Terror Watch: Probe Closed

In a significant setback for the Bush administration's international crackdown on those it suspects of funding terrorism, Swiss prosecutors have "suspended" a long-running criminal investigation into Al Taqwa, an Islamic network that Washington believes has provided financing for Al Qaeda and other terror groups.

Youssef Nada, founder and head of Al Taqwa, told NEWSWEEK by telephone that his lawyer had received a letter from the Swiss federal attorney general's office earlier today informing him that an investigation which the office had launched in the weeks after the 9/11 attacks was to be closed. In an order issued earlier this year, a Swiss court had given the prosecutor's office until May 31 to either present the results of its investigation to a judge for further proceedings or close the file.

Mark Wiedmer, spokesman for the Swiss Attorney General's office in Bern, said that the investigation was not absolutely terminated but "suspended" because it could be restarted if new evidence was acquired by Swiss authorities. But Wiedmer acknowledged that prosecutors concluded that after three and a half years of investigation they could not put together enough evidence in time for the May 31 deadline to convince a federal investigating magistrate that a criminal case against Nada and Al Taqwa could be taken to trial. Hence the investigation had to be closed for now.

By the same token, Wiedmer said, "We don't say they [Nada and Al Taqwa] are innocent." The lengthy investigation, he argued, was a "qualified success" because prosecutors now know "what's the matter [with Al Taqwa], we know what's not the matter and we know where we don't know what's the matter."

Because his name remains on U.S. and U.N. sanctions lists, Nada said, the Swiss prosecutors' decision to close down their Al Taqwa criminal investigation was, for him, insufficient vindication. "I'm still in the same position," Nada complained. Under terrorism-finance sanctions imposed by the U.S. and U.N. after 9/11, the known assets of "designated" terrorist financiers like Nada and his associates are supposed to be frozen, and their physical movements are supposed to be limited to their countries of residence.

Nada said Swiss investigators, who began their inquiry a few weeks after 9/11 with raids on the homes and offices of Nada and other Al Taqwa associates, had conducted a worldwide inquiry looking for evidence that the network had financed terrorism and "come up in the end with empty hands."

He said the U.S. Treasury should now reassess the evidence that led it to put him, his associates, and Al Taqwa on its sanctions list, and called on President Bush to order an investigation into how and why the Treasury pursued what Nada characterized as a miscarriage of justice against him. U.S. authorities, he said, had bought into inaccurate information linking him and Al Taqwa to terrorism through what he said was a "chain of misleadings." He declined to specify how he believed U.S. officials were misled or who misled them.

While acknowledging that he is an "activist," an "Islamist" and a leading figure in the militant Muslim Brotherhood movement, Nada said that he and the brotherhood had been condemned by Al Qaeda deputy leader Ayman al-Zawahiri as "infidels" for their peaceful pursuit of a worldwide Islamic caliphate. "There is no way" he would support Osama bin Laden, Al Qaeda or other ultraviolent jihadi groups, Nada insisted. "It is outside my character."

The Bush administration had regarded the Al Taqwa case as a test both of the reach of U.S. law in curbing suspected terrorist financiers and the cooperation between U.S. investigators and authorities in countries like Switzerland with strong traditions of financial secrecy.

In the immediate aftermath of the 9/11 attacks, Swiss authorities claimed that earlier investigations of alleged irregularities involving Al Taqwa had not produced substantial evidence of wrongdoing. Under pressure from Washington, however, Switzerland's federal attorney general later launched a major criminal probe of Nada and Al Taqwa. Swiss authorities raided premises used by Nada, Al Taqwa and other associates in early November 2001, at about the same time the Bush administration formally designated Nada and Al Taqwa as financiers of terrorism.

Washington appears to have made extensive efforts to provide Swiss investigators with U.S. government information about the alleged terrorist connections of Nada and Al Taqwa. In a Feb. 4, 2002, letter to Swiss authorities, George Wolfe, U.S. Treasury deputy general counsel, said that U.S. government information indicated that Al Taqwa had "long been thought to be involved in financing radical groups" like Hamas and several North African Islamist factions. According to the letter, as of "late September 2001"--after 9/11--"bin Laden and his Al Qaeda organization received financial assistance" from Nada and a now-deceased Saudi associate, Ali bin Mussalim. The letter claimed that since the 1980s Nada and Mussalim "following the pullout of the Soviet Army from Afghanistan, [had] been providing direct investment services for Al Qaeda, investing funds for bin Laden, and making cash deliveries on request to the Al Qaeda organization."

According to the letter, as of October 2000, Bank Al Taqwa, a Nada entity with an offshore banking license from the government of the Bahamas, "appeared to be providing a clandestine line of credit for a close associate of Osama bin Laden. 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." The letter also noted that Nada had "personal ties" with Saddam Hussein and that one of his fellow Al Taqwa directors, retired Swiss journalist Ahmed Huber, had "extreme anti-Israel views," had admitted meeting Bin Laden followers in Beirut, and had defended the 9/11 attackers."

Nada said that he had searched through Al Taqwa records and could find no evidence of the mysterious line of credit U.S. authorities alleged Al Taqwa had maintained for bin Laden's associate. He acknowledged that he did go to Baghdad before the first gulf war to try unsuccessfully to persuade Saddam Hussein to withdraw his troops from Kuwait and that investigators had removed a picture of him meeting Saddam from his residence when they raided him in 2001.

Swiss government spokesman Wiedmer said that authorities in Bern were quite happy with the assistance they received from the United States during their investigation. He complained, however, that the government of the Bahamas, which had issued Al Taqwa a critical offshore banking license, had not adequately responded to official requests for assistance from Swiss investigators.