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Saudis Must Stem Cash for Terror, Report Says

Times Staff Writer

BARCELONA, Spain -- Despite a crackdown on terrorism financing after the Sept. 11 attacks, Saudi Arabia still must dismantle a system that has permitted hundreds of millions of dollars to flow to Islamic extremists through businesses and charities, according to a report submitted to the U.N.

Prominent Saudi donors, companies and charities whose funds have been traced to Osama bin Laden’s Al Qaeda network by investigators around the world are still doing business, the French investigator who wrote the report said in an interview Monday. The problem stems in part from a blurring of religion and finance in Saudi society that impedes reform, according to the report.

“Al Qaeda was able to receive between $300 [million] and $500 million over the last 10 years from wealthy businessmen and bankers, whose fortunes represent about 20% of the Saudi GNP, through a web of charities and companies acting as fronts,” said Jean-Charles Brisard, the investigator. “Most of this financial backbone is still at large and able to support fundamentalist institutions.”

The 34-page report was submitted by Brisard last week at the request of the Colombian ambassador to the United Nations, the current president of the Security Council.

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Brisard spent years analyzing Al Qaeda’s finances for a French intelligence service. He works now as a private investigator for relatives of victims of the Sept. 11 attacks who have filed a lawsuit against Saudi political and economic leaders alleging they sponsored Al Qaeda terrorism.

A spokesman for the Saudi mission to the United Nations declined to comment on the allegations Monday.

“The report speaks for itself,” the official said. “We do not comment on such reports.”

Saying they have been unfairly criticized in the aftermath of the World Trade Center and Pentagon attacks, Saudi authorities have taken steps to regulate hundreds of millions of dollars in religious donations that leave the kingdom each year. In November, authorities said they would intensify audits of Islamic charities and create new regulations and special units to fight money laundering.

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But the report says such measures are insufficient because the financing of terror, in which legitimate funds are diverted to criminal purposes, differs from money laundering, which recycles criminal profits into legal enterprises.

Saudi Arabia must change a culture whose “entire legal framework, from state regulation to charities control through religious interpretation” helps “corrupt a system that may be honest and legitimate at its beginning,” the report states.

Drawing from court cases and intelligence activity around the world, Brisard outlines the financial structure of Al Qaeda before a U.S. military operation last year wiped out its headquarters in Afghanistan.

Bin Laden’s organization, the report says, spent as little as 10% of its estimated budget on actual terrorist operations, whose costs are often modest: The Sept. 11 plotters are thought to have spent about $600,000. A bombing on the Indonesian island of Bali that killed more than 190 people in October cost about $74,000, according to the report.

While terrorist cells often sustain themselves with criminal activity, Al Qaeda has spent most of its money on communications, training bases and protection payments to host states such as Sudan and Afghanistan, according to the report.

Al Qaeda’s fugitive leaders are now believed to be paying protection to ward off capture in tribal areas along the Afghan-Pakistan border, Brisard said.

The report says Bin Laden’s public statements show he has encouraged and profited from the abuse of zakat, a pillar of the Islamic faith that requires Muslims to give a percentage of their earnings to the needy. Because the donations are largely unregulated, they have become “the most important source of financial support for the Al Qaeda network,” the report states.

Saudi officials who oversee the payments have failed to regulate the donations that flow to 241 Saudi charity organizations operating in the kingdom or abroad, according to the report. Sometimes unwittingly and sometimes intentionally, charities have been conduits of funding for Bin Laden’s “holy war” against the West.

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Omar Faruq, an accused Al Qaeda operative arrested this year in Indonesia and interrogated by U.S. agents, identified the Al Haramain Islamic Foundation as “the funding mechanism” for terrorists in Indonesia, the report states. The Saudis have shut down branches of that charity in Somalia and Bosnia-Herzegovina, but other offices still function, Brisard said.

The kingdom has “repeatedly tried to establish legal rules to govern zakat and donations,” Brisard acknowledged. Since Sept. 11 last year, Saudi authorities say they have frozen a total of about $5.5 million in 33 bank accounts belonging to three individuals.

However, the report alleges that resistance from religious conservatives has shielded businesspeople, companies and banks involved in a structure that benefits extremists. The report recommends that Saudi Arabia make drastic changes such as forming a nonreligious agency to oversee the zakat process and banning cash donations and charitable contributions by companies.

“One must question the real ability and willingness of the kingdom to exercise any control over the use of religious money in and outside of the country ... ,” the report concludes. “The unwillingness of the Saudi government to consider its responsibility in that regard is a major setback in the war against terrorism financing.”

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Times Paris Bureau chief Rotella is on assigment in Barcelona.


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