Black Market Billions: How Organized Retail Crime Funds Global Terrorists (Gal Zentner's Library) (25 page)

Abdirizak Bihi, a community leader in Minneapolis, helped with the investigation by convincing the Somali community to work with officials and not against them. This included telling FBI agents if they suspected suspicious activity, if they were coerced or intimidated by local mosques into not talking about charitable donations going to fund jihad, or if the mosque encouraged parents to encourage their children to return to Somalia to join forces with the al Shabaab. Bihi explains in an interview with the Investigative Project on Terrorism that Somalis were approached in mosques and in their homes by women like Ali and Hassan holding up pictures of sick people in Somalia and asking for donations to help them. Playing the “victim card” is a common tactic for operatives living stateside and trying to raise funds.

“Somali community members have a tradition of volunteerism and are leery of giving money to charity,” says Bihi. “That’s why it’s so difficult to comprehend how these two women manipulated a community. These women claim they were soliciting funds ‘for Allah’ or for purposes like building mosques in Somalia [not to fund jihad].”
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Charitable Donation Loopholes: How the IRS and Banking Systems Failed to Prevent Fraudulent ORC Funds from Financing Terrorist Groups

Executive Order 13224 was passed by President George W. Bush in 2001. Its intent was to freeze assets controlled by or in the possession of individuals or organizations deemed by the Executive Branch to be associated with terrorism and those who are associated with and support them, including charities and nonprofit organizations.
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Between 2001 and 2004, the Bush Administration reported that $131 million in terrorist-related assets had been frozen and seized by authorities worldwide, including $35.7 million in the U.S. and an additional $64 million globally.

According to the Department of Justice, al Qaeda received 30% of its financial resources from donations solicited in the U.S. and abroad.
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Terrorist financing through charitable donations can be categorized in two ways: direct and indirect charitable abuse. Direct refers to people like Ali and Hassan, who engage in deceptive fund-raising practices and funnel money to nonexempt purposes.
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Indirect refers to nonprofit organizations that mistakenly raise funds for and unknowingly direct their profits to terrorist organizations.

An example of direct charitable abuse would be The Holy Land Foundation (an organization that Samuel Elias was donating money to).
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Although they are subjected to a series of Internal Revenue Service (IRS) checks and balances, nonprofits can fly under the radar due to their tax-exempt status. Likewise, donations solicited from the U.S. are more easily sent overseas to terrorist organizations because the law exempts numerous categories of recipients and services. Recipients of the donations can bypass the Anti-Terrorism Clause (ATC), which states that organizations receiving U.S. funding and that sign the clause agree not to support or promote terror.

“[Channeling funds through a charitable organization] is a very attractive method for terrorist organizations to get funding, especially through the United States,” says John Tobon. “Charities act as a legitimate front where most donors won’t question the purpose of the charity or, worse, automatically assume the monies are going to a good cause. And with minimal penalties and lighter regulation of nonprofits in the U.S., terrorist organizations will exploit the opportunity. It’s an issue that exists.”
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According to Department of Justice (DOJ) court documents, the Global Relief Foundation, an Illinois-based charity, sent more than 90% of its donations abroad. It has connections to and has supported
and helped individuals associated with Osama bin Laden, the al Qaeda network, and other known terrorist groups. The Global Relief Foundation has also been linked to financial transactions with the Holy Land Foundation. Similarly, the DOJ asserts that the Illinois-based Benevolence International Foundation moved charitable contributions that were fraudulently solicited from donors in the U.S. to locations abroad to support terrorist activities. The foundation has offices worldwide through which it facilitates the global movement of its funds.
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Charities Turn to a Cyber Audience

Raising money for terrorist organizations has evolved in the 21st century, especially by charities being used as fronts. Just like Revolution Muslim raised awareness and recruited members online, shell charities use the Internet and social media sites such as MySpace, Twitter, and Facebook to solicit donations worldwide by capitalizing on people’s sympathy and shrouding the funds’ real purpose.

“We are starting to see that, in a recent cases with financial fraud, there is a loose confederation of very bright young men who got together every six to eight months,” says Tobon. “The group was defrauding thousands of people and making $20 to $25 million just from their ability to manipulate social media technology. As law enforcement, we need to embrace and get comfortable with new technology. At this point, we only have a couple more years before this really becomes an issue.”
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Why the Government Can’t Regulate Charities

Competing priorities slowed IRS plans to take advantage of a law enabling greater information sharing with the states. Although the
IRS said in February 2002 that it had begun to develop a system to share data with the states for the oversight of charities, as allowed by law, the IRS has not made this initiative a priority and therefore has not developed and implemented this system. Although deterring terrorism is not a primary goal for the IRS or the states, using data-sharing systems is even more important now, when feasible, in light of the charities cases involving terrorist financing. States have an important role in combating terrorist financing because they share oversight responsibility for charities with the IRS. Furthermore, according to state officials, questionable charities tend to move from state to state to avoid detection.
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In 2000, the president of The Holy Land Foundation received a letter from the United States Agency for International Development (USAID) proposing to terminate HLF’s registration as a private and voluntary organization with USAID. The reasons included the State Department’s designation that HLF’s registration or a financial relationship between USAID and the organization was contrary to the national defense, national security, or foreign policy interests of the U.S.
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Seven years later, USAID still didn’t have a plan for dealing with charities potentially funding terrorist organizations.

Based on the Audit of Adequacy of USAID’s Antiterrorism Vetting Procedures conducted in November of 2007, eight recommendations were made to get USAID on board to accurately and efficiently vet potentially dishonest charities. These recommendations focused on the lack of a substantial plan for how USAID deals with terrorist financing. It had no real guidance for an approved vetting program, no unification of antiterrorism procedures between USAID worldwide offices, and no developed database to track and vet charities worldwide. Likewise, the audit singled out the management of USAID, stating, “Management needs to design and implement effective management controls to help ensure that directives are being carried out.”
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USAID did use an Office of Acquisition (OAA)-implemented
database. However, the database was incomplete because information about the awards was not entered into the system.
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In February 2005, a USAID partner pled guilty to lying to law enforcement officials about his involvement with and support of one of the disciples of Osama bin Laden in a terrorism-related investigation. In August 2005, a U.S. District Court in Louisiana sentenced the former USAID partner to 48 months’ imprisonment and a fine for making false statements to federal agents in connection with counterterrorism investigations. Before the indictment, USAID officials had provided the partner with approximately $108,000 (of an estimated $1 million) from July 2004 to January 2005 for a program funded out of USAID/Pakistan. Initially, the U.S. Embassy in Pakistan notified USAID about the partner’s arrest in October 2004 pursuant to the indictment. Of the $108,000, USAID paid the partner an additional $25,000 as a termination settlement for the grant that was awarded in July 2004.
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Just as some charities aren’t what they seem, many multinational corporations also find themselves working (whether by force or by their own choice) with terrorist organizations on the macro- and micro-levels. Just when you thought it was safe to purchase your favorite DVD, CD, television set, or bananas, it isn’t. Next, we’ll expose the ties that some well-known corporations have to terrorism.

9. Strange Bedfellows

On a warm June morning in 1969, two unassuming policemen on motorcycles made their way to a General Motors plant located in the suburban neighborhood of Sayago in Montevideo, Uruguay. The watchmen of the plant were unfazed upon seeing them drive up; extra security had been commissioned by the government in anticipation of New York Governor Nelson Rockefeller’s visit and press conference.

The men, however, were not law enforcement. They were members of the urban guerrilla group known as the Tupamaro. The group notoriously used tactics such as kidnapping and sabotage to communicate their disdain for the Uruguayan government and their pro-Marxist ideology. As they approached the building, the two men detonated two packages that looked like bombs. Within 15 minutes, a fire in the General Motors plant destroyed the facility’s files, fuel tanks, jets, and five cars parked in the patio. Overall, the attack caused $1 million in damages, but what was more costly (specifically, to the Uruguayan government) was the damage done by the underlying diplomatic message the rebels wanted the world to hear. TV screens in American homes showed a shocked U.S. governor arriving at a smoldering pyre instead of a thriving plant. Two scrawled words summed up the attack’s mission: “Out Rockefeller.”

“This was the work of an Uruguayan urban guerrilla group,” said an American news anchor. “The Tupas.”
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And it wouldn’t be the last.

Targeting American symbols such as embassies and multinational corporations was part of a greater strategic operation called Plan Satan. The Tupamaro sought to provoke a ministerial crisis in foreign intervention that would lead to the downfall of the government.
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When the world thinks of multinational companies and their involvement in terrorism, the image of what took place in Uruguay that June day comes to mind—small yet powerful rebel groups kidnapping and maiming, bombing buildings, and alarming customers and executives of multinational companies, clearly making the companies and anyone associated with them the target. What doesn’t come to mind is those same people who were once the target working with, paying off, or funding rebel leaders and terrorist groups in countries all over the world.

But that’s exactly what R.J. Reynolds (RJR), Sony Corp., Dole Foods, and Chiquita International Brands did unknowingly or knowingly. As much as these multinationals tried to distance themselves from terrorism plots, these Fortune 500 companies acted as financial facilitators of extortions, kidnappings, bombings, and the smuggling of people and products across borders. The terrorists used profits made from selling these companies’ goods, according to court documents—the same goods consumers were purchasing in grocery stores, delis, and big-box retailers all around the world.
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How Banned TVs Funded Bombings

In the mountains of Afghanistan, the drug route on which illegal substances normally were transported—across the Pakistani border by way of the Khyber Pass—was being used to transport another product just as illegal and dangerous as the poppies used for heroin.

It was Sony television sets.

In 1996, a survey conducted by the Pakistan Electronics Manufacturers Association found that 500,000 TVs were smuggled into the
country that year, and 75% of them were Sonys.
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And in 2010, the National Assembly’s Standing Committee on Finance was told that the Afghan Transit Trade was the main source of smuggling into Pakistan, banking $4 to $5 billion annually and subjecting the country to $2.5 billion in lost taxes and tariffs.
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The Taliban allowed contraband Sony television sets to be imported through Iran and into Pakistan. Smugglers would obtain the product after it shipped to the Iranian port of Baider Abbas, and from there go past the Afghan border to southeast Kandahar, into Jalalabad, and into Pakistan through Peshawar. The Taliban would let the smugglers use these routes and in return would take fees from them. The Taliban also made it easier for the smugglers to avoid paying stiff taxes and duties levied on these goods going into Pakistan through agreement deals they had with border patrol.

But Sony wasn’t oblivious to what was happening. In his book
At Home in the World
, Daniel Pearl reported that Sony Gulf FZE (a wholly owned subsidiary and sales office headquartered in Dubai) sold few TVs through the proper legal channels into Pakistan and didn’t assemble sets locally.
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I corroborated this fact with my source at Sony Gulf in March 2010. According to its web site and a source at Sony Gulf FZE, the television sets were manufactured in Dubai and the United Arab Emirates. In fact, Sony Gulf FZE (similar to RJR Corp.) allegedly used smuggling as a marketing and distribution strategy for the Middle East region to gain market share over other television and electronics manufacturers. Managers of Sony Gulf FZE would actively seek out and recruit potential traders and then sell them the merchandise. They would then ship the merchandise to Iran. In one instance, Sony Gulf approached Abdul Haq, an Afghani and ex-mujahideen, about distributing TVs in Afghanistan. He began sending them to his family in Afghanistan by way of Dubai. In his book, Pearl also notes how Khalid Khan, manager of Sony Gulf, often visited the Karkhano market (known for selling smuggled goods) in Pakistan and admitted that “all of the TVs were smuggled into Pakistan
from Afghanistan.”
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Wrote Pearl before he was kidnapped and killed by the Jaish-I-Mohammed (Army of Mohammed, which also goes by the alias “The National Movement for the Restoration of Pakistani Sovereignty”) in 2002: “Smuggling offers employment to people in the tribal areas of the Afghan border. Smuggling is an industry, and it’s the largest entry in the terror balance of payments.”