Jacobs is the CEO and President of Laredo National Bank in Laredo, Texas. A well-known businessman with bipartisan political connections, Jacobs is not shy about using political contributions to try to advance the cause of his bank, now the third largest in the state. He has been the point man in the counterattack launched by Laredo National Bank, its lawyers, and its principal shareholder Carlos Hank Rhon after the blizzard of stories linking them to drug trafficking. The reported linkage of Carlos Hank Rhon to corruption in the Mexican system is based on allegations about his father Carlos Hank Gonzalez. FRONTLINE asked Jacobs about comments made by both Jorge Casteneda, a Mexican scholar and advisor to President-elect Vicente Fox, and recently retired deputy assistant Secretary of State for Law Enforcement and Narcotics Jonathan Winer about Carlos Hank Gonzalez and corruption in the Mexican system.

I think Winer has an agenda. He's never met me, yet he says very bad things about me. He's never met my principle shareholders. He and his former boss, Gelbard, have said very uncomplimentary things about us. He has no credibility with me whatsoever. I repeat--I think he's an idiot....I mean, where does Winer come off, given the environment he grew up in, pointing fingers at Mexico and saying somehow his version of what is corrupt in Mexico is harming our bilateral interests? I think he has some other agenda.

Explain then, why is he saying negative things about you? To someone who knows nothing about that, where is that all coming from? What happened and why?

... We have, as far as I know, the only perhaps--certainly the largest--independent bank holding company in the United States controlled by people who do not live in the United States. My other shareholders are all Mexican nationals.

And for some reason unknown to me, Winer and Gelbard targeted one of our shareholders and have held--the State Department has been complicitous with some other agencies in building a file of lies, documentable lies, about me and these other shareholders and our institution... But I can tell you that this campaign that Winer and others, some in the DEA and some in other agencies, have been waging against us has been in conjunction with the Federal Reserve Board staff. There are people on the Board staff who have worked with the Winers of the government to try to build a false record that our financial institutions--which are among the best capitalized in the country, among the best managed, solid, law-abiding, compliant institutions--that there's somehow something wrong with our shareholder base.

I think all of that is based on prejudice, just like I think Winer's focus on the subject that you and I just touched on is based on prejudice. In other words, I think there are--

But the focus is on Carlos Hank Rhon.

And Carlos became a victim. I became a victim. But yes, I think there are a lot of people on the Federal Reserve Board staff, and perhaps higher than the Board staff, that somehow became spooked that they had made a mistake and given permission for Carlos and other Mexican national shareholders-but they focused on Carlos, and me to a lesser extent--to control a U.S. bank holding company...

Let me quote to you from someone else we talked to, who is the former head of the FBI office in Mexico City from '91-'96. He says to us, "I arrived in Mexico in 1991 and I received information to the effect that if you wanted to do business in Mexico--and that meant legitimate or illegitimate business--that there are two people that you approach or had to approach in order to succeed in business: Carlos Hank Gonzalez, the father of Carlos Hank Rhon, and the other, the President's brother, Raul Salinas." And he goes on to say, "Raul Salinas was known as Mr. 10% because in order to do business you had to have his backing." So the question was what about Hank Gonzalez? And he says, "And from what I understand, in the same way, although I don't know what his fee was."

...I don't really know him that well personally. But I do know his son, Carlos Hank Rhon quite well. I respect him a lot. I think what our government, the United States government, has done to him is criminal, criminal. [They] violated lots of laws in the United States to try to get him, and me in the process...

I feel like I know Carlos Hank Rhon very well. I have enormous respect for him. I mean, he's a great human being. He's a kind person. He's a very shrewd, highly intelligent businessman, and a great financial mind. He's not in politics. He's a great father, a great grandfather, a great husband. I mean, anybody that meets Carlos, I think, likes him. And he's a man who has tried to make friends, not enemies. So I think this whole attack by the Fed has been really unfortunate. I mean, it's kind of showing the worst side of the United States, not the best.

...And notwithstanding what you or someone may think about how much help his father may or may not have given him at one point in his life, all the businesses that I know of Carlos's--all of his joint ventures, everything--he has done on his own. His businesses are not co-mingled with his brother or his two sisters, or his father. His businesses are independent, and they have been independent for many, many years. And he's done very well for himself and for his partners: General Motors, [Assaya Brown Baveri], Combustion Engineering, AES, the private power company--I mean, you can go on and on. And all of those people did a good due diligence. Daimler Chrysler, which was Daimler Benz, he founded the company in Mexico and chaired it for many years, and took basically a turn-around truck and bus chassis manufacturing company and built it into Mercedes and sold it to them.

His father wasn't involved in that, that I know of. And I think I would, I would know. And, I have seen his financial filings that we did with the Board of Governors. And I don't see any co-mingling. So I think this is all a campaign again, I believe, generated by individuals in the Fed. Not by the institution, but by rogue individuals.

And what are they trying to do to him and the bank?

Well, they're trying to harass him individually into selling his position. And we've taken a position that that's not possible. He hasn't violated any regulations or any laws in our opinion and in the opinions of our attorneys. And they shouldn't be engaged in this campaign, and we hope to show them the errors of their ways.

I'm sitting out there in the audience and I'm saying, "Now wait a second. U.S. Customs, the FBI, DEA, the CIA"-- I'm trying to think of all the different agencies that have had something negative to say in one form or another about your boss.

And my institution, and me individually.

They're all wrong?

They're all lies. And Janet Reno's letter, which you and others have seen, is kind of the tip of the iceberg.

What does Janet Reno have to do with this?

Well, one of our attorneys, after this horrible NDIC National Drug Intelligence Center report was leaked, among other documents that were leaked that were false about Carlos and about us...And that story found its way to the Washington Post. And as a friend of mine says, when you make page one of the Washington Post and you're accused of being drug dealers, money launderers and criminal threats to the United States, that's pretty serious stuff.

So as numb as I was to these press attacks, we finally decided--we'd done nothing about any of the others--that we would go to the Justice Department.

...They may be able to indict people, but they can't--they shouldn't be able to convict anybody if they're innocent. Carlos is innocent, I am innocent, of having committed any crimes anywhere at any time.

...Months later another attorney that we had hired went to the Justice Department. And--

That was who?

Senator Warren Rudman, retired, went to the Justice Department because he believes that Carlos is innocent of everything that is alleged in these, what I call false statements, that the Government is making. And he sat down with Janet Reno and she said she would look into it. And about four months later she wrote a letter saying that this NDIC report had not been authorized, and that it had been illegally leaked, and that they were going to take appropriate action against the leakers.

And, as you know, we have since learned on our own that one of the leakers was terminated.

People that I've talked with about this, let's say on the other side, say, "Well, that's just a reflection of Jacobs's and Hank's influence with the White House." That you've been a big contributor, that you've had coffee with Bill Clinton--

Carlos has no influence with the White House at all and makes no political contributions, has no political activities in the United States. From time to time I'm active in both parties. I usually support individuals, and I usually tend to support whomever is in power once they're in power. And I intended--I was lucky. I was a good friend of George Bush when he was President. I worked with him on NAFTA...The Carter Administration, all of them. So it's not unusual for me to go to the White House. I've been to the White House--

Both parties--

In the Clinton government several times and in the Republican governments probably more times.

I think you mentioned that George W. Bush knows Carlos.

Yes, George W. Bush knows Carlos. And I'm on the Governor's Business Council in Texas, [I] have been for a long time. And George W., I think, is a really good friend of Mexico. And he wanted to meet people in Mexico long before he decided to be--publicly be President of the United States. And Carlos is one of the individuals that he met. He knows a lot of people in Mexico.

What was the Drug Kingpin Law...?

The heart of the legislation was that Treasury would submit a list to the White House every year or every two years--I forget what the cycle was. And this list would be U.S. businesses that Treasury believed were tied in some way to drug dealers on their target list. And if the White House certified the list, no due process would be allowed. And Treasury could go in and seize those assets. In other words, they could seize the corporation or they could seize the assets of the corporation without due process...And then, of course, the rumor was that we were going to be on the list and that some of our stock could get confiscated.

You weren't worried that your assets were going to be seized, when your name is in this report and this report is on the front page of the Washington Post?

No, because I knew it would be lies, and I knew with lawsuits that I was getting ready to file, these cockroaches in the government are going to run for cover. And they are - because it's all lies. I'm--you know, I guess I'm an incurable believer in the American system. I believe that if you tell the truth and you pay your taxes, as Carlos does, as I do, and you don't violate any laws that the system will redeem you. We really haven't started playing all our cards yet...