Undercover American narcotics agents have laundered or smuggled millions of dollars in drug proceeds as part of Washington’s expanding role in Mexico’s fight against drug cartels, according to current and former federal law enforcement officials.

The high-risk activities raise delicate questions about the agency’s effectiveness in bringing down drug kingpins, underscore diplomatic concerns about Mexican sovereignty, and blur the line between surveillance and facilitating crime.

The Los Angeles Times examines the staggering sums of money expended on patently absurd domestic “homeland security” projects: $75 billion per year for things such as a Zodiac boat with side-scan sonar to respond to a potential attack on a lake in tiny Keith County, Nebraska, and hundreds of “9-ton BearCat armored vehicles, complete with turret” to guard against things like an attack on DreamWorks in Los Angeles.

In what will likely be seen as something of a Freudian slip by the US Secretary of State, Hillary Clinton said recently in a Mexican news interview that the United States cannot legalize drugs as a means of fighting the black market because “there is just too much money in it.”

Diplomatic cables released by WikiLeaks show the pharmaceutical giant Pfizer hired investigators to find evidence of corruption against the Nigerian attorney general to pressure him to drop a $6 billion lawsuit over fraudulent drug tests on Nigerian children. Researchers did not obtain signed consent forms, and medical personnel said Pfizer did not tell parents their children were getting the experimental drug. Eleven children died, and others suffered disabling injuries including deafness, muteness, paralysis, brain damage, loss of sight, slurred speech.

The Vatican Bank is under new scrutiny in a case involving money-laundering allegations that led police to seize €23m (£19.25m) in September.

The Vatican calls the seizure of assets a “misunderstanding” and expresses optimism it will be quickly cleared up. But fresh court documents show that prosecutors say the Vatican Bank deliberately flouted anti-laundering laws “with the aim of hiding the ownership, destination and origin of the capital”.