as in Articles 40 to 42 of the Regulation of said Commission in matters to do with inspection, vigilance and accountability. (T1181)
4. In these very same act delivery is made to Messrs LIC Carlos Cabal and public accountant Hoakim El Kala of the intervention audit files, file numbers 601-1-vJ-32777-94 and 60-1-vi-32778 dated 26 July 1994 to which Article 41 makes reference of the aforementioned regulation. (T1163)
5. Mr LIC Carlos Cabal-Peniche and public accountant Hoakim El Kala Heros shall supply the National Banking Commission and the administration auditor with all such information regarding the irregular operations which may be of their knowledge with the purpose of evaluating the impact on the financial situation of Banco Union SA and Banca Cremi SA. (T1162-63)
6. Likewise the aforementioned banking officials shall submit presently to the consideration of the National Banking Commission the form and terms in which any irregular operation is sought to be normalised. (T1163)
7. The officials of the aforementioned Credit Institution shall at all times collaborate with the appointed auditor, appointed by the National Banking Commission without prejudice to other sanctions that may result applicable, the failure to co-operate or the lack of accuracy in the information supplied to the auditor or to the Commission shall result in the intervention with the status of management of the very same institutions on the terms of Article 138 of the Credit Institutions Law."
44 It is submitted for the applicants that Cabal, by being told to sign this document, was being directed to sign a document falsely acknowledging the occurrence of irregularities. If it were, from his point of view, a false acknowledgment that was his own doing. It does not import any want of bona fides on the part of the National Banking Commission. I find it unlikely that Cabal did not appreciate the potential seriousness of the allegations to which he was, in broad terms, assenting. He was, by virtue of paragraph 2 of the document accepting "…the existence of irregular operations at Banco Union SA which implied the financing, the excessive financing to various people in relation to the acquisition of companies".
45 The day after he signed the irregularities document presented to him by the National Banking Commission, Cabal obtained a visa from the French Consul General. (T1162) On 30 July his father died. Subsequently he and his family left Mexico and travelled to the United States where they spent a few days. From there they went on to Europe. Cabal's stated purpose for going to Europe was to negotiate a personal line of credit in Switzerland. The line of credit he negotiated was about $110 million. Its objective was to enable him to acquire Del Monte Foods, a canning operation, and merge it with Del Monte Fresh. He regarded the acquisition of Del Monte Foods as a matter of considerable significance. The overall price of the acquisition was about $US1 billion. The acquisition brought with it an important distribution network in the United States. The company had a very high consumption of tomatoes and Mexico is a very important producer of tomatoes.
46 While Cabal was in Europe the Mexican presidential elections took place on 21 August 1994. Zedillo was elected as President. (T1367) On or about 24 August 1994 Aspe's secretary, Jorge Trrasso, telephoned Cabal from Mexico saying that he should come back to Mexico to have a conversation with Aspe. As a result of this Cabal made an appointment to see Aspe on 31 August in Mexico City.
47 Immediately after the election of the President, on 29 August 1994, Banco Union and Banca Cremi published newspaper advertisements congratulating President Zedillo upon his election. Although Mexico's chronology suggested that Cabal had ordered the publication of these congratulations, neither the notices of congratulations nor the evidence about them from Zinser bore out that he was personally responsible.
48 Under the Criminal Law of Mexico there are two classes of offences: those which may be investigated by the Attorney-General by virtue of his or her office; and offences which are de querella, which can only be the subject of criminal investigation upon the filing of a complaint by a person legally entitled to make the complaint. In respect of tax offences or tax-related offences, the Ministry of Finance may file a querella. For banking offences, either the bank itself or the Ministry can formulate the complaint but the complaint must be made on the basis of a confirming technical opinion from the National Banking Commission. (T 2253-2256) It is contended for the applicants that what constituted a formal complaint from the Ministry of Finance was issued on 29 August and delivered to the Federal Public Prosecutor at the Attorney-General's office on 30 August. The prosecutor applied on 31 August to a judge, the Seventh District Judge for the Federal District in Criminal Matters, Ricardo Ojeda Bohorquez, who issued a warrant or order of apprehension on the same day. The order so issued related to Cabal and nine other persons. The alleged offences were against articles 112, 113 and 114 of the Law of Credit Institutions. The factual recital grounding the issue of the warrant comprised about 142 pages.
49 On the same day, 31 August, Cabal who had returned to Mexico, met with Doctor Aspe. Also present was Ortiz, Fernandez and Mr Thomas Ruiz. Dr Aspe told Cabal he was very annoyed about the irregularities which had been found in connection with the Bank and that Cabal should follow instructions from Fernandez in order to clear them up. Cabal replied that he was unaware of the irregularities and so far as he was concerned the Bank was operating normally. Aspe said if he wanted to demonstrate that, he should follow Fernandez' instructions. There was some discussion about the float, Cabal making the point that he still hadn't received authorisation to float the shares on the Stock Exchange. Aspe said he should not proceed at that time. The irregularities should be cleared up and Fernandez' instructions followed. Cabal referred to his negotiations in Europe in order to obtain finance and the line of credit which he had arranged. However Aspe was not interested in talking about that.
50 On the following day Cabal met with Fernandez. He asked why the Bank was being singled out with respect to the alleged irregularities. He told Fernandez that it was operating the same way as all other banks in Mexico and that so far as he was aware the Commission was fully informed of all the operations that were being undertaken in the Bank and that those operations were not irregular. Fernandez said he was not the person to decide on Cabal's case. Decisions would be taken at a presidential level. It was an extremely big case for Mexico because of all the companies that Cabal was managing and that were involved. He had nothing personal against Cabal and was only following instructions. He had set out a list of questions which needed answering and had given them to Lel Kala. He told Cabal he should be ready to be called to a further appointment. Cabal said he would have to return to Europe to be with his family and that Fernandez should give him adequate notice. He said that he would place fully at Fernandez' disposal any information he wanted about the Bank. On the same day that he met with Fernandez, Cabal also consulted a lawyer, Juan Velazquez, whom he described as "…an important criminal lawyer". (T4537)
51 While Cabal was meeting with Fernandez and his lawyer, officers of the National Banking Commission were appearing before the Federal Public Prosecutor. An application for a second order of apprehension or warrant was made to the Seventh District Judge on 2 September and issued on the same day. It was not communicated to the Federal Prosecutor until 5 September at 3.15pm. The recital of facts backing the warrant runs to 46 pages. The order required the apprehension of Cabal, Gabriele Roblesy Gonzalez Del Cossio, Francisco Macias Zamora and Alejandro Garza Vasconcelos "as subjects with probable responsibility for committing the felonies foreseen and sanctioned by articles 112, fraction V, clause d), and 114 fraction 1, of the Law of Credit Institutions".
52 Cabal departed from Mexico on 1 or 2 September 1994. He travelled first to the offices of Del Monte in Miami where he spent a few hours and then travelled to Europe to join his family. He has not been back to Mexico since that time.
53 On 31 August Pasini had also departed Mexico for Europe, specifically Monaco where he joined his sister, Teresa Cabal. The reason he gave in his evidence was that he had been invited to see his sister on holidays and also because he had been offered, some time previously, a job with Del Monte. No particular time had been mentioned, just a period of training and the offer of a position if he turned out to be suitable. In the event he did not take up any such position. In context, the account given of his reasons for leaving Mexico at the time seem inherently improbable.
54 A letter dated 1 September 1994 from the National Banking Commission to Banco Union, signed by Fernandez, announced the Commission's intervention in the affairs of the Bank. It appears from the concluding paragraphs of the letter, which is in Spanish, that this intervention was made pursuant to a resolution of the Commission on 28 August. The second last paragraph appears to identify the object of the intervention as normalisation of irregular operations and the establishment of an administration which would observe sound financial practices. Cabal did not become aware of this intervention until 5 September when he saw it on CNN television news in Europe. The substance of the report as Cabal described it in his evidence to Her Worship was that the Bank had been the subject of intervention through the agency of Aspe and Ortiz, that approximately forty officers of the Bank had been detained and that he, Cabal, was an absconder from justice. He immediately rang his lawyers in Mexico so that they could analyse the situation and take charge of the case. On the same day, Mr Zinser was given Mr Cabal's power of attorney by two of his legal representatives in Mexico, a process which, according to Zinser, is available under Mexican civil law. (T2509) The document was not actually delivered to Zinser until the following day, 6 September. (T2523 X190)
55 Not surprisingly there was wide spread publicity in Mexico surrounding these events and Cabal's departure from the jurisdiction. There was an attempt before Her Worship to cross-examine Zinser on newspaper reports of statements said to have been made on Cabal's behalf by the lawyer, Velazquez, to the effect that Cabal would respond to each of the charges against him. Counsel for Mexico sought to rely upon this evidence to establish that it was widely believed in Mexico that Cabal was out of the country. Evidently this would either explain or rebut arguments that might be made about the exhaustiveness of the police inquiries about the whereabouts of Cabal in Mexico. (T2687) Her Worship quite properly in my opinion, refused to allow cross-examination along these lines to continue. The newspaper reports were simply marked for identification. (T2684-2688) In the meantime, acting on his lawyers' advice, Cabal made no statements and stayed out of the jurisdiction. His lawyers were in contact with Aspe and treasurer officials. Cabal himself did not have continued communication with bank officers. Everything, he said, "… was in a very confused state". (T4443)
56 While in Monaco, Pasini also heard the news that "the government had taken [Cabal's] banks". He decided to stay there because as he put it:
"…my sister needed support at that time and I made the decision that the right thing was for me to stay with her at that time." (T4650)
Towards the end of September or early in October 1994, Pasini went to France with his sister and stayed with her and her family in a town called Dreux near Paris.
57 On 14 September a third warrant or order of apprehension was issued by Carlos Arellano Hobelsberger, Judge for the Eighth District in criminal matters in the Federal District. The warrant was issued against Cabal, Hector Gomez Lopez and Eduardo Hernandez Torres "…for their probable criminal responsibility in the commission of the crimes contemplated and penalised by article 112, fraction V, 112, fraction V paragraph e), and the same number in its fraction VI of the Law of Credit Institutions". In this case it appears a complaint was made to the Federal Prosecutor's office on 7 September 1994, application for the issue of the warrant made on 8 September and the warrant issued on 14 September 1994. On 9 October a fourth warrant was issued by the Tenth District Judge. The initial complaint to the office of the Federal Prosecutor was made on 30 September 1994 and the application for the issue of the warrant on 4 October 1994. The warrant was for the arrest of Cabal and Alfredo Castaneda Bretton for breaches of article 112, section V, first paragraph and article 112, section V, clauses c), d) and e) of the Credit Institutions Law. The issuing judge was Olga Estrever Escamilla.
58 On 5 November 1994, Cabal arranged for the publication of an open letter in the Mexican press. His objective, according to his evidence before Her Worship, was "… to make known to the public opinion in general and to the Bank shareholders with regard to what my situation was at that time in relation to the government of Mexico." He also asserted that the letter referred to his political beliefs. A translated version was admitted in evidence before Her Worship without objection (C47). The letter was published in a newspaper called "Financiero". (T4446-4447) In the letter Cabal asserted that an attempt had been made to arrest him on 5 September when police entered his offices at Banco Union. He referred to the appearance on television that night of Ortiz reporting that the Ministry of Finance had carried out ".. a managerial intervention on behalf of the National Banking Commission, of all the intermediaries that make up the financial group Cremi-Union…". He referred also to Ortiz' announcement that "based on the petitions of the financial authority, the Office of the Attorney General of the Republic filed the criminal proceedings, and the legal authority issued the corresponding orders of arrest against Mr Carlos Cabal Peniche…and others". Ortiz, he said, later gave "an extensive but vague explanation to support his hasty measures, which amounted only to defamatory assumptions and fantasies without any basis whatsoever, with the sole purpose of provoking and fostering scandal". He described the procedures set in motion as "…the machinery of injustice". He said:
"Up to now I have been silent while I waited for better circumstances in which to defend myself. Those who attack me do so without reason, and their actions have nothing to do with compliance with the law and are, instead, arbitrary actions born from resentment. I am not driven by any negative feelings, but by my wish for the truth to be known, and for lawfulness to prevail over the powerful personal interests that, feeling affronted, have led to my persecution."
He said he had fled from injustice. He claimed that the justice system did not always act with the independence that was essential to "fully trust in it". He denied that he had committed any of the "absurd crimes" of which he was accused. The relevant authorities had always been informed regularly and with full details of his every move and activity in the banking institution. He went on to say:
"Clearly identified interests, seeking tax concessions, have fostered the confusion, and have taken advantage of it in order to try to implicate several of my friends, for purposes of party politics. Others have reached the height of absurdity in trying to link me to drug dealing and money laundering. Some have discovered the right occasion to become, without any real grounds, severe critics."
He referred to his family background, his love of his country and of his region. He had always been a firm believer in the greatness of Mexico, had constantly wanted to do something important for the country and had been willing to take risks. Speaking of his banking group he said:
"In the struggle to consolidate and expand that institution, I thought that it was my duty that small and medium-size entrepreneurs of the South Eastern Region should have the chance to take part in the intensive development of that region, so that it could attain progress comparable to that of other regions in the country."
He said it was in the Maya States that unemployment had reached "unimaginable levels". He did not want them to be left behind in Mexico's progress. It was the same desire which led him to purchase Del Monte Fresh. He asserted that his competitors were the main beneficiaries of the injustice caused against him. He said:
"I have also been informed that the same powerful interests, with specious arguments and unlawful measures, intend to take this company away from me. I shall do, backed by the law, all that is necessary to prevent this from happening without retribution.
By acting independently I have earned the enmity and rancour of the representatives of the most exclusive and conservative sectors of the country, who arrogantly watched us and considered our South Eastern Region Group as a collection of incompetent, uneducated provincial men.
Therefore, it is understandable that we, the newcomers, have been the ones chosen to give a show of pretended legal and moral exemplariness. This is essentially unfair, because it is evident that there are many loopholes in the legislation regulating the matter, there is an abundance of vacuums, anachronisms and ambiguous interpretations, which permits and even fosters their arbitrary enforcement. This is an area that deserves an in-depth analysis."
He said that he did not intend to surrender control of either Grupo Financiero Union or Del Monte Fresh. He knew there was a path full of obstacles in front of him. He said he would act with determination for so long as it was necessary. By way of addendum to the translation of the letter Cabal indicated that the reference to "interests, seeking tax concessions" is a familiar Mexican expression meaning "people who have sold themselves to the government".
59 On 1 December 1994 Zedillo assumed office as President of Mexico. He appointed as Attorney General, Antonio Lozano Gracia, a member of the opposition National Action Party (PAN). Lozano in turn appointed officials who were not members of the PRI. Professor Roett, to whom this was put in cross-examination, was dismissive of it saying:
"It has now become symbolic to appoint a non-PRI person to the position of Attorney General, to convince us that the rule of law exists in Mexico when it does not." (T2060)
In December 1994 the Mexican economy experienced difficulty evidently known as "the December mistake". On 20 December the Finance Minister, Jaime Serra Puehe, announced a sudden devaluation of the peso. The impact of that decision led to his resignation and replacement by Ortiz who had initially been appointed as the Secretary of Communications and Transport by Zedillo. (X 187). A number of banks which had been privatised under President Salinas had problems and were the subject of interventions. (T4448)
60 On 31 December 1994 regulations were promulgated in the Official Gazette by the President at the request of Congress which apparently contained transitional provisions to ensure continuity of the institutions of government, including the administration of the Supreme Court and the Council of the Federal Judiciary. (T3636 X-246)
61 In January 1995 the Chase Manhattan Bank published a newsletter on the financial crisis in Mexico, the author of which was Professor Roett. In that newsletter Roett referred to three areas in which the monetary crisis could undermine political stability in Mexico:
1. The year old Zapatista insurgency in the State of Chiapas associated with demands for the resignation of the incumbent PRI governor on the grounds that his election was procured by electoral fraud.
2. Imminent state elections.
3. The role of labour unions, their relationship to government and the PRI.
The newsletter concluded that the Mexican monetary crisis had overshadowed the commitment of the Zedillo administration to political reforms including negotiations to resolve the Chiapas crisis and the guarantee of fair elections at State and municipal levels. It also raised the question whether or not Mexican workers would accept a prolonged period of wages losses and diminished high standards. It observed that to the degree the Zedillo government was unable to stabilise the peso and avoid inflation it ran the risk of social and political uncertainty. Chase Manhattan Bank however subsequently published a memorandum stating that the newsletter did not reflect its views.
62 On 31 January 1995, a fifth warrant issued by the Eighth District Judge. It was directed against Cabal and Castaneda and asserted contraventions of article 112, fraction V, first paragraph and 112, fraction V clause c), d), and e) of the Law of Credit Institutions. The warrant and backing facts occupy some seventeen pages. It does not appear from the recital when the complaint was first made to the Federal Public Prosecutor's office or when the application for the issue of the warrant was made to the judge. A sixth warrant was issued on 7 September 1995 by the Seventh District Judge against Cabal, Castaneda, Ernesto Malda Maza, Ricardo Armas Arroyo and Rafael Antonio Ramirez Galn alleging contraventions of article 112, section V, first and second paragraphs, clauses c) and e), of the Credit Institutions Law. In this case it appears that there was a complaint on 22 May 1995 and that the request for the issue of the warrant was dated 31 July 1995, received by the Court on 2 August 1995. A seventh warrant issued on 24 October 1995, again by the Seventh District Judge. It appears that the initial presentation of a complaint to the Federal Public Prosecutor was on 3 October 1995 and the application for the warrant on 24 October 1995. The warrant was directed against Cabal, Castaneda, Malda and Armas and again asserted contraventions of article 112, section V, paragraphs c) and e), of the Credit Institutions Law.
63 In January or February 1995 Pasini learned that one of his businesses which he owned in partnership with Manuel Hurtato had been closed without any prior warning to him. About six months later, another of his businesses closed. Also at about that time he had to renew his visa to remain in France. He did that and in July 1995 moved with his sister to Spain. From time to time he travelled back from Spain to France. He claimed that while in Spain he and his sister and her family were consistently followed. (T4652)
64 In September 1995, Pasini was introduced, in Madrid, to a person calling himself Domingo Murguia, whom he later discovered in fact to be Juan Miguel Ponce Edmondson, an officer of Mexican Interpol. (T4653) Pasini met Ponce at a hotel in Madrid in company with his sister, Teresa Cabal, and a Spanish lawyer Pedro Gonzales Trevijano. Ponce told Pasini and his sister that they had no chance of fighting the government. It was like David and Goliath. The only way forward was to negotiate with him. They could not trust their Mexican lawyers who were only interested in making money. He told them that they had to understand "…that the problem Carlos [Cabal] had at that stage was only a political problem and could only be resolved in a political way". The people who were after Cabal wanted "to present him to the public in a photo behind bars and with the striped prison suit on". Cabal should give himself up on 15 September. If he did not, there would be serious consequences for the people who were close to him and who were helping him. Ponce said that the people following Cabal already had the striped jacket measured up for him and that it was up to the Pasinis whether it was to be luxury model or just a standard model. Ponce said warrants could be issued for the arrest of Pasini, his sister Teresa, and his brother Pedro. He told Pasini he was in a very delicate situation for sticking his bib in where it wasn't his business. He ended by saying to Pasini:
"I hope your faith can save you because that's the only thing that will be capable of saving you." (T4656)
65 A further meeting was arranged with Ponce at the same hotel. In the course of that further meeting he asked which politician Cabal had offended and what he had done to receive such a punishment. Pasini put it to Ponce that if he had important contacts he should know which politician it was. Ponce didn't want to say who, he didn't want to reply, he kept saying that the Pasinis should state their theory as to who the offended politician was. The meeting concluded with Ponce warning the Pasinis that their time had started to tick over and that they should make a quick decision because time was hanging over them.
66 In October 1995, when Pasini was at his apartment in Druex in France, two French policemen and a Mexican police officer, Juan Carlos Lopez, entered and demanded to search his apartment and his car. Lopez told Pasini the reason for the search was that he was a member of Cabal's family and was helping Cabal. The police carried out the searches then took him to a police station in Versi where they kept him for two and a half days. He claimed that Lopez threatened him, saying that he was going to make sure that Pasini would go to jail in Mexico and he wouldn't survive more than two days as he, Lopez, would place Pasini with his friends in the prison. On 24 October 1995, Pasini was interviewed by French authorities and made a statement to them in Spanish which was tendered untranslated (X171). He told French authorities he was President and General Director of a company called Xurtu. The purpose of the company was the sale and lease of property. The lawyer Pedro Gonzales had asked him to occupy the position of President and General Director. He had accepted that appointment because the lawyer told him that role would not cause him any problems. An office was leased in Madrid for carrying out the various operations of the company. After his release by the French police, Pasini went to Madrid. While there he was telephoned at a hotel by the same Mexican officer who asked where Cabal was. Pasini said he did not know. The officer told him that he was in serious trouble for saying that and for not co-operating and that the officer was going to be very happy to do damage to him personally. (T4660) A short time later he was joined by his girlfriend, who is now his wife. In view of the risks of remaining where he was he decided it would be best for Mrs Cabal and himself if they separated. Pasini then travelled to Argentina where his girlfriend joined him in November 1995. They were married there in December 1995.
67 The evidence of a Federal Agent, Robert Grant, of documents obtained from Pasini in Melbourne in November 1998 (T4775-4777) and the documents themselves, having regard to Pasini's refusal to answer questions about them in cross-examination (T4684-4685) establish that in 1996 he obtained a false passport from the Dominican Republic in the name of Gregorio Montero (X-271). He also obtained an extract of a birth certificate from the Dominican Republic in 1997 (X-272) under the name Montero and an identity card in the same name from the Republic of Uruguay (X-273). In addition, he was in possession of an identity card from that country in the name of Aracelis Del Carmen Pichardo Diaz (X-273).
68 Like Pasini, Cabal was cross-examined about documents found at his premises in Melbourne in November 1998, being three passports from the Dominican Republic, an Australian Driver's Licence, a driver's licence from the Dominican Republic and an identity card from Uruguay (X 263, 264, 265, 267). He declined to answer the questions put to him in relation to those documents on the basis that the answers could "tend to expose me to procedures or penalties" (T4621-4623). The evidence of Federal Agents Macauley and Grant however, established that the documents had been located at Cabal's residence at Glyndon Avenue, Brighton on 11 November 1998. Two of the three passports from the Dominican Republic purported to have been issued in 1996. The third appeared to bear an issue date of 17 September 1998. All were issued to Rafael Certi Merrit. The Dominican Republic driver's licence (X-265) and the Uruguayan identity card (X-267) were also in the name of Rafael Certi. These were false documents obtained by Cabal for his own use.
69 The first of two warrants against Pasini was issued on 18 January 1996. It was issued by Gilberto Chavez Priego, a Justice of the Third Unitary Court for the First Circuit. It was issued following a review of a decision by the Seventh District Criminal Court for the Federal District denying issue of a warrant. The warrant as issued by the Unitary Court alleged contravention of article 112, section V, clauses c) and e) of the Credit Institutions Law. The original complaint was made on 3 October 1995 and an application for order of apprehension made on 24 October 1995. On 29 August 1996 a second warrant was issued against Pasini. The Eighth District Judge had initially denied the warrant which had been sought by Federal Prosecutors in November 1995. That denial was appealed to the Third Unitary Circuit Court. On appeal the Court denied issue of the warrant against four of the persons named, but authorised issue against Pasini and another.
70 On 12 August 1996, an eighth warrant was issued against Cabal by the Sixth District Judge. The original complaint appears to have been made on 20 May 1996, apparently from within the office of the Federal Public Prosecutor.
71 As appears from the Dominican Republic Passport (X-236B) and documentation later submitted to the Department of Immigration and Multicultural Affairs, Cabal obtained the grant of an Australian Visitor's Visa under the name Rafael Certi Merrit. The visa was obtained in Buenos Aires, Argentina on 30 September 1996. His occupation was described on the application as Vice President of Intercontinental Trading SA. His nationality was described as Dominican and his residence as the Dominican Republic and Italy. He was accompanied to Australia by his wife, who travelled under the name Matalia Righi De Certi and his four children who also travelled under the surname Certi. All travelled on passports issued by the Dominican Republic. They arrived in Sydney on 11 October 1996. Their visas authorised them to remain in Australia until 11 January 1997.
72 In Australia, Robert Henry, a registered migration agent, applied on 1 November 1996 for a Business Temporary Visa 457 for Cabal under the name Rafael Merrit. Mr Henry made the application on behalf of Intercontinental Trading SA of the Dominican Republic as Certi's sponsor for a temporary business visa sub class 457 for a period of two years to enable him to establish a branch of Intercontinental in Australia. In the application it was noted that Mr Certi would be leaving Australia within a few days of the application. His intention was to obtain their subclass 457 visas on return in January 1997. The application was elaborate. It asserted that Mr Certi held a Bachelor of Economics degree awarded in 1975, had over twenty years relevant experience in the food industry and had been employed with the Intercontinental group since 1992 when he had been appointed its Vice President and Chief Executive Officer. He was said to be Chief Executive Officer of the company's subsidiary in Italy, recently based in that country, and responsible for establishing the company there. The application asserted that Intercontinental was of the opinion that Mr Certi was the only suitably experienced and qualified person to establish a successful subsidiary in Australia. Family members were included in the application. The application enclosed passports, application forms, a resume, a letter of support from the President of Intercontinental Trading SA, an Intercontinental Trading SA Organisation Chart, a Certificate of Registration for the Australian firm, notification of allotment of shares in Australia and notification of change of office holders in Australia. It also contained a budget forecast for Intercontinental Trading SA for the period 1 November 1996 to 30 June 1997 and a letter from the National Australia Bank of 30 October 1996 confirming the opening of an account. The application was an elaborate and, no doubt, expensive fraud. It was rightly tendered before the magistrate as going to Cabal's credibility. The application was approved and notification of the approval given on 25 March 1997.
73 In April 1997, Pasini under the false name, Montero, made application for a temporary business entry visa, falsely asserting that the Dominican Republic was his country of birth and nationality. The application was accompanied by a letter from a company called Superb Foods Pty Ltd over the signature of one Ben Riccio acknowledging that Mr Montero intended visiting their company in order to conclude negotiations regarding the export of wine to Australia. Riccio had been shown in the documents supporting Cabal's application as a director and secretary of Intercontinental Trading Pty Ltd, appointed to that office on 18 October 1996. The grant of the visa was approved and Pasini and his wife subsequently travelled to Australia.
74 Further warrants, the ninth, tenth and eleventh, were issued against Cabal on 25 November and 9 and 10 December 1997. They were issued by the Seventh, Eighth and Sixth Federal District Judges respectively. A twelfth warrant was issued on 13 April 1998 by the Twelfth Federal District Judge and the thirteenth warrant on 15 May 1998 by the Forty First Federal District Judge. The thirteenth warrant issued against Cabal and its predecessors to that point represented the totality of the warrants supporting what became known as the first extradition request.
75 On 11 November 1998, Cabal was arrested by Australian Federal Police. They drove him to a carpark near Luna Park at St Kilda where another vehicle with three Mexicans was waiting. One of them was Juan Miguel Ponce Edmondson. The other two were introduced by him as a General and a member of Interpol respectively. While the Australian police withdrew a few metres, Ponce told Cabal that they had been pursuing him for a long time. He said that he knew Cabal's problem was a political one. If Cabal were willing to return voluntarily to Mexico his family would be able to remain in Australia. Cabal said he would need to discuss that with his wife. However they could not raise her by mobile phone and at this point the Australian Federal Police officer, Whitehead, said to Cabal that if he did not go to see his wife he would have to be taken either to a police station or the Magistrates' Court. The General took a photograph of him which, according to Cabal, was later published in Mexican and Australian newspapers. In the event, Cabal not agreeing to a voluntary return to Mexico, he was taken into custody and brought before a Magistrates' Court. The authority for his arrest was a provisional warrant which had issued on 10 November 1998 under s 12 of the Extradition Act 1988 on the application of Mexico. On the same day, Pasini's car was intercepted near Cabal's Brighton home by Australian Federal Police. Ponce was there and said to him in Spanish "so you're Marco Pasini. Well I've really fucked you now and that's how you're going to finish up". Later Ponce told Pasini, at Cabal's Brighton house, that Cabal had already voluntarily accepted extradition, that he (Ponce) was going to take charge of fixing up immigration matters and that his family wasn't going to have any problems remaining in Australia. However in order for that to occur Pasini had to find Teresa Cabal and speak with her. Initially it appears Pasini was taken into custody under provisions of the Migration Act 1958 (Cth). However a provisional warrant for his arrest issued on 27 November 1998 under s 12 of the Extradition Act. Both Cabal and Pasini have remained in custody at Port Phillip Prison since their respective arrests in November 1998.
76 On 6 January 1999, Mexico delivered a request to Australia for the extradition of Cabal relying upon thirteen of the warrants referred to above. On the following day the Acting Attorney-General, Senator Vanstone, signed a notice under s 16(1) of the Extradition Act directed to the magistrate before whom Cabal was brought stating that the request had been received from Mexico. The notice recited the Minister's opinion that Cabal was an extraditable person for the purposes of the Act in relation to Mexico and that if his conduct had taken place in Australia at the time of the extradition requests, it would have constituted extradition offences in relation to Australia. The Minister further recited that she was not of the opinion that there was an extradition objection. A diplomatic note received by Australia on 20 January 1999 from Mexico requested the extradition of Pasini, relying on the two arrest warrants that had been issued against him in Mexico. The Minister issued a s 16 notice on 21 January 1999 which contained recitals in terms similar to those set out in the first notice relating to Cabal.
77 A second diplomatic note relating to Cabal and requesting his extradition was received by Australia on 11 February 1999. This relied upon three warrants already mentioned in that connection and a fourth warrant which was issued by the Second District Judge on 7 January 1999. The issue by the Minister of the s 16 notices was the subject of three applications for judicial review by Cabal and Pasini. The applications were heard by Kenny J and dismissed on 27 March 2000 - Bertran v Vanstone (2000) 173 ALR 63.
78 On 24 February 1999, prior to the issue of the second s 16 notice in relation to Cabal, his then solicitors, Pryles & Defteros, wrote to the Attorney-General putting submissions against the issue of the notice. Under the heading "Extradition Objections" it was contended that there was "…compelling material to demonstrate that the surrender of Carlos Cabal is being sought for the purpose of prosecuting him and punishing him on account of his political opinions and that if surrendered to Mexico his trial may be prejudiced and he may be punished and detained by reason of his political opinions". Without limiting the material to be relied upon some of the particulars of that objection were said to include the following:
1. Carlos Cabal was closely aligned and identified with the presidential candidate, Louis Donaldo Colosio, who was assassinated in 1994.
2. Cabal's political and economic objectives, which formed a major part of the presidential campaign of Colosio, included the development and restructuring of the south-east of Mexico. This is an area which is poor and under-developed. These objectives were unpopular and disliked by key members of the Mexican government, in particular Ministers and officials within the Ministry of Finance.
3. Cabal and two other bankers have been singled out and deliberately chosen by the government of Mexico as scapegoats for the governments mismanagement of both the banking industry and the economy between 1992 and 1995. In particular there has been a decision to selectively prosecute Cabal and those closely associated with him, whilst deliberately choosing not to prosecute others.
4. The decision to prosecute Carlos Cabal was made with no regard to substantive and procedural principles. This disregard for the due process combined with factors, some of which are referred to above, demonstrate that the prosecution of Carlos Cabal was instituted and is now being conducted, not by an independent and unbiased executive authority (by reason of his activities within Banco Union), but on account of his political opinions and standing.
5. The political pressure has as a consequence led to improper and unlawful pressure being applied to the Criminal Justice system. In Mexico criminal trials are conducted before a judge alone. Some of the lawyers acting on behalf of Cabal's co-accused have been persecuted and harassed.
6. Any sentence that will be imposed upon Cabal will be excessive and his detention will most probably be served in jails reserved for the most violent offenders. The conditions in these prisons are in contravention of principles set out [in] international treaties to which Australia is a signatory."
79 This would appear to have been the first formulation in a formal way of the extradition objection related to alleged political opinions. Formal particulars of extradition objections were delivered by Cabal and Pasini's lawyers on 27 May 1999. They set out in a somewhat more elaborate form the objections mentioned in the letter from Pryles & Defteros.
80 On 23 March 1999, Cabal released a media statement which he also placed on the website which he had established. In that statement he said he had always refused to accept what he described as "…the unfair and undeserved victimisation" of himself by the Mexican government whose only purpose he said was "to distract the Mexican people from the disastrous failures of economic policies implemented by the financial authorities". He referred to the near collapse of the Mexican banking system following devaluation and asserted that the government had singled out some bankers and businessmen to blame for that financial disaster. He said:
"They targeted me not because of my actions, but because of my political views."
He said:
"I am being persecuted because of the threat that is believed I represent to the system. I am not aligned to any political group, but I supported the former presidential candidate Louis Donaldo Colosio because I agreed with his social policies to develop the whole of Mexico.
Colosio was assassinated a few months before the presidential election which he most certainly would have won and I believe Mexico would have had a very different and favourable reality.
This murder, as well as a rebel uprising in the Mexican south, created great instability in Mexico and a new power struggle at a time when the economic crisis was beginning.
I was not as enthusiastic about Zedillo's policies as I was about Colosio's. This and the fact that I did not support Zedillo as much as I did with Colosio has cost me dearly."
He asserted that the charges against him seemed to relate to a series of transactions involving "…the bank's preparations to buy another bank, which would have then meant that it would have been the fourth largest bank in Mexico". He asserted there was no missing money and that the proceeds of loans in issue were in institutions which the government seized. Allegations about tax evasion and money laundering had been prepared once he was arrested in Australia. They, he said, were a fabrication and could quickly be proved wrong. He described the proceedings against him as "political persecution" and said Australia was the only chance to fight that persecution "masked as a legitimate act of the Mexican government". He said:
"I am certain that I am persecuted by reason of my political opinions. I am confident, given the appropriate opportunity, that I can prove this as a valid opposition to Mexico's request for my extradition. More importantly, I strongly believe, again given the right opportunity, that my innocence will prevail."
81 In the Miami Herald of 29 May 1999, Andres Oppenheimer, published an article said to be based on an interview with Cabal under the headline "Banker tells of huge PRI donations". The opening paragraph of the article was in the following terms:
"Offering a rare glimpse into the back rooms of Mexico's traditionally secretive ruling elite, a fugitive Mexican banker disclosed to The Herald this week that he contributed $25 million to the government party in 1994, including $5 million for President Ernesto Zedillo's campaign.
Carlos Cabal Peniche who is in an Australian prison fighting an extradition request from the Mexican government, said in a letter to The Herald that "donations of this kind were normal in Mexico…It was part of the system between businessmen and politicians. Everyone had to do it."
Cabal's statement was said by the reporter to mark an unusual description of the nature and scope of relations between big business and the PRI. The article went on to quote statements by Cabal about his contributions to Colosio's campaign and subsequently the $5 million donation to Zedillo and another to the campaign of Tabasco Governor, Roberto Madrazo. The article said:
"Cabal Peniche, who faces a July 19 extradition hearing in Australia, said in a March telephone interview that he is a victim of political persecution by Zedillo, because he was "not as enthusiastic about Zedillo's policies as I was about Colosio's."
The article also quoted a government spokesman as rejecting any claims of financial improprieties or political retribution. The writer, Oppenheimer, is a friend of Professor Roett (T2064 X-184). A further article in the newspaper, Reforma, of 7 July 1999, carried a lead story about Cabal on the front page. It attributed to him statements that the extradition treaty between Australia and Mexico was being abused and abrogated by an authoritarian state. The process was characterised by Cabal, according to that article, as a "quick political fix before the presidential elections".
82 On 15 July 1999, a newspaper advertisement was published by the PRI responding to statements attributed to Cabal in the media in the preceding few days. A translation of the advertisement was tendered and ultimately received in evidence (C55 at T4870). The advertisement asserted that in September 1994 the Government of Mexico was obliged to assume control of Banco Union of which Cabal was Chairman and a majority shareholder. The intervention was said to have been made necessary by financial losses which the bank had suffered largely as a result of illegal operations carried out by Cabal himself. As a result of the efforts of the current government, it was said, seventeen criminal proceedings had been brought against Cabal giving rise to seventeen arrest warrants. The Federal Attorney-General's Department had placed an embargo on assets and accounts belonging to Cabal in several countries throughout the world. It was said:
"The offences for which he is being prosecuted are those of fraud against individuals and against financial institutions, and also tax fraud, all of which have inflicted heavy financial losses on Mexican citizens and companies. Worse still, Cabal Peniche has allegedly committed an offence classified by the law as serious, namely that of money laundering. The illegal acts of which he is accused involve over 600 million dollars."
Reference was made to Cabal having been on the run from the law for over four years and that his alleged responsibility had not only come to light in Mexico but also in other countries where he had been accused of fraud. The statement went on:
"These facts corroborate that he is not being prosecuted for political reasons but rather because he is an alleged offender."
The advertisement then went on to discuss what was said to be "Cabal's strategy" of trying to "…implicate in alleged illegal acts a Government which from the outset has pursued him until it caught him and that is waging a permanent battle against impunity" (sic). His only defence, it was said, has been to try and pass himself off before Australian authorities as a person subjected to political persecution. The statement then said:
"It is to be deplored that, whether through ignorance or driven by purely electoral interests, legislators of the National Action Party [PAN] and of the Party of the Democratic Revolution [PRD] should come to the public defence of this alleged offender. It is somewhat of a paradox that those who publicly claim to combat impunity should nevertheless be assisting Carlos Cabal to obtain his own."
The advertisement then went on to specify a number of alleged lies propagated by Cabal. These included what was said to be the lie that the Mexican legal system was prosecuting him for expressing his political ideas. It also said he had lied when he said he gave millions to the PRI for the financing of the presidential campaign. Supporters' contributions received by the Party for that purpose were said to have been within the legal limits. 1993 contributions by different groups of supporters linked to Banco Union were made without the PRI breaching in any way the laws then in force. The matter of financing of the 1994 campaign had been analysed by authorities who were said to have found in favour of the PRI. It was said:
"In fact, in June of this year the Federal Electoral Court …handed down final and irreproachable judgments with regard to the appeals lodged by the PRD in relation to this matter, which has accordingly become res judicata."
The advertisement which appeared over the designation "National Executive Committee" ended with the words:
"Carlos Cabal Peniche has not acted, does not act, and will not act with impunity. The full weight of the law will be brought to bear. That is the commitment of the PRI."
83 It is not necessary for present purposes to set out the convoluted history of proceedings generated by the arrest of Cabal and Pasini and their attempted extradition. That history includes litigation in the Supreme Court of Victoria relating to the seizure of assets, applications in the Federal Court challenging the refusal of bridging visas pending the hearing of an application for protection visas, a pending application for judicial review of the refusal of protection visas, proceedings related to the terms of custody and the refusal of bail and a challenge to the extradition notices issued by the Minister. An extradition hearing in relation to the three requests was heard over some sixty nine days before Her Worship Ms Hannan in the Melbourne Magistrates' Court and on 17 December 1999 her Worship ruled that Cabal and Pasini were eligible for surrender. The present proceedings seek a review of that ruling under s 21 of the Extradition Act 1988 and otherwise judicial review.