Follow the Saudi Money

Monday, April 20, 2009

Three weeks after the 9/11 attacks, NATO forces hunting for terrorists raided the offices of an obscure Islamic charity in Sarajevo, far from the destruction. What they found had little to do with charitable works.

Among the items confiscated from the offices of the Saudi High Commission for Relief of Bosnia and Herzegovina were computer hard drives with before and after pictures of the twin towers; pictures of the bombed United States embassies in East Africa; photos of the USS Cole after a bomb ripped a two-story gash in its side in October 2000, killing seventeen sailors; materials for forging U.S. State Department ID badges; and files on pesticides and crop-duster aircraft, a potential weapon long eyed by terror cells.

One commission employee was arrested around that time and charged with plotting to blow up the United States embassy in Sarajevo, and has been held in the Guantánamo Bay prison ever since.

The Saudi High Commission case is among dozens cited in a sprawling lawsuit in federal district court in Manhattan that raises troubling questions about the role of the Saudi government and affiliated charities in financing the movement that spawned the attacks of September 11, 2001. The lawsuit, pursued on behalf of dozens of U.S. and European insurers, individual victims, and others, sketches a detailed portrait of seeming Saudi indifference and inaction in the face of mounting evidence that government- backed charities were funding terror cells in Afghanistan, Europe, and Southeast Asia. It portrays the Saudi government as having far more control over the charities before the 9/11 attacks than it, or the U.S. government, has acknowledged, and it cites evidence that the Saudis were warned by U.S. and European officials in the years before the attacks that charities supported by Riyadh were serving as terrorist fronts.

Outside the courtroom, the lawsuit is disturbing the delicate relationship between the United States and Saudi Arabia, which, after Israel, is Washington’s most important Mideast ally.

Absent the Saudis’ financial support, the lawsuit charges, the 9/11 attacks probably never would have happened.

Whatever the outcome of the case, it already has served one useful purpose: attorneys for the plaintiffs have assembled in one place the most extensive record yet of Saudi government support for radical Islamic charities that fueled the terrorist movement with money and logistical support.

The plaintiffs have chosen a formidable adversary. The oil-rich desert kingdom supplies much of the United States’ energy needs, buys huge amounts of hardware from U.S. military manufacturers, hires top Washington lobbying firms, and is a pivotal ally in helping carry out U.S. diplomatic and military measures in the Middle East. The kingdom’s legal team is the best that money can buy, and includes the law firm of former secretary of state James Baker. That team has fought the lawsuit vigorously from the moment it was filed on September 11, 2003.

Those suing the Saudis face difficult legal tests as well. U.S. law sets high hurdles for citizens seeking to sue foreign governments, and the U.S. Court of Appeals for the Second Circuit in Manhattan has upheld a lower court judge in dismissing Saudi Arabia as a defendant. Yet that decision, which conflicts with other lower court rulings in other cases, is still in play. It has been appealed to the U.S. Supreme Court. (In February, in a move legal experts consider significant, the Supreme Court asked the U.S. solicitor general to weigh in on whether the case should move forward.)

“The kingdom and its officials knew and intended to support Al-Qaeda through these charities,” alleges plaintiffs’ attorney Stephen Cozen. “The resources to build Al-Qaeda’s infrastructure were provided by donors and channeled through a network of Islamic charities. It is the misconduct of the charities and government officials that forms the basis of our complaint.”

Even if the plaintiffs lose on the issue of whether Saudi Arabia itself can be sued, the late federal district court judge Richard Conway Casey, ruling in Manhattan in 2005, decided that there was enough evidence to proceed on a limited basis against prominent Islamic charities supported by the government. Casey also said the lawsuit could go forward against the National Commercial Bank, owned by the Saudi government.

Absent financial support from the Saudis, the lawsuit charges, the September 11 attacks would probably never have happened.

Outside the courtroom, the lawsuit has caused friction in the delicate relationship between the United States and Saudi Arabia, which, after Israel, is this nation’s most important Mideast ally.

In a filing with the Second Circuit, Saudi Arabia charged that the litigation had undermined the ability of the two nations to work together to fight terrorism.

“This concern is felt in all circles of the Saudi government,” said Nizar bin Obaid Madani, the Saudi deputy minister of foreign affairs, who oversees the kingdom’s alliance with the United States. The litigation, he said, “sends a confusing and mixed message about the relationship between the governments of the United States and Saudi Arabia.”


In a surprising twist, the plaintiffs have now spent more time examining the September 11, 2001, attacks than did the 9/11 Commission and Congress. Their attorneys have sifted through thousands of pages of Treasury Department findings and declassified diplomatic cables, memos, and military and intelligence reports to track Al-Qaeda from its inception in Afghanistan in 1988, to its subsequent growth and consolidation in the Sudan and the Balkans, to its emergence as a global threat.

The court records suggest that the plaintiffs have been able to unearth facts and make connections that were missed not only by the 9/11 Commission in its August 2004 report but also by Congress and the Pentagon. Among its key allegations:

  • Senior Saudi officials and members of the Saudi royal family either served as executives of suspect charities or sat on their boards while the charities were used to launder money into Al-Qaeda. In several instances, alleged Al-Qaeda financiers or terrorist sympathizers held senior leadership positions in Saudi-based charities.

  • The charities themselves many times provided money, employment cover, identification badges, and logistical support to Al-Qaeda fighters in Southeast Asia and the Balkans.

  • The link between some of the charities and Al-Qaeda operations was so strong that employment or affiliation with them, along with other factors, is considered grounds by the Pentagon for continued confinement at Guantánamo.

  • The Saudis have so far declined to impose sanctions on alleged Al-Qaeda financiers who continue to live in Saudi Arabia, including an alleged founder of Al-Qaeda and longtime associate of Osama bin Laden, Wa’el Julaidan, designated a terrorist financier by the State Department in 2002.

Among the evidence is a little-noticed disclosure by the 9/11 Commission: American officials in 1998 informed the Saudis that employees of a Saudi government-linked charity, Al-Haramain Foundation, might have been involved in the bombings that year of two American embassies in East Africa. The 9/11 Commission wrote in its August 2004 report that the Saudis never acted on that information.

The lawsuit also cites an affidavit from former French interior minister Charles Pasqua, who told his Saudi counterpart, Interior Minister Prince Naif, in 1993 that the Muslim World League, a sprawling Saudi governmentsupported charity named in the lawsuit, was funding terror cells in France.

U.S. officials gave the Saudis other warnings. Two delegations of senior American officials traveled to Riyadh in 1999 and 2000 to urge the Saudis to crack down on charities that U.S. officials believed were providing financial and other support to terrorist groups such as Al-Qaeda. The trips, cited in the lawsuit and confirmed by officials who participated in them, followed a meeting between then–vice president Al Gore and then–crown prince Abdullah in which Gore asked the Saudis to help disrupt Al-Qaeda’s financial network.

The Americans handed the Saudis a list of prominent charities, most based in the kingdom or in other Persian Gulf countries, identified as sources of Al-Qaeda funding, according to a former Clinton administration official who attended the meetings. The Saudis, however, failed to react to the information.

“We didn’t have as many facts as we should have,” Jonathan Winer, a former deputy assistant secretary of state for international law enforcement, who helped oversee the delegations, said in congressional testimony. “But we went to the Saudis as a government, shared with them what we had, asked them for more information, warned them of what might take place, and ultimately nothing happened.”


Each of the accused charities at one time or another was the focus of suspicion by U.S. law enforcement and intelligence agencies. Besides the Saudi High Commission, the charities include the International Islamic Relief Organization (IIRO), which cites its ties to the government as a defense in the lawsuit, and the Muslim World League, founded by the Saudi royal family and overseen in part by the desert kingdom’s chief Islamic cleric, the grand mufti, himself a government official.

The charities typically performed needed services in conflict regions and disaster zones by aiding refugees, building mosques, drilling wells, and providing other forms of humanitarian relief, according to a U.N. report on the links between Al-Qaeda and Islamic charities that is cited in the lawsuit. But that report goes on to say of the IIRO, which focuses most of its efforts on religious, educational, social, and humanitarian programs, “it and some of its constituent organizations have been used to assist in Al- Qaeda financing.”

The IIRO has responded to the litigation by asserting that it “has never knowingly or intentionally financed terrorist activities.” Moreover, as an instrument of the Saudi government’s policy for providing relief to regions struck by catastrophe and as a representative of the government, it maintains it should be immune from lawsuits. Each of its dozen branch offices in Saudi Arabia itself is overseen by a member of the Saudi royal family, according to documents made public in the lawsuit.

The IIRO has repeatedly drawn the scrutiny of American intelligence and law enforcement officials seeking to root out sources of funding for bin Laden and other terrorist organizations. A 1996 CIA report on Islamic charities said the IIRO had helped fund six militant training camps in Afghanistan. Moreover, according to the Treasury Department, an IIRO branch in the Philippines was founded by bin Laden’s brother-in-law, a senior Al-Qaeda member.

The Saudi-based IIRO official responsible for its Philippines and Indonesia branches, Al-Hamid Sulaiman Al-Mujil, gave money to Al- Qaeda and other terrorist groups, according to the Treasury. In terrorism finance circles, Mujil’s renown was such that he became known as the “million- dollar man.”

In the 1990s Mujil met regularly with Khalid Sheik Muhammad, the admitted planner of the 9/11 attacks, who now faces a capital murder trial before a military commission in Guantánamo, according to American intelligence reports. He also had contact with bin Laden and Abdallah Azzam, the storied Al-Qaeda co-founder.

Despite evidence that Mujil had a long working relationship with Al- Qaeda, Treasury has not taken the step of sanctioning IIRO headquarters in Saudi Arabia.

One former State Department official who was involved in designating terrorism financiers and charities said that as a matter of realpolitik, Washington simply cannot crack down on every Islamic charity.

“There may be no evidence that the headquarters had any idea that money was going to terrorist groups, and the other [concern] is about Western Christian countries designating every Islamic charity in the world, the damaging message that would send, that all Muslims are suspect and evil,” the former official said.

The 9/11 Commission made a similar point in its last report, on August 22, 2004. It quoted senior government officials as saying that in the case of the Islamic charity Al-Haramain, which it said might have played a role in the U.S. embassy bombing attacks in Nairobi and Dar es Salaam, it had decided that pushing Saudi Arabia too hard might lessen the likelihood of cooperation.

“The U.S. government wanted the Saudis to support the Middle East peace process, ensure a steady flow of oil, cut off support to the Taliban, continue various mutually beneficial economic arrangements, and assist in the containment of Iraq,” the report said.


Given the U.S. government’s reluctance to push the Saudis too hard, many victims of the 9/11 attacks, including sizable commercial insurers like Chubb, Allstate, Ace, and One Beacon, have decided that American courts offer their only realistic hope to recover their costs. They base their legal reasoning on decisions in two notorious state-sponsored assassinations in which federal courts held governments of prominent foreign allies liable. In one, a former Chilean ambassador to the United States, Orlando Letelier, was killed in a 1976 car-bombing in Washington, D.C., along with his American assistant, Ronni Moffitt. In the second, dissident journalist Henry Liu was assassinated in his home in Daly City, California, in 1984 at the direction of Taiwan’s intelligence agency.

Central to the Letelier and Liu cases was whether the offense was so egregious, and so outside the realm of normal government activities, that the courts could take the extraordinary step of imposing U.S. law on a foreign sovereign.

For centuries, the established practice in the United States and abroad weighed heavily against such actions. In 1976, however, Congress passed the Foreign Sovereign Immunities Act, which broadened the basis for suing and left it up to the courts to decide when a foreign government could be sued. U.S. law presumes immunity from suit for foreign governments, yet it waives that protection in certain commercial disputes, or when the actions of foreign officials fall outside the boundaries of normal government decision making, and thus are not discretionary.

That is what the courts concluded in the Letelier and Liu cases. There was evidence that Letelier was killed as part of a wider plan to eliminate the enemies of Chilean dictator Augusto Pinochet. Liu was shown to have been assassinated by two gang members acting under the direction of Admiral Wong Hsi-ling, former director of Taiwan’s Defense Intelligence Bureau.

Establishing jurisdiction in such cases is no small feat, especially in matters of terrorism, where both state and nonstate actors operate in the shadows and facts are hard to come by.

Judge Jose Cabranes of the U.S. Court of Appeals for the Second Circuit in Manhattan indirectly acknowledged that difficulty during a hearing in the Saudi Arabia case last year.

A defense attorney suggested that the plaintiffs back up one of their claims: that the Saudi government had agreed to support the Taliban in exchange for a promise that bin Laden would not attack the kingdom. “We challenged them to come forward with any information that this was correct,” attorney Michael Kellogg told Cabranes.

“What could that have been?” Cabranes asked.

“It could have been a sworn statement which they claimed to have had but never produced in court,” Kellogg said.

“Your average Taliban affidavit,” Cabranes responded, with obvious scorn.


The litigation against the Saudi government, Islamic charities, banks, and other alleged terrorism financiers has been fueled in large measure by a trove of Al-Qaeda documents from a 2002 raid in Sarajevo.

The baseline issue in the lawsuit against Saudi Arabia is whether a foreign sovereign can be sued. Establishing jurisdiction in such cases is a tall order.

During a joint raid by the FBI and Bosnian police on the Benevolence International Foundation, an Islamic charity, authorities seized computer hard drives with information on BIF Executive Director Enaam Arnaout’s early ties to bin Laden. The evidence included minutes of the meeting at which Al-Qaeda was formed; exchanges of letters between Arnaout and bin Laden; and a list of Al-Qaeda financiers called the “Golden Chain,” which included prominent Saudis Adel Batterjee, the BIF founder, and Wa’el Julaidan, a confidant of bin Laden.

There were also copies of an Al-Qaeda loyalty oath; documents suggesting that Arnaout had acquired various weapons for one of bin Laden’s training camps in Afghanistan, including rockets, mortars, bombs, and dynamite; and a list of credentials for Al-Qaeda membership, including the requirement that members come with a recommendation, that they be “listening and obedient,” and that they have “good manners,” prosecutors said.

It was, according to U.S. Attorney Patrick Fitzgerald, “the one and only Al-Qaeda archive.”

Arnaout was indicted by a Chicago grand jury in October 2002 on charges of illegally diverting purported humanitarian relief funds to Al-Qaeda and Islamic fighters in Bosnia and Chechnya. But shortly before the case was to go to trial, U.S. district judge Suzanne B. Conlon ruled that Fitzgerald’s evidence of a close Arnaout association with bin Laden did not relate to the crime alleged: that BIF funds raised in Chicago and elsewhere ended up in the coffers of Al-Qaeda. Prosecutors, she said, had failed to connect the dots.

One day before he was to go to trial, Arnaout pleaded guilty to charges of fraudulently diverting charitable funds to Islamic rebels in Bosnia and Chechnya to buy boots, telecommunications equipment, blankets, and other supplies. He was sentenced to eleven years and three months in federal prison.

The Treasury Department continues to list the Benevolence International Foundation as a supporter of terrorism, and many of the figures whose activities are detailed on the BIF hard drives continue as defendants in the litigation.

One of them is Wa’el Julaidan. After the 9/11 attacks, the U.S. Treasury Department found the case against him persuasive enough to designate Julaidan a terrorism financier, freezing his funds, barring U.S. citizens from engaging in transactions with him, and imposing a travel ban on him.

Since then, according to Julaidan’s responses to plaintiffs’ queries, the Saudis themselves have imposed no penalties on him and he continues to operate his business in Saudi Arabia without restrictions.

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