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Following the money:
Notice in the first article that it has been Bush & Senator Gramm who have been blocking money laundering investigations.
Hmmm
In the second article we’re told Osama Bin Laden network doesn’t have much money.
OK, so then who manipulated the stock market before 911?
Also, why did Bush give the Taliban, which Osama Bin Laden is the head of, $43 million dollars last May, if the Treasury Department, since 1998, has been trying to block his assets and made it illegal for any US bank or business to do business with him?
Phoenix
September 20, 2001
THE PAPER TRAIL
Roadblocks Cited in Efforts to Trace bin Laden's Money
By TIM WEINER and DAVID CAY JOHNSTON
six-year struggle to uncover Osama bin Laden's financial network failed because American officials did not skillfully use the legal tools they had, did not realize they needed stronger weapons, and faced resistance at home and abroad, officials involved in the effort say.
Federal officials say they have not persuaded foreign banks to open their books to investigators and that in this country, a law that would have allowed the United States to penalize foreign banks that did not cooperate was blocked last year by a single United States senator.
Current laws and regulations give the government less authority to seize the assets of terrorists than of drug cartels, one federal investigator said; it may seize only assets that are the direct proceeds of terrorist violence. For drug cartels or organized crime gangs, it can seize any assets used to support their activities.
Investigators also attribute their inability to pierce Mr. bin Laden's financial network to an ancient system of cash transfers based on trust, not detailed records, that they say has spread from countries like Pakistan into the United States.
Since last week's attacks, proposals to curb money laundering by terrorists have suddenly gained support among old opponents — including the Bush administration — after languishing for two years. The White House says it now wants an aggressive attack on money laundering, including stepped-up seizure of assets.
The bin Laden organization operates in 35 countries and needs to move money to its members, American intelligence officials say. Tracing the money could reveal not only terrorists' sources of support, but their intentions.
But present and former government officials say that since the mid- 1990's, they did not fully use the legal tools they had to wage this difficult fight. "We could have starved the organization if we put our minds to it," said Richard Palmer, who gained experience in money laundering as the Central Intelligence Agency's station chief in Moscow during the 1990's. "The government has had the ability to track these accounts for some time."
Congress is now reviving a proposal killed last year by Senator Phil Gramm, the Texas Republican who was then chairman of the Senate Banking Committee. The bill, introduced by the Clinton administration, would give the Treasury secretary broad power to bar foreign countries and banks from access to the American financial market unless they cooperated with money-laundering investigations. It was strongly opposed by the banking industry and Mr. Gramm.
"I was right then and I am right now" in opposing the bill, Mr. Gramm said yesterday. He called the bill "totalitarian" and added, "The way to deal with terrorists is to hunt them down and kill them."
But the bill is gathering support from both parties. "I would be amazed if there is not a sea change," said Senator John Kerry, the Massachusetts Democrat, who is sponsoring the bill with Senator Charles E. Grassley, Republican of Iowa. He said the opposition was based on "ridiculously phony" arguments.
Even after the attacks last week, the banking industry continues to doubt the need for new rules to combat money laundering, a lobbyist said.
Most experts say the funds used to finance the attacks here probably came into this country in small amounts either through wire transfers or through the use of brokers that belong to a paperless underground banking system.
That system of brokers is often referred to by its Hindi name, "hawala," meaning "in trust." It enables individuals to transfer sizable sums of cash from their country to recipients in another country without the funds ever crossing borders. The system, which has spread to the United States, is particularly popular in countries like Pakistan and India where people want to avoid paying taxes or bribes to officials when transferring money across borders, experts said.
"Somebody will come into the office of a hawala broker in Pakistan and say, `I want $100,000 to get to somebody in Vero Beach who is going to come in and identify themselves as Cupid,' " said Jonathan M. Winer, who led the State Department's international law enforcement efforts from 1994 to 1999 and now practices law in Washington.
The Pakistani broker, Mr. Winer explained, will contact a counterpart in the United States, often using the Internet, then mail him a chit or agree on a code word to complete the transaction.
Mr. Winer said such brokers might have been used to transfer sizable sums of money destined for terrorists in this country because carrying large amounts of cash posed too many risks.
"The two brokers have absolute trust in each other," said Rowan Bosworth-Davies, an expert on money laundering at the Control Risks Group. "They often come from the same clan and that is why nothing is written down or records kept."
Congress passed a law in 1993 requiring check-cashing businesses and informal financial enterprises like hawalas to register with the government and report transactions over $3,000. But the Clinton administration did not publish all the regulations until 1999. The Bush administration ordered a further delay until June 30, 2002. Jimmy Gurule, the Treasury under secretary for enforcement, said yesterday that the administration, in light of last week's attack, might move up the date.
The effort to track the bin Laden group's money began in earnest when President Bill Clinton signed a classified presidential order on Oct. 21, 1995. The secret order, Presidential Decision Directive 42, ordered the Departments of Justice, State and Treasury, the National Security Council, the C.I.A. and other intelligence agencies to increase and integrate their efforts against international money laundering by terrorists and criminals.
The government agencies joined together to try to penetrate the bin Laden network of businesses, charities, banks and front companies. They failed.
The ball was handed to people who were generally incompetent to handle the intricate task, said one Clinton administration official directly involved in the effort to drain or divert the money flowing in and out of the bin Laden organization.
The government agencies given the job suffered from "a lack of institutional knowledge, a lack of expertise," said William Wechsler, a National Security Council staff member under Mr. Clinton. "We could have been doing much more earlier. It didn't happen."
Then attackers blew up two American embassies in Africa in August 1998. Richard A. Clarke, the government's counterterrorism coordinator, set up a new government team. He ordered it to find out how much money the bin Laden organization had, where it came from, how it moved around the world — and to stop it.
"We had only marginal successes," said Mr. Wechsler, who led the new team in 1998 and 1999. The United Arab Emirates imposed money laundering laws and China banned flights by the Afghan state airline, Ariana, at the United States' urging, officials said.
The lack of great success was "mostly due to the limited assistance we received from key countries abroad," Mr. Wechsler said. He blamed "their lack of political will or weaknesses in their laws which fail to effectively regulate their financial institutions and charities."
Until last week's attacks, the Bush administration was not much more enthusiastic about new money laundering laws than Mr. Gramm. Led by its chief economic adviser, Lawrence B. Lindsey, the administration did not want to pressure international banks in the United States and elsewhere to open their books.
Now the White House is setting up a new agency, called the Foreign Terrorist Asset Tracking Center, run by the Treasury Department with help from law enforcement and intelligence services, to try anew to track bin Laden's finances.
The financial architecture of the bin Laden organization has not changed radically since he set up operations near the Khyber Pass in the mid-1980's and worked side by side with the C.I.A. to support the rebels fighting Soviet forces in Afghanistan, United States officials said.
"The money movement and fund- raising system is the same," Mr. Wechsler said.
September 20, 2001
Page One Feature
Tracing Money Trail Is Hard
As Operatives Pay With Cash
By JERRY MARKON, ANDREW HIGGINS, STEVE LEVINE, and STEVE STECKLOW
Staff Reporters of THE WALL STREET JOURNAL
As authorities around the world rush to freeze bank accounts and financially squeeze Osama bin Laden and his organization, a troubling fact is obscured: Terrorism can be a low-budget enterprise.
Despite repeated reports that Mr. bin Laden commands a personal fortune of $300 million or more -- estimates that people who know him suggest are wildly exaggerated -- his far-flung network has shown itself over the years to be a primitive and cheap force, one often self-financed by start-up businesses, petty crime or low-wage jobs.
In fact, an extensive review of court documents and interviews shows that many of his followers who carry out his orders appear to receive little if any contribution from Mr. bin Laden himself. Links between Mr. bin Laden and last week's attacks haven't been firmly established; still, the hijackers followed a similar pattern. They stayed in cheap hotels and haggled over bills, and at least one lived off money from his parents.
"This costs a lot less than people think, and the truth is, bin Laden doesn't have to have any money to be able to do things like this," says Milton Bearden, who spent 30 years with the Central Intelligence Agency.
1See full coverage of the aftermath of the attack.
Attempts to throttle Mr. bin Laden's finances by scouring bank records and monitoring international transfers may miss their target. Mr. bin Laden's al Qaeda group, which U.S. authorities believe was responsible for last week's attacks, has in the past often moved money by hiding $100 bills in suitcases or shuffling funds through an informal and almost entirely unregulated system of remittances, not by issuing transfer orders to big banks. He and other Islamic militants have been doing this since the 1980s, when, with arms provided in part by the U.S., they fought to drive Soviet troops from Afghanistan.
Mr. bin Laden's group hasn't entirely skirted conventional channels. He or his close associates have had accounts in London, Vienna, Dubai, Malaysia, Hong Kong, the Sudanese capital of Khartoum and several other locations, according to a former financial aide. Nor does the basic infrastructure of his organization -- training camps stocked with weapons -- come cheap.
Before moving in 1996 to Afghanistan, where he is believed to be now, Mr. bin Laden ran his operation from Sudan and splashed out $430,000 to buy chunks of land, the first of many investments there, according to testimony in the African bombings trial in New York federal court. He sent the money to a bank in Khartoum. He spent a further $230,000 to buy a used American C-130 cargo carrier. (It later crashed into a sand dune.)
Already in Place
But the division between the high cost of setting up and running a terror organization for the long haul and the relatively modest costs of launching specific operations confronts the U.S. government with a thorny problem: Strangling Mr. bin Laden's finances could help limit the threat he and like-minded militants pose down the road, but it may be too late to stop attacks by thousands he has already helped train and imbue with an implacable hatred for the West.
Authorities have been hunting for and trying to block Mr. bin Laden's assets for years. The Treasury Department Office of Foreign Assets Control in 1998 added him and al Qaeda to a list that made it illegal for any U.S. bank or company to do business with them. The following year it did the same to the Taliban government that harbors him in Afghanistan. The U.S. government also put pressure on foreign countries whose banks were suspected of moving his funds, sending emissaries to Pakistan, Saudi Arabia and elsewhere to plead for help in the fight against terrorism.
Last week's attacks have made the financial battle a crucial front in America's "new war." America, said Treasury Secretary Paul O'Neill, is "not just waging a usual war against these people but waging a financial war and enlisting the leaders of civilized world countries and their financial institutions in helping us identify who these people are, where their money is and taking it away from them."
But Saad al-Fagih, a Saudi dissident in London, says, "The Americans just don't understand Muslim society. They don't understand the money story." He says they underestimate the dominant role of cash -- nearly always U.S. dollars, despite hostility towards the U.S. -- and exaggerate the cost of launching even a calamitous terrorist attack. "To accomplish an operation [like the one last week], these people don't need billions of dollars, or even millions of dollars. They need a few thousand," says Dr. al-Fagih, who runs the London-based Movement for Islamic Reform in Arabia.
Indeed, according to a prosecutor who investigated the 1993 World Trade Center bombing, the whole operation cost the terrorists less than $10,000 -- an amount so small it didn't pop up on law-enforcement radar screens. And last week's terror, like bomb attacks on U.S. embassies in Nairobi and Tanzania, was in many ways a low-budget affair. Consider how two of the hijackers spent their final days from Aug. 26 through Sept. 9: They stayed at the budget Panther Hotel in Deerfield Beach, Fla., renting a double room for $250 a week.
Richard Surma, the motel's owner, says Marwan Alshehhi, the presumed pilot of the second World Trade Center plane, and Mohamed Atta, believed to have piloted the first plane, did their own laundry at the coin-operated machine in the motel at $1 a load. They didn't rent any pay-per-view movies, never used the phone and were seen by Mr. Surma and his wife bringing in bags of groceries for use in the room's full kitchen.
Frugal Drivers
Brad Warrick, owner of Warrick's Rent-A-Car in Pompano Beach, says Mr. Alshehhi and Mr. Atta rented cars on three occasions between Aug. 6 and Sept. 9 and usually picked the cheapest car on the lot. "They weren't blowing money like they had unlimited resources, like you see on TV," Mr. Warrick says.
During the second rental, Mr. Atta exceeded the mileage limits and protested when Mr. Warrick charged him an extra $61.80. "He just didn't want to do it," Mr. Warrick says, adding that Mr. Atta eventually agreed to pay without incident.
Both men previously had lived at a $550-a-month house in Nokomis, Fla., while they attended flight school nearby. "This house is nothing extravagant at all -- a real plain-Jane, small, older home," says owner Steve Kona, who noted they drove a 10-year-old car. "It's not like they were living in a $3,000-a-month rental home and driving a Mercedes."
Probably their biggest expense was flying lessons. Mr. Alshehhi and Mr. Atta both paid tuition at Huffman Aviation in Venice, Fla., from July 3, 2000, to Jan. 3, 2001. School officials said Mr. Alshehhi paid a total of $20,000 for lessons on a Cessna 152 and Piper Seneca, while Mr. Atta paid a total of $18,000. (Mr. Atta paid less because he already had a private pilot's license.)
The two men paid $1,000 a week each, using checks drawn from a Suntrust Bank branch in downtown Venice. "When they arrived here, all they had was cash," says Charles Voss, the school's former bookkeeper, who briefly rented the two men a room in his home, for which they paid about $250 in cash. "Then they went down to the bank and opened up an account. I probably recommended that bank to them; it was the same bank the company used."
Both men apparently came to the U.S. from Hamburg, Germany. Mr. Atta was a student -- tuition was free -- but also held a variety of odd jobs, including work as a used-car dealer in an open-air car market. How many other people supported them and what resources they had are questions now at the focus of mammoth investigation involving the Treasury and thousands of FBI and intelligence officers. But the example of past terrorist attacks also widely blamed on Mr. bin Laden, particularly the 1998 bombing of U.S. embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania, gives a clear picture of the way al Qaeda prepares, funds and executes its assaults.
In operations in Sudan, Nairobi, Britain and the U.S., Mr. bin Laden's followers often have been scrappy hustlers, opening businesses ranging from hide tanning to gem trading to sesame growing, much of it complementing their ultimate aim of attacking American targets. In Sudan, a peanut and corn farm doubled as a weapons-training site. A plane carrying sugar to Afghanistan returned with weapons. A Nairobi charity provided cover so that Mr. bin Laden's group could obtain visas.
When Mr. bin Laden agreed to furnish Kalashnikov rifles to a brother radical group in Egypt called Islamic Jihad, he didn't hire a plane, a boat or even a car to deliver them. Instead, he bought two 50-camel caravans for the several hundred mile journey from next-door Sudan, according to testimony in the African bombings trial.
Jamal Ahmed al Fadl, a member of al Qaeda who worked in Mr. bin Laden's finance department in Sudan, told a New York court earlier this year how he helped move bundles of cash to supporters in the early- to mid-1990s. Testifying at the trial of four men convicted of involvement in the African bombings, he described how he had carried $10,000 to al Qaeda activists in Kenya and a further $100,000 to a militant Palestinian group based in Jordan. He hid the money under his clothes in a bag and, with help from Sudanese security officials, skirted airport checks.
Mr. al Fadl and other al Qaeda couriers rarely aroused suspicion: Their trips often combined legitimate business with their secret role as emissaries from Mr. bin Laden. Mr. al Fadl traveled to Slovakia to buy spare parts for tractors, and to Cyprus to sell peanuts on behalf of Taba Investments, Laden International and other arms of a sprawling business network set up by Mr. bin Laden and his supporters. Charities, a string of which were closed down by Kenyan authorities after the 1998 bombings, provided added camouflage.
Legitimate business, genuine charity work and political violence coexisted. Another member of al Qaeda, Wadi El Hage, who was convicted in New York earlier this year for his role in the embassy bombings, was sent to Baku, Azerbaijan, to open a charity that would serve as a cover for support to rebels fighting in Chechnya. While there, he decided to try to earn some money, too: He bought bicycles. He later explained to baffled colleagues that they were "cheap over there [and] if we buy a lot, we make money from that," according to court testimony.
Though favoring personal delivery of cash, al Qaeda did open some bank accounts under the cover of business. Mr. al Fadl told the New York court that Mr. bin Laden himself had an account in Khartoum at the Al Shamal Islamic Bank. His lieutenants had accounts in London, at Barclay's Bank, and in Malaysia, Hong Kong and Dubai. Mr. al Fadl said he had an account at Girocredit in Vienna and another one at Girobank in Kenya. Barclays Bank PLC said Wednesday it had frozen a London account that had been inactive "for years" and possibly connected to Mr. bin Laden's organization.
Al Qaeda also used informal financial networks known as hawalas. At the trial in New York, prosecutors presented the ledger from a small money-moving firm called Dihab Shill. It recorded $1,000 transfers from Kuwait and Yemen to a suspected al Qaeda supporter in Nairobi. But the evidence highlighted the problems of tracking such money: The hand-written ledger had been doctored, and the transfer company said it had discarded a fax it received giving details of who had transferred the money.
Financial Squeeze
Business provided good camouflage for Mr. bin Laden in Sudan and elsewhere, but it didn't earn him or his confederates much money, according to court testimony. Many of the ventures floundered. A Nairobi car company run by Mr. El Hage went belly up, for example, when he couldn't resell relatively expensive cars he intended to import from Dubai. Money was so tight at one point that Mr. El Hage told a partner in Black Giant, an al Qaeda gems business, that he was having financial problems and would have to take a side job to raise cash to support his family.
By the mid-1990s, according to court testimony by l'Housaine Kherchtou, another erstwhile al Qaeda supporter and trainee pilot, business was so bad in Sudan that Mr. bin Laden called a meeting to discuss the crisis. He cut salaries and scaled back some ventures. Mr. Kherchtou later asked the organization for money to pay for his pregnant wife's $500 hospital bill. He was told to put her in a free Islamic clinic. He declined, he told the court, saying he knew "she would die on the first day."
Mr. bin Laden's financial problems deepened with the defection of his chief accountant, Abu Fadhl al Makkee Madani al Tayyab, a close associate who had lost part of his leg during the Afghan war against the Soviet Union. Mr. al Tayyab began giving information to Saudi authorities, say people who knew him. Despite such travail, al Qaeda succeeded in bombing two American embassies nearly simultaneously, killing 224 people and injuring several thousand.
Money was also tight in London, where Mr. bin Laden sent Khalid al-Fawwaz to set up an office in 1994 and act as his spokesman. A London-based Saudi dissident, Muhammad al-Massari, says he helped Mr. al-Fawwaz, including installing telephone lines that were secure from the Saudi secret police, by routing the calls through the U.S. He says the office was small and often short of cash. "Everything was tightening the belt," Mr. al-Massari says. He says Mr. bin Laden's envoy once had to borrow money to pay his phone bill and rejected a plea to donate money to his own group, the Committee for the Defense of Legitimate Rights.
Even the 150-pound-a-month rental cost of the office -- a relative pittance in London, equivalent to about $220 -- apparently became too much. Mr. al-Massari says Mr. al-Fawwaz later moved the office to the living room of his home in the Neasden area, a rental property that he estimates cost 700 to 800 pounds a month. The operation shut down in 1998 with Mr. al-Fawwaz's arrest in Britain. He remains in custody, fighting extradition efforts by the U.S. in the embassy bombings case.
Whether Mr. bin Laden at the time was stingy, overstretched or less wealthy than many believe is unclear. Mr. al-Massari, the Saudi dissident, estimates his personal fortune -- inherited more than 20 years after the death of his father, a prominent businessman in Saudi Arabia who died in 1968 -- is closer to $30 million to $40 million, a fraction of usual estimates. He had a raft of companies in Sudan, but most of their value lay in things like bulldozers and land. "He got involved with activities that consume money, that don't produce much money," says Mr. al-Massari.
-- Marcus Walker, Glenn R. Simpson and Laurie Cohen contributed to this article.
Write to Jerry Markon at jerry.markon@wsj.com2, Andrew Higgins at andrew.higgins@wsj.com3, Steve Levine at steve.levine@wsj.com4, and Steve Stecklow at steve.stecklow@wsj.com5
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