Mexico to probe Zedillo's family finances, says paper

MEXICO CITY, Mexico (Reuters) -- Mexico's new government will probe the finances of relatives of former presidents Ernesto Zedillo and Carlos Salinas because of suspicions the Finance Ministry let them get away with not paying taxes, a newspaper reported Monday.

El Universal daily said the administration of President Vicente Fox, who ended 71 years of single-party rule when he took office Friday, had files showing Zedillo's brothers, sister and other relatives accumulated tax debts of 15.3 million pesos ($1.6 million) between 1991 and 1996.

The newspaper did not clarify its source but said a tax audit of Zedillo, whose six-year term ended Friday, and Salinas (1988-1994) would be carried out by new Comptroller General Francisco Barrio.

Fox, Mexico's first president since 1929 not to be a member of the Institutional Revolutionary Party (PRI), has pledged to crack down on the corruption that became ingrained during the long tenure of the PRI.

El Universal said Zedillo's brothers Rodolfo, Luis Eduardo, and sister Veronica, among other relatives, owned various construction sector companies.

They stacked up tax debts of 15.3 million pesos ($1.6 million) from 1991 to 1996, but were given a tax pardon by Zedillo's Finance Minister Jose Angel Gurria in 1998, covering 47 percent of the money owed.

Political analysts and even critics agree that Zedillo was one of the few Mexican presidents in recent decades to have kept his hands clean in office.

But his family has occasionally crept into newspaper stories, and his brothers in particular have been accused by Zedillo opponents of trying to use President Zedillo position in the presidency to win construction contracts. None of the accusations have ever been investigated, or proven.

Barrio also ordered his new office to dig into the background of Salinas, El Universal said.

The aim of the investigation would be to trace federal moneys that may have been siphoned off and transferred to "phantom" companies allegedly owned by Salinas, and his brother Raul, who is in jail for murder.

Salinas was the darling of international financial analysts for privatizing whole swathes of the public sector during his term. But his world dissolved shortly after he left office in December 1994 when the peso crisis erupted.

Now disdained by most Mexicans, Salinas fled into self-imposed exile in 1995 after his brother Raul was arrested for murder and accused of running a multimillion-dollar protection racket for the nation's powerful drug cartels.

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