NYTimes.com Article: Terror Money Hard to Block, Officials Find

This article from NYTimes.com 
has been sent to you by threehegemons@aol.com.


Despite progress in unraveling the finances of the September attacks, 
government officials say dismantling the overall financing of Al Qaeda is 
proving more difficult, in part because it hinges far less on Mr. bin Laden's 
fortune than was once believed.

During the last few years, government officials have concluded that Mr. bin 
Laden's inheritance, once estimated at $300 million, was actually more in the 
range of $25 million. 

pretty interesting article.

Steven Sherman

threehegemons@aol.com

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Terror Money Hard to Block, Officials Find

December 10, 2001 

By KURT EICHENWALD


 

In Afghanistan, the hunt for Osama bin Laden is narrowing.
But on the war's financial front, the government is only
now beginning to come to grips with Al Qaeda's
money-raising apparatus, which officials say is so
far-flung and diversified that it could survive even if Mr.
bin Laden is captured or killed. 

Delving into a network that generates millions of dollars a
year, yet often trafficks in small amounts, the inquiry has
uncovered at least $238,000 sent to the Sept. 11 hijackers
in the United States through a dozen wire transfers from
the United Arab Emirates. Several transfers are linked to
an Al Qaeda official who used various aliases, United
States government officials said in recent interviews. 

Investigators have also found that the hijackers and some
of their acquaintances declared about $40,000 in cash when
entering the United States, the officials said, and law
enforcement officials are trying to determine if that cash
also aided the attacks. 

Despite progress in unraveling the finances of the
September attacks, government officials say dismantling the
overall financing of Al Qaeda is proving more difficult, in
part because it hinges far less on Mr. bin Laden's fortune
than was once believed. 

During the last few years, government officials have
concluded that Mr. bin Laden's inheritance, once estimated
at $300 million, was actually more in the range of $25
million. Instead, Al Qaeda uses an amalgam of private
enterprises, corporate shells and charities that are
structured like a financial archipelago with connections
hidden beneath the surface. 

To support Al Qaeda, some operatives work like organized
crime crews. Government officials exploring Al Qaeda's
operation in Bosnia found that operatives skimmed money
from relief charities and linked up with Bosnian crime
bosses. The success in Bosnia made it a model for Al Qaeda
to use in embattled countries around the world. 

The description of the expansive and self-sufficient
structure of the network is based on interviews with
current and former officials of many American government
agencies, as well as from court records and other official
documents. The Bush administration's attempt to break up
this financial network is as vital as the military action
in Afghanistan, experts say. 

"A military success would not be sufficient without an
attack on the financial infrastructure" of Al Qaeda, said
Michael Zeldin, former head of the money-laundering section
at the Justice Department. "If that stays in place, then
you may chase them from one geography to the next, you may
be disruptive, but you haven't gotten to the root of the
problem." 

Since Sept. 11 the Bush administration has taken three
public steps to block dozens of individuals, companies,
charities and other organizations with Al Qaeda connections
from the international banking system. 

But out of public view, the effort is far broader,
government officials say, involving diplomatic and covert
actions. Working with governments in the Middle East and
Europe, officials have privately confronted several
international charities with accusations that terrorists
had infiltrated their organizations and were diverting
money to Al Qaeda. 

United States officials, working with foreign counterparts,
have monitored back transactions trying to track down Al
Qaeda supporters. So-called "jump teams" of American
forensic accountants, lawyers and other experts have
descended on foreign countries to review records in search
of Al Qaeda connections. 

Evaluating progress on the financial front is far more
difficult than it is in military battles. Much of the
effort is only now getting under way, and the Bush
administration has made public virtually none of the
evidence it says it has linking individuals and private
groups to Al Qaeda. 

Success in this fight will be hard-won, experts say,
primarily because Mr. bin Laden has fundamentally changed
the nature of terrorist financing. In effect, at a time
when state sponsorship for terrorism was in decline, Mr.
bin Laden undertook a privatization of terror, creating a
far more diffuse network than any faced in the past. 

"The decline in state-sponsored terrorism means that the
private support for terrorist groups has become the most
essential element in fund-raising," said Reuven Paz, former
academic director with the International Policy Institute
for Counterterrorism in Herzlia, Israel. "That means any
attempt to cut the money flow into Al Qaeda or other
similar organizations will prove far more difficult than it
has been in the past." 

Invasion Prompts Money Flow 

It all began - as with most things Al Qaeda - with the
Soviet Union's invasion of Afghanistan in 1979. 

As devout Muslims trooped there to defend the Islamic
nation, wealthy Saudi businessmen funneled millions of
dollars to support the effort through assorted charities.
Among those businessmen was Mr. bin Laden, an heir to a
Saudi construction fortune. 

With the Afghan war playing out on the geopolitical
chessboard of the cold war, the Central Intelligence Agency
was directing even larger sums of cash toward the Afghan
rebels, known as the mujahedeen. As the charities gained
influence, American officials watched with little concern -
and indeed, with approval. 

"The lion's share of the money for the mujahedeen came from
the United States," one former senior intelligence official
said. "We knew there was money coming from Arab states,
primarily Saudi Arabia, that was being funneled through
charities. But as long as we were all on the same side, it
was welcome. It wasn't looked on as a threat that you
needed to monitor." 

When the Afghan war end in 1989, officials said, Mr. bin
Laden tapped those fund-raising contacts to support his
idea of a wider jihad, or holy war, against the West. By
1991, he had a base in Sudan, where a militant Islamic
government was in power, and Al Qaeda's financial operation
took root. 

Using his inheritance and donations channeled through
charities, Mr. bin Laden expanded his economic base.
According to records in the Manhattan trial of Al Qaeda
members who were convicted of bombing American embassies in
Africa, he formed a company in Sudan called Wadi al-Aqiq,
which managed investments in at least nine businesses,
including a furniture company, a bakery and a
cattle-breeding concern. 

The organization also expanded contacts with charitable
front groups, and formed some of its own. Supporters of Al
Qaeda approached Arab businessmen for contributions. Often,
they paid, either out of conviction or concern. "A lot of
people gave money as part of the cause, and a lot of people
gave money so terror wasn't directed at them," said Jack
Devine, former acting director of operations with the
C.I.A. and now president of the Arkin Group, a New York
investigations firm. "You can give honorably or you can
give out of fear." 

Government officials also believe that Al Qaeda used
seemingly independent companies as fronts. For example,
earlier this month, President Bush blocked the accounts of
a financial network called Al Barakaat, which owns an
international collection of hawalas, an informal remittance
system that moves millions of dollars around the world with
virtually no paper trail. According to law enforcement
information provided to the Treasury Department, the
network is controlled by Al-Ittihad Al-Islamiya, an
extremist Somali militia designated by President Bush as a
terrorist organization. 

Officials at Al Barakaat's headquarters in Mogadishu have
denied that their money- transfer operation has any
connection to Al Qaeda. 

However, the information suggests that the connection to
the terrorist groups works like this: Somali emigrants
around the world use Al Barakaat to send money back home.
That money is sometimes commingled with the illicit
proceeds from welfare and insurance frauds and transferred
to accounts in Dubai, where terrorist operatives siphon off
a portion of it for Al Qaeda and the Somali militia group.
Sometimes that portion is used to buy arms. The balance
makes its way to Somalis back home. 

Terrorists also benefit from fees on the transaction.
Law-enforcement officials have also found that a fee of
about 5 percent is charged on each transfer; in Dubai,
operatives pass a piece of the fee to the Somali militia
group, which then gives a cut to Al Qaeda. 

Great effort goes into disguising these connections. For
example, government officials said, people at Al Barakaat
arranged for an arms shipment to people linked to Al Qaeda.
In records, the officials said, the shipment was recorded
as containing only blankets. 

Al Qaeda both produces and profits from mayhem. After the
organization's creation in Afghanistan, Mr. bin Laden
recognized that global unrest presented it with
opportunities to expand its influence, as well as pump its
financial machine. 

Years of bloodletting in Bosnia, for example, allowed Al
Qaeda to establish a beachhead in central Europe,
government officials said. When the United States guided
three rival Balkan states to a peace accord at a meeting in
Dayton, Ohio, in 1995, the stage was set for Al Qaeda and
other militant groups. "Various very militant groups who
were mujahedeen-connected were involved in the Bosnia
campaign and took advantage of the Dayton peace accords to
set up shop" in the Balkans, one former intelligence
official said. "They found a very hospitable environment"
when a portion of Bosnia was placed in the hands of
Muslims. 

The bin Laden financial machine blossomed, according to
officials who have been informed of intelligence
information on the matter. Charities around the Arab world
proclaimed that they were raising money for humanitarian
purposes in Bosnia, but in fact portions benefited Islamic
extremist groups in the area, including Al Qaeda. 

Militants linked to Al Qaeda also established connections
with Bosnian organized crime figures. The officials said Al
Qaeda and the Taliban found a route for the trafficking of
heroin from Afghanistan into Europe through the Balkans. 

Their presence in Bosnia proved so successful for Al Qaeda
operatives, officials said, that it became an
"off-the-shelf" model for fund-raising and recruitment used
by the terrorist organization again and again - in Kosovo,
Albania and Chechnya. 

"There is a vast criminal network of these operating
throughout Europe, that provides these groups with the
financial revenue to buy military equipment," one former
intelligence official said. "It is narco-terrorism all
intertwined with organized crime." 

By 1996, Mr. bin Laden was expelled from Sudan. He moved to
Afghanistan and ingratiated himself with the ruling Taliban
by pouring millions of dollars into the country. His group
gained new financial powers; even the country's national
airline, Ariana Afghan Airlines, became Al Qaeda's "Fed- Ex
system" for shipping arms and personnel, officials said.
This financial system transformed the nature of
international terrorism. Al Qaeda offered amateurs
dedicated to destruction at any cost a source of cash with
no strings attached. 

But that source could be stingy. While millions were
available for recruitment and training, sometimes only a
few thousand dollars were disbursed for particular attacks,
leaving Al Qaeda cells struggling to support themselves
with petty crimes, like credit card fraud. 

"The organization writ large has a lot of money," said
William Wechsler, who headed counterterrorism for the
National Security Council in the Clinton administration.
"But go to any portion of it, and it is scraping by." 

Faltering Attack on Finances 

After Al Qaeda's deadly
bombings of embassies in Kenya and Tanzania in 1998, the
Clinton administration began the first major effort to
disrupt the network's financing. 

President Clinton ordered the freezing of assets linked to
Al Qaeda, including the funds of Ariana Afghan Airlines.
His administration enlisted the support of Arab and Asian
nations against Ariana, and Russia helped push through a
resolution against the airline at the United Nations.
Within a short time, the airline could no longer land
outside Afghanistan. Other efforts to disrupt Al Qaeda's
finances were less successful. Beginning in 1999, midlevel
Clinton administration officials traveled to Saudi Arabia,
Kuwait, Bahrain and the United Arab Emirates seeking
information about charities aiding Al Qaeda. 

But Saudi Arabia and the U.A.E. provided no assistance,
American officials said, and with the embassy bombings
receding into memory, the administration largely moved on.
"These visits were not followed up by senior-level
intervention by the State Department, or for that matter by
Treasury, to those governments," said Stuart Eizenstadt, a
former Treasury official and a participant in the trips. "I
think that was interpreted by those governments as meaning
this was not the highest priority." 

When terrorists struck on Sept. 11, the assault on Al
Qaeda's finances had largely fallen by the wayside. The
American government had developed a good deal of
information about Al Qaeda's finances, but it was not
widely shared among agencies. 

To coordinate government action, the Bush administration
created a Policy Coordinating Committee, bringing together
officials from Treasury, State, Justice, the National
Security Council, the F.B.I. and the C.I.A. Two interagency
groups, the Foreign Terrorist Asset Tracking Center and
Operation Green Quest, were created to identify sources of
cash for terrorists. 

More Muscle for Authorities 

Presidential authority has also been expanded. Until now, a
president could block assets of foreign entities if a
finding was made that they threatened the Middle East peace
process. President Bush's Executive Order 13224 expanded
the power of the Treasury's office of foreign asset control
to block the property of individuals and entities that
commit, threaten to commit or support terrorism. 

The executive order "put the backers of terrorism on an
equal footing as those who issue the orders," said David
Aufhauser, the general counsel at the Treasury Department.
Officials said the new rules allowed the administration to
freeze the assets of a wide array of individuals and groups
by better using some information, much of which the
government has had for years. 

But, even with the broader powers, the government has
frequently chosen not to issue blocking orders on some
organizations with apparent ties to terrorism. Instead,
many of them are allowed to continue running, not realizing
that the administration, working with foreign governments,
has begun covert efforts to disrupt their operations and to
trace the activities of other individuals and groups who do
business with them. 

Eventually, officials said, some of those organizations
have been shut down once the covert efforts were completed.
"It would be easy to put 120 names on the list," Mr.
Aufhauser said. "The standards are accessible, and our
library is full. The question is, is that the intelligent
way to proceed?" 

For example, officials said, the Bahamas, which has strict
bank-secrecy laws, allowed American investigators to sift
through records of a closed operation there of Al Taqwa
bank, a financial network suspected of providing support to
Al Qaeda. 

This month, Al Taqwa was cited with Al Barakaat by the
United States in an order blocking their assets. 

That same day, Swiss authorities detained principals of Al
Taqwa, officials in Dubai seized assets and records of Al
Barakaat, and coordinated enforcement actions were taken
throughout Europe, the Middle East and Africa. 

In the basement of F.B.I. headquarters, more than 178,000
financial documents have been stamped with identification
numbers and filed away. Many are in foreign languages, with
financial information in currencies other than dollars. But
each potentially contains another bit of evidence on the
financing of the Sept. 11 attacks. 

The government believes that the attacks cost about
$500,000. Just under half that - $238,000 - was sent to the
hijackers in more than a dozen wires from the United Arab
Emirates, officials said. Four wires have received
particular attention. They were sent in June and July of
last year under three different names - Mustafa Ahmed
Al-Hisawi; Almohtaram, an Arabic honorific; and Fawor
Trading. But officials believe each of the transfers,
totaling $110,000, came from Mr. Ahmed, whose name appears
in numerous Al Qaeda records. 

Government officials said additional money appeared to have
been provided to the hijackers in cash. Investigators have
tracked down Customs records showing that, on arriving in
the United States, the hijackers and some of their
acquaintances declared about $40,000 in cash. It is not
clear if any of those other people had prior knowledge of
the plot. 

Also, the hijackers had "maxed out" all of their credit
cards to help finance the operation, one official said. 

While they were living in the United States, at least one
of the hijackers appears to have received financial
assistance from the American office of a Middle Eastern
organization that helps people traveling overseas,
officials said. 

In addition, officials said, at least one entity cited in
the President's blocking orders has turned out to have a
direct financial connection with a hijacker. 

As the inquiry proceeds, government officials said, the
effort is as much directed at detecting financial patterns
that could signal another potential attack as it is at
unraveling the financing of the Sept. 11 attacks. 

Despite the progress that has been made, there are some
frustrations among law enforcement officials about the pace
of the financial investigation, government officials said,
largely resulting from the complexity of obtaining and
analyzing a huge volume of foreign records. 

Those difficulties have as yet prevented investigators from
analyzing financial records from Germany, a focal point in
the hijacking conspiracy. 

Also, government officials said, until early November, the
United Arab Emirates seemed to be dragging its feet on
providing documentation - a problem officials said has
dissipated. 

Foreign and American officials said the level of
cooperation between law enforcement worldwide has been
unusual. 

Still, experts said, quick victories on the financial front
are unlikely. 

"We have been going after organized crime's financial
network since we put Al Capone away," said Mr. Wechsler,
the former National Security Council official. "And while
the Mafia is a shell of what it once was, we haven't
stamped it out yet."

http://www.nytimes.com/2001/12/10/international/10MONE.html?ex=1008999837&ei=1&en=9e0421b0833d6666



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