May Issue 2005
Banking on Terror
The latest operation in the lawless tribal zones as well as the arrest of some of the militants linked to Al-Qaeda from various Pakistani cities have revealed not only the terrorist network’s ability to channel funds from one place to another, but also its potential to maintain a ‘pension system’ for those of its cadres who are retired.
Counter-terrorism officials in Pakistan said they learnt about the financial wheeling and dealings of Bin Laden’s network when they arrested two militants of Algerian descent earlier this month in Peshawar.
Medjouri Mohammad Saad, 39, and Mehdi Rabbah,37, both veterans of the Afghan war, had remained associated with Al-Qaeda after arriving in Afghanistan in the early ’90s. They have admitted to taking part in various operations since then, having moved to Pakistan after the conservative Taliban government was dislodged nearly four years ago.
They are believed to have told interrogators that they had expressed their inability to continue operations in the terrorist network due to their family commitments. Both Saad and Rabbah had married local girls and were unable to return to their respective countries due to their past records, and were thus entitled to a ‘pension.’ They received between 600 and 900 US dollars each, every three to four months.
Officials said they had also obtained past evidence of Al-Qaeda’s financial dealings. “The network maintains an independent department that deals with financial matters and gives stipends to those who work for them and those who are retired due to one reason or the other,” says a senior Pakistani official. He said this stipend is not lavish, but enough for the terrorist cadres to live reasonably well.
These officials said Al-Qaeda has a network to transfer money needed for various operations from one place to another as well as to pay individuals to carry out different operations.
When Pakistani authorities initiated a dialogue with tribesmen to restore peace in South Waziristan several months ago, they learnt that these tribesmen were compelled to fight for Al-Qaeda and against the Pakistan army because they had obtained huge loans from Al-Qaeda and had no option but to offer its militants shelter or work for their interests in the region.
The Pakistan Army later paid a whopping 32 million rupees to some of the most-wanted militants in the tribal area of South Waziristan who surrendered and signed peace deals, to enable them to clear their dues and surrender their weapons.
Peshawar Corps Commander Lt Gen. Safdar Hussain, the man in charge of military operations in Waziristan, told newsmen that these payments were made as part of a package after the militants said that they needed “to settle debts with al-Qaeda.” According to General Hussain, two of these tribal warriors, Haji Sharif and Maulvi Abbas, received 15 million rupees each while Maulvi Javed and Haji Omar were paid a million rupees each.
The late Nek Mohammed, another tribal hero who was killed in a precise missile attack last year, is believed to have earned a fortune by providing logistical support to Al-Qaeda militants in these tribal zones. Senior officials said that documents seized from an arrested Taliban leader in Afghanistan indicated that he had distributed over 100 million rupees to militants and arms suppliers on behalf of Al-Qaeda, in June of last year, to disrupt the elections in Afghanistan. “This not only shows how much access they [Al-Qaeda] still have to financing, but also a system through which they are able to churn out these funds and transfer them from one place to another without much ado,” says a senior police official.
The wave of terrorist incidents, even after 9/11 , in different parts of the world, indicated that the terrorists do not have any shortage of funds. It has been estimated by experts of the Monitoring Committee of the UN Security Council that despite freezing of terrorist funds and other assets worth 112 million US dollars since 9/11, Al Qaeda and its allies in the International Islamic Front still have about 300 million US dollars at their disposal.
Counter-terrorism experts maintain that the availability of ready funds is essential to achieving the aims of any militant organisation. Recruitment depends on monetary incentives as well as ideological motivation. “For all this you need money. It is as important as oxygen to the body,” says an expert.
These experts believe that over the years Al-Qaeda had established an efficient network to generate as well as transfer funds from one place to another. Sources of funding include direct donations from wealthy businessmen committed to the cause, donations collected through Zakat and collection from places of worhip. Evidence suggests that these militant organisations have also been raising funds through drug trafficking. Experts believe that other sources of funding, like charity organisations, have became an important source for terrorist financing. Al-Rashid Trust, a Pakistan-based charity organisation, was outlawed by the US after it found a clear link between the Trust and Al-Qaeda.
Pakistani investigators recently found a link between Al-Akhtar Trust International, another Pakistan-based Muslim charity organisation and one of four suspects believed to be involved in the murder of Wall Street Journal reporter Daniel Pearl.
A trust deed of Al-Akhtar Trust International, retrieved from two Pakistani banks, shows that Saud Memon, an Al-Qaeda fugitive who carries a three-million rupee bounty, is one of the charity’s 11 trustees. Saud Memon, who owns the shed where Pearl’s remains were found and is known to be the financial head of the Al-Qaeda operations in Pakistan, had been named by several arrested members of these militant organisations as their chief financial guru.
While US authorities have enacted new laws on the transfer of funds after 9/11 , senior government officials say this has created more problems for law-abiding folk.
US authorities have banned Muslim banks in the US and Middle East from dealing with direct cash transfers. Under new laws enacted after 9/11, these banks are bound to transfer or wire money only when it is received by cheque or through a bank draft. Due to these new banking restrictions, immigrants, especially those who work in the Middle East, now face manifold problems in sending money to their respective countries. Many of these laborers live illegally, while others are illiterate and unable to operate bank accounts. As a result of these new laws, banks have increased their fees for the transfer of funds which has multiplied problems for the people.
Other than the banks, US authorities have issued licences to certain non-Muslim money-changers who are allowed to handle cash transfers. However, their charges are prohibitive. These companies include Western Union Money Transfer, Money Gram and Express Money Transfer. Western Union Money Transfer, a US- based company, which is supposed to be the biggest of all, has nearly 270 collection points all over Pakistan.
Malik Mohammed Bostan, former president of the Forex Association of Pakistan, said militants or drug traffickers never use banking channels or money changers for transfer of funds and rely instead on the underground network of hawala or hundi, an informal banking system. The hawala system is, according to Malik, “the mother of banking systems, and existed well before any formal banking system was established.”
Financial experts say there are three types of people who rely on hawala. Firstly, militants or drug traffickers, secondly, those who have black or ill-gotten money and want to transfer it from one country to another, and finally, those who live illegally and cannot operate a bank account. Some people, such as those who live in Afghanistan or even in the tribal areas of Pakistan also rely on the hawala system because the banking system doesn’t exist in these areas.
The volume of transactions through hawala in Pakistan alone could be gauged from the fact that, an estimated five million Pakistanis work as labourers overseas. Financial experts said, that on average, if every one of these overseas workers sends a minimum of 200 US dollars a month back to Pakistan, this amounts to nearly a billion dollars every month.
According to rough estimates, the money that comes to Pakistan every month through banking channels today is a mere 200 to 300 million US dollars, while another 200 to 300 million US dollars comes through other channels, including transfers by hand and through money-changers. The rest of it, nearly 400 million US dollars, is channelised through hawala even today.
These experts said that banking laws introduced after 9/11 have increased the volume of foreign remittances through banks but failed to make a substantial dent in the hawala business. To put a stop to unofficial transactions, they believe that the authorities should focus on simplifying banking procedures for the transfer of funds from one country to another. High transfer fees pose another problem that needs to be tackled.
If these steps are taken, more workers would rely on inter-bank transfers and would deny business to those who deal in hawala. “Once they [hawala dealers] lose business from genuine people, which makes up the majority of their dealings, it will make it difficult for them to maintain their network or even to survive,” says Malik Mohammed Bostan.