Terror Watch: Paying For Terror

A Bahamian bank controlled by a controversial Islamic financier in Switzerland set up a highly secretive line of credit for a top associate of Osama bin Laden as part of an elaborate scheme to finance attacks by Al Qaeda and other terrorist organizations, according to a newly disclosed U.S. Treasury document.

In a January 2002 letter to Swiss authorities, a senior Treasury official privately spelled out the U.S. government's case that the Bahamian bank--one arm of an international financial network known as Al-Taqwa (Arabic for "Fear of God")--had a lengthy history of "financing and facilitating the activities of terrorists," including providing millions of dollars in funding for Al Qaeda and Hamas.

The Treasury letter, and another one involving Saudi businessman Yassin A. Kadi, provide a revealing new window into the murky world of terror finance--at least as viewed by U.S. counterterrorism officials. Based largely on secret intelligence sources, the Treasury documents attempt to show how Kadi and Al-Taqwa and its founder, Youssef M. Nada, used concealed bank accounts, complex land deals and other hard-to-trace methods to steer large sums of money to terrorists.

The letters were recently obtained by Ron Motley, the lead lawyer in a massive lawsuit against Saudi business figures and others accused of complicity in the financing of the September 11 attacks. In a little-noticed court filing on Monday, Motley placed the documents in the public record--a move that seemed to startle at least one defense lawyer who noted that such private "government-to-government" communications are almost never made public.

The letters were written by Treasury in an effort to persuade the Swiss to take legal action to shut down the operations of suspect organizations. The most significant of the letters involves Al-Taqwa and its founder, Nada, an Egyptian-born businessman based in Switzerland who has long been a prominent figure in the world of Islamic finance and who has consistently denied any involvement in the financing of terrorism.

In the letter dated Jan. 4, 2002, George B. Wolfe, then Treasury's deputy general counsel, tells Switzerland's deputy chief federal prosecutor, Claude Nicati, that money "pours in" to branch offices of the Al-Taqwa network in Lugano and Malta from Kuwait and the United Arab Emirates for bin Laden. It alleges that, as late as September 2001, Nada and a business associate, Ali bin Mussalim, provided "indirect investment services for Al Qaeda, investing funds for bin Laden, and making cash deliveries on request to the Al Qaeda organization."

The most startling allegation is that Nada's Bank Al-Taqwa "appeared to be providing a clandestine line of credit for a close associate of bin Laden," according to the Wolfe letter. "This bin Laden lieutenant had a line of credit with a Middle East financial institution that drew on an identical account number at Bank Al-Taqwa. Unlike other accounts--even accounts of private banking customers--this account was blocked by the computer system and special privileges were required to access it." Noting that "no identifiable names were associated with the account," the letter calls the circumstances surrounding the account "highly unusual" and suggests that they were created "to conceal the association of the bin Laden organization with Bank Al-Taqwa."

A legal source familiar with the investigation into Al-Taqwa said that another U.S. intelligence document states that the Al-Taqwa account was originally set up for Mamdouh Mahmoud Salim, a one-time member of Al Qaeda's governing Shura Council who was captured in Germany after the 1998 U.S. Embassy bombings in Africa and has been awaiting trial while in prison in the United States ever since. Just last week, Salim was sentenced to 32 years in prison in a separate case stemming from charges that he stabbed a prison guard in the eye with a sharpened plastic comb as part of a failed plot with other accused Al Qaeda codefendants to break out of the Metropolitan Correctional Center in lower Manhattan. (The prison guard suffered brain damage, lost an eye and is partially paralyzed as a result of the attack.) After Salim's arrest, other Al Qaeda figures continued to access the account, the legal source said.

The Wolfe letter also reveals for the first time that the government of Jordan had accused Bank Al-Taqwa of financing a terrorist network linked to bin Laden that was involved in plotting terror attacks at Western and tourist targets in Jordan during the millennium celebrations. Jordanian authorities have recently alleged that Abu Moussab al-Zarqawi, the Jordanian-born terrorist leader who this week apparently claimed credit for the gruesome beheading of U.S. businessman Nicholas Berg in Iraq, was a leader of the cell that plotted the Jordanian millennium attack.

In addition, the letter notes that one of Al-Taqwa's board members, Ahmed Huber, had confirmed that he had met with members of bin Laden's organization in Beirut and had defended the attacks on the World Trade Center and the Pentagon. Huber, a notorious Swiss Holocaust denier and far-right activist, is described in the Wolfe letter has having "extreme anti-Israel views." The letter also states that another Al-Taqwa board member, Ahmed Idris Nasreddin, has supported an Islamic center in Milan that the U.S. government believes may be Al Qaeda's "most important base in Europe" and which was linked to the 1993 World Trade Center bombing, among other terror plots.

In interviews with NEWSWEEK, Nada, Huber and Swiss lawyers for both Nada and Nasreddin have adamantly denied any connection to the financing of terrorism. (Contacted by NEWSWEEK this week, Nada declined to comment on the Wolfe letter on the grounds that he had not seen it.) Their lawyers also note that, for all the U.S. allegations about their clients, none of them have been charged in any criminal case brought by the Justice Department or any other foreign government.

The same goes for Kadi, a prominent Saudi businessman who, in a Nov. 29, 2001, letter to the Swiss written by then Treasury general counsel David Aufhauser, is described as having "a long history of financing and facilitating the activities of terrorists and terrorist-related organizations, often acting through seemingly legitimate charitable enterprises and businesses." Kadi was the founder of Muwafaq ("Blessed Relief") Foundation, an Islamic charity that "employed or served as cover" for a number of Islamic extremists connected with bin Laden and other terror groups, according to the Aufhauser letter. A lawyer for Kadi, whose assets have been blocked by the Treasury Department in the United States, said that the businessman is in the process of presenting evidence to U.S. officials challenging the allegations against him.

U.S. counterterrorism officials have privately acknowledged their frustration in pursuing cases against both Al-Taqwa members and Kadi as well as numerous other targets in terror-finance investigations. "Intelligence is one thing, but gathering the evidence to support these allegations is another story," said one former top U.S. law-enforcement official who worked on terror-finance cases. Still, the Justice Department is not done trying. In a recent court hearing, Gordon Kromberg, the senior federal prosecutor in charge of a long-running probe into Islamic charities based in Northern Virginia--including some whose directors have been associated with Nada and Kadi--said that his case was proceeding. "We expect them to be charged," Kromberg said in a court hearing, referring to the Islamic charities that have been targets of the investigation. "There will be indictments coming."