ATbar Tracing Bin Laden's Money - Easier Said Than Done
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Tracing Bin Laden's Money - Easier Said Than Done

21/09/2001 | by Shahar, Yael  

In the wake of the terror attacks of “Black Tuesday,” investigators are seeking to follow the “money trail” back to the perpetrators, hoping to learn who ultimately gave the order. While American officials would like to see a clear trail leading back to the legendary wealth of Saudi fugitive Osama bin Laden, tracing this financial path back to him is likely to be difficult—perhaps more difficult even than finding the perpetrators themselves.

Osama bin Laden was named by the State Department’s “Patterns of Global Terrorism” report in 1996 as “one of the most significant financial sponsors of Islamic extremist activities in the world today.” The estimates of his personal fortune vary widely, from a few million dollars to $300 million or more.

In an attempt to find out who bankrolled the attacks on New York and Washington, U.S. investigators are expected to examine electronic banking systems and known offshore banking havens. They will also seek the cooperation of authorities in Malaysia, Singapore and other Asian countries where bin Laden is believed to have established bank accounts and “shell companies.”

ICT’s Reuven Paz, an authority on Islamist organizations, has pointed out that any attempt to trace the money flowing into or out of al-Qaida’s bank accounts is likely to prove extremely difficult, if not impossible.

The problem is aggravated, paradoxically, by the decline in state-sponsorship of terrorism, according to Paz. “In recent years there has been a decline in the sponsoring of terrorism by states. What this means is that public support for terrorist groups has become the most essential element in fund-raising and the main source of finances.” Such public support means that one must trace, not one or two, but literally hundreds of thousands of transactions.

A Legend of Wealth

Osama bin Laden is one of 53 children of Saudi construction magnate Muhammad Awad bin Laden, who amassed a fortune from successful construction and contracting companies in Yemen and Saudi Arabia. Today, the bin Laden family fortune is estimated at $5 billion, of which Osama is reported to have received an estimated $300 million before his family disavowed him.

A graduate of King Abdul Aziz University’s management and economics department, Bin Laden sees himself as a model businessman, and has invested vast amounts of money in infrastructure projects in Sudan and Afghanistan.

Following the Soviet invasion of Afghanistan in 1979, bin Laden set out to liberate the land from the infidel invader, establishing along the way the framework of his al-Qaidah organization. He built roads and airports, bought weapons and built training camps. He also set up a worldwide network to finance the influx of young Arab volunteers to fight the Soviets.

In the years since the Soviets withdrew from Afghanistan, bin Laden’s financial network has expanded to fund Islamist conflicts all over the world, drawing on numerous charity organizations, private donors and commercial activities—both legal and illegal. Among the sources of Al-Qaida’s wealth are:

  • Legitimate Businesses

In 1991, bin Laden was expelled from his native Saudi Arabia and repudiated by his family. Together with a large band of followers, he moved to Sudan, where he became the darling of the ruling Islamist regime. He invested in a variety of commercial enterprises and infrastructure projects.

Bin Laden’s construction company “el-Hijrah for Construction and Development Ltd.”—in partnership with the National Islamic Front (NIF) and the Sudanese military—built the new airport at Port Sudan, as well as a 1200 km-long highway linking Khartoum to Port Sudan. The Sudanese government paid for at least part of this construction work by giving bin Laden ownership of the Khartoum Tannery.

Another company reputedly owned by bin Laden is the “Wadi al-Aqiq” Company, an export-import firm. For many years, bin Laden owned and ran the Taba Investment Company Ltd., which deals in global stock markets. He was also part-owner of the “el-Shamal Islamic Bank” in Khartoum, a joint effort with the NIF, in which bin Laden is said to have invested $50 million.

According to the testimony of witnesses in the U.S. embassy bombing trials, al-Qaida ran several farms in Sudan, raising a variety of crops, from peanuts to sunflowers. However, the land was also reportedly used for weapons and explosives training. Other enterprises in Sudan included the Laden International import/export company; a bakery; a furniture company; the Bank of Zoological Resource cattle-breeding operation; and the International al-Ikhlar Co., which made honey and other sweets.

The produce from these enterprises was routed through a number of countries, including Cyprus, to evade international sanctions against Sudan and to allow for a more profitable sale in Europe and America. Many of these Sudanese projects were likely motivated more by political motives than profitability, and won for bin Laden the status of state benefactor and protected person in Sudan. In 1996, bin Laden told Abdel-Bari Atwan, a London-based journalist, that he had lost “more than $150 million on farming and construction projects during his time in Sudan.”
Nonetheless, bin Laden’s organization is believed to have enough cash to sustain a worldwide empire. Al-Qaida has at one time operated ostrich farms and shrimp boats in Kenya, bought tracts of forest in Turkey, engaged in diamond trading in Africa and acquired agricultural holdings in Tajikistan. Many of these minor enterprises—such as the fishing business in Kenya—served as a cover for terrorist operations.
Sudanese president Omar el-Bashir recently announced that all of bin Laden’s businesses in Sudan were liquidated when he was expelled from the country in 1996. El-Bashir said he didn’t know if bin Laden maintains bank accounts in Sudan, but that if he still has investments there, they would be liquidated.

However, tracing all of bin Laden’s holdings may prove no easy task. One of bin Laden’s associates told a U.S. federal court last year that Osama’s money is now scattered among secret financial and commercial agencies in Europe and the Arab world, and that many of his business partners may not even know that they’re working with him.

  • Charitable and Relief Organizations

A number of international charities that collect money for refugees and other relief works in the Middle East are known to be funneling money into terrorist activity, in some cases with the knowledge of contributors. Much of this money comes from the Gulf States, which in 1991 ended all financial aid to the PLO because of its position in the Gulf war. This decision led to a shift of financial support to Islamic groups, organizations and projects.

Countries such as Iran, Saudi Arabia, Kuwait, Sudan, and Pakistan, give—either directly, or through official and unofficial foundations and companies—enormous sums of money to Islamic movements. This money goes to a wide range of Islamic organizations and institutions all over the world. Many of these bodies serve as front organizations for groups that engage in terrorism.

Each year, the Saudi government hands over some $10 billion to Islamic organizations through the Ministry of Religious Works—largess designed to appease fundamentalists. Although the funds are supposed to be used for social, educational and humanitarian purposes, American officials believe that at least some of this money finds its way into bin Laden’s coffers.

A vast number of Middle-Eastern and Asian Islamic relief organizations are active in Western countries as well. There, protected by democratic freedoms, they can operate under much less supervision than they could in their countries of origin. Most of these groups maintain active Internet websites to promote their activities and their radical Islamist message, particularly to the younger members of the Muslim communities in the West.

  • Private Donors

Bin Laden’s organization draws large amounts of money from wealthy Islamic donors. Some give because they believe in bin Laden’s cause; others may be contributing to avoid potentially unpleasant consequences. The WasPost quoted a senior U.S. official as saying, “We believe a lot of guys have paid protection money.”

The vast majority of these donors live in Saudi Arabia and the Gulf States; though in recent years, donations have also been pouring in from wealthy expatriates in Western Europe and the United States.

According to Reuven Paz, donations to Islamic movements or projects are channeled through private foundations, but may still have the blessings of governments. “Although these donations are private, in most cases they come from officials or individuals of high public position in their countries, or even members of the royal families,” he said. “The donations are thus perceived as part of governmental support.”
Drug trafficking
U.S. Senator John Kerry, a member of the Senate Foreign Relations Committee, said that there are strong indications that bin Laden’s al-Qaida network has profited handsomely from the opium trade. Al-Qaida militants have frequently been deployed as smugglers or as guard details for smugglers.
Opium, used in the manufacture of heroin and morphine, has an added attraction for terrorists because such drugs head to the United States and lead to problems such as addiction and crime, he said. “That’s part of their revenge on the world,” Kerry said. “Get as many people drugged out and screwed up as you can.”

Last year, the ruling Taliban cracked down on opium production. However, there are rumors that a special religious ruling (fatwah) was issued by Taliban authorities allowing the continued production of drugs for export.

Terrorism on a Shoestring

Despite the reputedly vast sums controlled by Osama bin Laden and al-Qaida, the organization appears to be quite miserly with doling out cash for operational costs. Court records and government reports in the United States and elsewhere, tell a tale of financial constraints and shoe-string budgets. Many of bin Laden’s agents have carried out their operations on a paltry budget and miniscule salaries.

In fact, the disproportion between bin Laden’s legendary wealth, and his apparent miserliness where his agents are concerned has driven several of his formerly trusted aides into the arms of his enemies. One key witness in the U.S. embassy bombing trials testified that he had decided to betray his employer when bin Laden refused to advance him money for a Cesarean section for his wife.

Other witnesses told how al-Qaida operatives were forced to rent rooms in cheap hotels, at times to turning to petty crimes to raise money for living expenses. Some of his cadres supported themselves with such activities as identity theft and credit card fraud. A Jordanian cell arrested in December 1999, on suspicion of links to bin Laden, confessed to planning robberies in order to finance their activities, and to receiving very small sums of money—generally no more than $2000—from abroad. Such was also the case with a Palestinian Islamist group uncovered by Israeli security services in April-June 2000, whose leader was linked to Bin Laden. Most of their financing came from Hamas sources.

Reuven Paz pointed out that there have been some rather odd transactions involved in many of bin Laden’s dealings. “An investigation into an alleged bin Laden network in the United States in 1999 discovered that about $11,000 was sent from the U.S. to an Islamist activist linked to bin Laden in the Middle East,” Paz said. “Certainly not the way it is supposed to work in the case of a terrorist network financed by Bin Laden.”

Compartmentalization and Untraceable Transfers

Money is transferred to terrorist organizations by means both sophisticated and secret, but in most cases legitimate. Transactions are routed through bank accounts in Europe, North America, Asia, and the Middle East. Some of the Islamic institutions in the West are used also to launder large sums of money transferred from different countries or wealthy individuals, primarily in Iran, Saudi Arabia, Kuwait and other Gulf states.

Many of al-Qaida’s cells are self-maintaining, generating their own finances through illegal activities in the countries were they operate. In such cases, there is no “central processing unit” for money transfers. Just as al-Qaida’s terrorist operations are fully compartmentalized, so too, are its financial enterprises.

All too often, al Qaida operations bypass the more traditional money laundering techniques—such as the use of electronic transfers and offshore accounts—that might provide clues to sources and methods. In many cases, there is no “paper trail” to follow; cash is simply slipped into a suitcase and carried by courier to designated recipients.

Jamal al Fadl, a key witness in the Embassy Bombings trials, told how he was given $100,000 in cash in $100 bills to carry to Amman, Jordan. Travel documents for the couriers are arranged by al-Qaida, and the courier is provided with an address or a description of a contact who will meet him at the airport. Once the money is handed over, often in a sealed envelope, the operative returns home. Most have no idea what is going on beyond their immediate task.

Another manner in which money can be transferred secretly is the traditional underground system known as hawala. From the Hindi word for “in trust,” the hawala system transfers money deposited with a hawala broker in one country to a second broker in another country. The system is completely unregulated, and is based solely on the relationship of trust between brokers. Organized through a series of informal chits and promises, such a system can move huge amounts of cash. None of it crosses borders, and apart from personal notes there’s no record of the transactions.

But even more traditional banking systems may prove an impenetrable wall to investigators. Consider:

  • Supposedly “untraceable” financial services are advertised in more than 60 nations, from Andorra to Western Samoa. The tiny Pacific island of Nauru alone is home to some 400 “shell banks” whose purpose is to hide money. Accounts in such places could prove inaccessible to investigators.
     
  • Throughout the British Virgin Islands, investors can set up an “anonymous corporation,” where owners can make deposits and withdrawals without being traced. The account is set up and managed by a bank-selected attorney, which means all the proceedings are protected by attorney-client privilege. Some banks even offer an “Anonymous ATM” card that allows unlimited withdrawals anywhere in the world.
     
  • The laws of the Seychelles Islands give immunity to investors from all outside criminal charges. Investors can place $10 million or more into approved investment schemes, even if that money was originally obtained through acts of violence or drug trafficking. The government requires only that the investor not engage in illegal activities on the Seychelles chain itself.
     
  • The foremost proponent of bank secrecy is Switzerland, even after the nation’s two largest commercial banks admitted their role in financing Hitler’s war machine. Strong Swiss support for the current system shows that there is unlikely to be any push to change banking laws anytime soon.
     
  • An international Financial Task Force on Money Laundering published a list in June of this year containing nineteen countries that did not meet its reporting standards, including Egypt, Guatemala, Russia, and the Asia-Pacific islands.

And then there are the legitimate bank accounts. Bin Laden’s network is believed to have accounts all over the world—from Barclay’s Bank in London, where a suspect account was shut down by the British government last week, to Girocredit in Vienna. “There is a web of private accounts with Islamic interest-free banks in the Muslim world which serve as lifeline to al Qaida movement,” a former Pakistani military intelligence official told the Washington Post.

The United Arab Emirates is believed to be a major hub of bin Laden’s banking operation, due to its liberal banking system. It is also one of only three countries that maintains official relations with the Taliban; the others being Saudi Arabia and Pakistan.

After the attacks of “Black Tuesday,” the British government called for robust action from international banks, particularly in Switzerland, to ensure greater transparency in the global financial system. British finance chief Gordon Brown has said that the key to cutting off the flow of funds to terrorists is better reporting, and has urged all financial institutions to declare dubious transactions “so that there is not only no safe haven for terrorists but no hiding place for terrorist money.”

Roger Alford, a finance expert at the London School of Economics was quoted by the Agence France Presse as saying that the main task was tracing suspect transactions back with the help of the banks. However, this could pose legal problems. “The trouble is of course that a lot of these people—Middle East millionaires who are maybe financing terrorist groups—they also do all sorts of perfectly legal transactions as well,” Alford said.

Another financial expert, banking consultant Noel de Berry, pointed that any sort of financial regulation would be a complicated business. “People are allowed to have many bank accounts,” he said. “Transactions take place in seconds. There’s a lot more happening that can ever be tracked down. Money can be moved across the world, make three or four jumps in a very short time and come back again.”

Monitoring funds transfers to suspect charities and relief organizations may also prove problematic—more for political and legal reasons than technical ones. Even in cases where it is clear that Islamic terrorists are concealing their activities and sources of funds by fronting throught charitable organizations, these charities still do substantial community service work. Investigating these organizations would prove especially difficult in Western countries, and could raise allegations of targeting religious or ethnic groups.

History has shown that proving a terrorist link to such institutions is quite difficult, and has only been done in a few cases. In most cases, investigations into dubious transfers eventually reached a dead end. Foundations like Interpal in the UK, the Holy Land Foundation in Texas, the Al-Aqsa Foundation in Germany, and others, have been subject to investigation without any real success.

One reason for this lack of success has been the lack of cooperation between countries—particularly the European Commonwealth and the United States—who differ in their interpretation of what constitutes terrorism and how to deal with it. These differences exist not only between Western countries, but also between Muslim countries. The disputes in the Arab world are especially detrimental to countering the financing of Islamist terrorist groups, since a major part of the financing comes indirectly from Arab governments, institutions or wealthy individuals.

Counter-terrorism professionals have been pointing out the need to combat the financing of terrorism for years, only to be frustrated by a lack of common agreement on the nature of the target. If the atrocities of Black Tuesday teach us nothing else, they should teach us that we must cease asking “who is a terrorist,” and concentrate instead on “what type of act constitutes terrorism.” The death of more than 7,000 civilians in the destruction of the Twin Towers of New York’s World Trade Center, part of the Pentagon, and four large airliners, is terrorism by any definition.

For the first time, a single act of terrorism has transformed geopolitics practically overnight. Terrorism is a strategic problem affecting the world as a whole—including the global economy. The solution to dealing with terrorist financing—as with almost every other type terrorist activity—is dictated by the nature of the problem: the globalization of Islamist terrorism must be met by a similar globalization of the effort to combat terrorism.