[Senate Hearing 108-245]
[From the U.S. Government Publishing Office]
S. Hrg. 108-245
TERRORISM FINANCING: ORIGINATION, ORGANIZATION, AND PREVENTION
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HEARING
before the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
JULY 31, 2003
__________
Printed for the use of the Committee on Governmental Affairs
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COMMITTEE ON GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama MARK PRYOR, Arkansas
Michael D. Bopp, Staff Director and Counsel
David A. Kass, Chief Investigative Counsel
Mark R. Heilbrun, General Counsel and National
Security Advisor to Senator Arlen Specter
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
David Barton, Minority Professional Staff Member
Amy B. Newhouse, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Collins.............................................. 1
Senator Specter.............................................. 3
Senator Akaka................................................ 13
Senator Lautenberg........................................... 16
Senator Coleman.............................................. 17
Senator Levin................................................ 18
Senator Pryor................................................ 22
Senator Carper............................................... 24
WITNESSES
Thursday, July 31, 2003
John S. Pistole, Acting Assistant Director for Counterterrorism,
Federal Bureau of Investigation................................ 4
R. Richard Newcomb, Director, Office of Foreign Assets Control,
U.S. Department of the Treasury................................ 7
Dore Gold, Former Israeli Ambassador to the United Nations, and
President, Jerusalem Center for Public Affairs................. 25
Jonathan M. Winer, Alston and Bird............................... 28
Steven Emerson, Executive Director, The Investigative Project.... 31
Alphabetical List of Witnesses
Emerson, Steven:
Testimony.................................................... 31
Prepared statement........................................... 131
Gold, Dore:
Testimony.................................................... 25
Prepared statement with attachments.......................... 77
Newcomb, R. Richard:
Testimony.................................................... 7
Prepared statement with attachments.......................... 54
Pistole, John S.:
Testimony.................................................... 4
Prepared statement........................................... 45
Winer, Jonathan M.:
Testimony.................................................... 28
Prepared statement........................................... 110
Appendix
Council on American-Islamic Relations (CAIR), Nihad Awad,
Executive Director, prepared statement with an attachment...... 176
Questions and Responses for the Record from:
Mr. Pistole.................................................. 180
Mr. Newcomb.................................................. 185
Mr. Gold..................................................... 190
Mr. Winer.................................................... 192
Mr. Emerson.................................................. 194
TERRORISM FINANCING: ORIGINATION, ORGANIZATION, AND PREVENTION
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THURSDAY, JULY 31, 2003
U.S. Senate,
Committee on Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10:16 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Susan M.
Collins, Chairman of the Committee, presiding.
Present: Senators Collins, Coleman, Specter, Levin, Akaka,
Carper, Lautenberg, and Pryor.
OPENING STATEMENT OF CHAIRMAN COLLINS
Chairman Collins. The Committee will come to order.
Today, the Committee on Governmental Affairs is holding a
hearing on the financing of terrorism. Terrorism costs money.
From funds needed to buy explosives and airline tickets, to
living expenses, to payoffs to the families of suicide bombers,
terrorists must have constant and untraceable sources of money.
Stopping the flow of these funds is a formidable task. Osama
bin Laden is an experienced financier who once reportedly
boasted that he and other al-Qaeda leaders know the cracks in
the Western financial system like the lines on their own hands.
Immediately after the September 11 attacks, the President
took strong action to close the gaps in our financial system by
issuing Executive Order 13224 to block terrorist funds.
Nevertheless, serious questions persist about whether we are
doing enough. There are even more serious questions about
whether some of our allies are doing enough.
Last year, the Council on Foreign Relations issued a report
contending that U.S. efforts to curtail terrorism financing are
impeded, ``not only by a lack of institutional capacity abroad
but by a lack of political will among American allies.''
The report concludes that our government appears to have
responded to this lack of will with a policy decision not to
use the full power of our influence and legal authority to
compel greater cooperation.
A key nation in the fight against terrorist financing is
Saudi Arabia. It appears that from the joint inquiry by the
House and Senate Intelligence Committees, which examined the
kingdom's role in terrorist financing, that it is difficult to
tell for sure exactly what the extent of the Saudi involvement
is because almost an entire chapter regarding foreign support
for the September 11 hijackers is classified. Even the parts
that were published, however, raise serious concerns about
Saudi Arabia's role in the September 11 attacks.
For example, the unclassified portion of the joint inquiry
report describes the activities of Omar al-Bayoumi, a man who
apparently provided extensive assistance to two of the
September 11 hijackers. According to the report, a source told
the FBI that he thought al-Bayoumi must have been a foreign
intelligence officer for Saudi Arabia or another power. The
report also finds that al-Bayoumi had access to ``seemingly
unlimited funding from Saudi Arabia.'' Al-Bayoumi is now
reported to be living in Saudi Arabia.
Last month, the General Counsel of the Treasury Department
testified before the Terrorism Subcommittee of the Judiciary
Committee that in many cases Saudi Arabia is the ``epicenter''
of terrorist financing. The Council on Foreign Relations report
found that for years individuals and charities based in Saudi
Arabia have been the most important source of funds for al-
Qaeda and that for years Saudi officials have turned a blind
eye to this problem.
As our witnesses Ambassador Dore Gold and Steven Emerson
will describe in some detail, there is evidence that enormous
sums of money flow from Saudi individuals and charitable
organizations to al-Qaeda, to Hamas, and other terrorist
organizations. The key question now is whether the Saudi
Government is doing enough to stop the flow of this money, and
if not, what actions the U.S. Government should take to prompt
the Saudis to take more effective action. The Saudi Government
recently announced some changes in its banking system and
charity laws, but it is not clear that these changes go far
enough or will be truly effective.
We are fortunate to have with us today key counterterrorism
officials from the FBI and the Department of Treasury. They
will describe the administration's actions against terrorism
financing, and they will help us better understand the level of
cooperation our country is receiving from the Saudi and other
governments. We also have three experts to discuss their views
regarding the fight against terrorist financing generally and
Saudi Arabia's role specifically.
As the discussion of the joint inquiry report has made
clear, there are still many questions about Saudi Arabia's
role, even if that role is inadvertent, in the September 11
attacks and about the extent of the Saudi Government's
cooperation in the fight against terrorism. I hope today's
hearing will help us get answers to some of these questions and
will highlight areas in which our government needs to refocus
its efforts in order to stop the flow of funds to terrorists.
I am very pleased today to pass the gavel to Senator
Specter, who spearheaded this investigation and is one of the
Senate's leaders in the war against terrorism. He has served as
the Chairman of the Senate Intelligence Committee. He chaired a
hearing about this very subject last November in the Judiciary
Committee, and he has continued to investigate this matter as a
Member not only of this Committee but the Judiciary Committee
as well.
This hearing today is particularly timely given the release
last week of the joint inquiry report on the September 11
attacks. I applaud Senator Specter for his leadership in this
area, and I am pleased to join him in working on an issue and a
challenge to our country that has profound impact on the safety
of our Nation and all law-abiding nations.
Senator Specter.
OPENING STATEMENT OF SENATOR SPECTER
Senator Specter [presiding.] Thank you very much, Madam
Chairman, Senator Collins. At the outset I compliment you on
the outstanding job you are doing in chairing this very
important Committee, a brief meteoric career so far in the U.S.
Senate, and I thank you for your leadership on this important
subject and for cooperating in this investigation and in this
hearing and for handing me this mighty gavel. I appreciate it
very much.
The issue of the financing of terrorists is one of enormous
importance, and the Saudi role is especially important in the
wake of the very extensive report published on September 11
with 26 missing pages identified as being Saudi involvement.
There has been a decision by the Executive Branch not to
release those pages, and I believe that puts a greater
responsibility on Congress in oversight on hearings just like
this.
The question of Saudi cooperation with the United States
has been on my agenda for the better part of the last decade.
When I chaired the Senate Intelligence Committee in the 104th
Congress, I went to Khobar Towers, investigated the matter, and
talked to the Crown Prince as part of a U.S. effort to get
cooperation from the Saudis. And while they profess to be very
cooperative, the fact was that they were very uncooperative.
There had been a car bombing in Riyadh in 1995 where Americans
were killed. Federal officials were not permitted to talk to
the suspects. They were beheaded by the Saudi Government so
that we never did find out what they had to say. And then on
June 25, 1996, Khobar Towers was blown up, 19 airmen killed,
400 airmen wounded, and the issue has never yet been fully
resolved.
A criminal indictment was returned naming Iran as a co-
conspirator, and questions linger to this day as to whether
some of those who were involved in Khobar Towers might have
been involved in September 11. And our hearing today is going
to probe this issue further to see if we can shed some light as
to what the Saudi involvement is.
The business of the financing of terrorism has broader
scope, which we have investigated on the Judiciary Committee,
last year a hearing on the financing of Hizbollah. They go into
a small town in North Carolina and reap millions of dollars on
cigarette smuggling, which goes to show you the scope of the
tentacles. Hamas is raising money in the United States, and we
are pursuing an investigation to identify those who contribute
to Hamas with a thought to hold them liable as accessories
before the fact to murder.
When you contribute to a known terrorist organization and
that terrorist organization then murders American citizens,
those people who contribute knowingly could be indicted and
prosecuted for being accessories before the fact to murder. And
Saudi Arabia contributes reportedly about $4 billion a year to
so-called charities which have dual purposes. And we really
need to pull back the covers on this item, and this is a real
challenge for the U.S. Government, and congressional oversight
is a very important part.
We have some expert witnesses today from the Federal Bureau
of Investigation and from the Treasury Department who will
detail efforts to identify Saudi contributions, and we have
experts who have been in government, former Ambassador to the
UN, Dore Gold, and others on a second panel.
We are going to establish the time of 5 minutes for opening
statements. Everything prepared in writing will be, as usual,
made a part of the record, but that will leave us the maximum
time for questions and answers.
Our first witness is John Pistole, Deputy Executive
Assistant Director for Counterterrorism of the Federal Bureau
of Investigation. Welcome, Mr. Pistole, and the floor is yours.
TESTIMONY OF JOHN S. PISTOLE,\1\ ACTING ASSISTANT DIRECTOR FOR
COUNTERTERRORISM, FEDERAL BUREAU OF INVESTIGATION
Mr. Pistole. Thank you, Senator Specter and Madam Chairman
Collins. Thank you for the opportunity to be here today, and I
will just take a couple of minutes, if I may, to make two
points and then, as you mentioned, Senator Specter, to allow
maximum time for questions.
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\1\ The prepared statement of Mr. Pistole appears in the Appendix
on page 45.
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The first point is the FBI's focus on terrorism financing
and the radically changed organization that the FBI is today
compared to prior to September 11, where today we have as our
overriding emphasis the prevention of terrorist activity in the
United States or against U.S. interests overseas. A key
component of that is the identification of individuals involved
in the financing of potential terrorist activity and trying to
identify the full scope of the enterprise, the individuals
associated with this group that is raising money that may be
going to terrorist financing. And we see that as one of the key
means of being able to disrupt and dismantle terrorist cells
that may be operating here in the United States or overseas
that may be targeting U.S. interests.
The second point that I would like to make is talking about
the unprecedented cooperation that we have had with not only
our law enforcement and intelligence community partners here in
the United States since September 11 but also with foreign
partners in both the law enforcement and intelligence
communities in addressing terrorism matters overall. Terrorism
financing remains one of those challenging issues that certain
countries such as Saudi Arabia we believe can do more in, and
we will address that shortly.
In terms of the FBI's response to September 11, I think the
Committee is quite aware of the FBI's response in creating the
Terrorist Financing Operations Section, or TFOS for short,
which originally looked at the 19 hijackers and detailed every
financial transaction that they conducted, overseas money
coming in to them or while they were here in the United States.
TFOS has evolved from that time into the central entity
responsible for coordinating all terrorist financing
investigations for the FBI and then working in concert with,
again, our domestic law enforcement and intelligence community
partners. And with me today is Dennis Lormel, the chief of the
Terrorist Financing Operations Section, who has been almost
singularly responsible to develop and implement the TFOS
strategy.
What TFOS has been doing is trying to follow the money, to
identify those individuals who may be involved in terrorist
financing and then to trace that money with law enforcement and
intelligence aspects to ascertain where that money is going.
And one of the key aspects of what the FBI is doing post-
September 11 is addressing every terrorist investigation as an
intelligence-driven investigation as opposed to strictly a law
enforcement investigation.
The key here is to use all the tools available to us,
whether it is the FISA court and the intercepts we are able to
obtain through the FISA court, national security letters, any
of the other tools available to us as a member of the
intelligence community, and then to focus that investigation on
the intelligence aspect, coupled with the law enforcement
sanctions and tools that we have if we need to bring charges
against individuals to take them off the street if they pose a
threat or to elicit their cooperation.
Given that background and that new paradigm that the FBI
has employed since September 11, TFOS has followed the
terrorist trail in a number of situations, and rather than go
into the detail that is enumerated in my statement, I will just
touch briefly on a couple of the successes in general terms.
One of the key areas has been our outreach with and
cooperation from the private sector. In that area, for example,
we have developed the ability to conduct real-time monitoring
of specifically identified financial activity, which has been
invaluable not only to investigations here in the United States
but to some of our foreign partners who have relied on that
information, tracking money going from the U.S. overseas that
may be used in terrorist activity and vice versa.
In support of a specific high-profile joint terrorist
investigation on financing, a number of countries and agencies,
such as United Kingdom, Switzerland, Canada, and Europol, have
detailed their investigators to TFOS on a temporary-duty basis.
We have engaged in extensive coordination with authorities of
numerous foreign governments in terrorist financing matters,
which has led to joint investigative efforts around the world,
including identifying and exploiting the financing of several
overseas al-Qaeda cells, including those in Indonesia,
Malaysia, Singapore, Spain, and Italy.
There are a number of other relationships that have been
established with central banks of foreign countries that have
also enabled us to track terrorist funding in a way that we
simply did not do prior to September 11.
The other aspect that is critical here is the information
sharing where our greatest successes have come in the
interagency forum, where we are part of the National Security
Council's Policy Coordinating Committee on terrorist financing,
which was created in March 2002. The information sharing we
have found has simply been critical to any success we have had,
and especially our relationship with the Central Intelligence
Agency in some sensitive ongoing matters has allowed us to
develop an expertise that simply the U.S. Government did not
have prior to September 11.
Senator Specter, you mentioned the case in Charlotte, North
Carolina, as one example. There are numbers of other examples
which, again, I won't go into at this time. They are in my
statement.
The other point that I want to touch on is the cooperation
of the foreign governments, and specifically Saudi Arabia. As
we all know, late on the evening of May 12 of this year, three
large bombs were detonated in Western housing complexes of
Riyadh, Saudi Arabia. The next day, I was on a flight to Riyadh
to lead an assessment team of the FBI, working with the CIA, to
assess what the Saudi Government, specifically the Mabahith,
the Saudi counterpart of the FBI, would allow us to do in terms
of bringing a team of investigators and experts in to go
through the crime scenes, to talk to witnesses, and to assess
who may be responsible for those acts.
As a result of the discussions, the Saudis allowed us to
bring 75 FBI employees and an undisclosed number of agency
people in to not only go through the crime scene, comb through
it with shovels and screens, but also to analyze DNA from some
of the human remains that were there, to do forensic tests on
any and all evidence. They also gave us access to Saudi
citizens who were witnesses to those three heinous acts.
To summarize, what they did after May 12, which I believe
was a defining moment for the Saudis because al-Qaeda attacked
Saudi interests in their homeland, what they allowed us to do
was unprecedented. You mentioned the Khobar Towers and the OPM-
SANG bombing prior to that where, frankly, we were frustrated
beyond any recognition to accomplish what we were hoping to do,
as you are well aware, Senator Specter.
What I would say is that post-May 12, the Saudis have had a
wake-up call, and we have had unprecedented cooperation with
them in virtually every area. To that end, the one key area and
the focus of today's hearing is on terrorist financing. The
Saudis last year made a number of representations and enacted a
number of laws designed to identify and dismantle terrorist
financing that may be emanating from Saudi. From our position,
the jury is still out on the effectiveness of what they have
done. We simply have not seen the results of those initiatives
from a terrorism financing perspective. Since May 12, they have
arrested hundreds of people, either detained or killed in an
attempt to apprehend----
Senator Specter. Where do you say the jury is out? On what
issue?
Mr. Pistole. On the terrorism financing issue as far as the
effectiveness of the Saudi initiatives to stem the tide of
financing through NGOs or charitable organizations.
Senator Specter. When the question and answer period comes,
we are going to ask you when you think the jury will be in on
that.
Mr. Pistole. OK.
Senator Specter. We would like to know. Could you sum up at
this point?
Mr. Pistole. Yes. I would be glad to, Senator.
As a follow-up to a number of ongoing measures, there is a
National Security Council team that is leaving Sunday to go to
Riyadh, which I am participating in with State Department and
Treasury Department senior officials, who are meeting with
senior Saudi officials to address a number of the issues that
may arise in this hearing today.
That would conclude my opening statement.
Senator Specter. OK. Thank you very much, Mr. Pistole.
Our next witness is Rick Newcomb, who is the Treasury
Office of Foreign Assets Control Director. Thank you for
joining us, and we look forward to your testimony.
TESTIMONY OF R. RICHARD NEWCOMB,\1\ DIRECTOR, OFFICE OF FOREIGN
ASSETS CONTROL, U.S. DEPARTMENT OF THE TREASURY
Mr. Newcomb. Thank you, Senator Specter, Madam Chairman,
Members of the Committee. I am pleased to have the opportunity
to testify this morning about our efforts to combat terrorist
support networks that threaten U.S. citizens and property
worldwide.
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\1\ The prepared statement of Mr. Newcomb with attachments appears
in the Appendix on page 54.
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The threat of terrorist support networks and financing is
real. It has been our mission to help identify and disrupt
these networks. There is much we know about how radical Islamic
terrorist networks are established and still thrive. Wealthy
individuals and influential individuals and families based in
the Middle East have provided seed money and support to build a
transnational support infrastructure that terrorists have used
for their purposes. This network, fueled by deep-pocket donors
and often controlled by terrorist organizations, their
supporters, and those willing to look the other way, includes
or implicates banks, businesses, NGOs, charities, social
service organizations, schools, mosques, madrassas, and
affiliated terrorist training camps and safe houses throughout
the world.
The terrorist networks are well entrenched, self-
sustaining, though vulnerable to the United States, allied, and
international efforts applying all tools at our disposal.
Today, I will explain our efforts being implemented in
coordination with other Federal agencies, including the
Departments of Defense, State, Justice, Homeland Security, the
FBI, the intelligence community, and other agencies to choke
off the key nodes in the transnational terrorist support
infrastructure.
The primary mission of the Office of Foreign Assets Control
of the Treasury Department is to administer and enforce
economic sanctions against targeted foreign countries and
foreign groups and individuals, such as terrorists, terrorist
organizations, and narcotics traffickers, which pose a threat
to the national security, foreign policy, or economy of the
United States. We act under the general Presidential wartime
and national emergency powers, as well as specific legislation,
to prohibit transactions and block or freeze assets subject to
U.S. jurisdiction. The origin of our involvement in the fight
against terrorism stems from the initial conception of
terrorism as being solely state-sponsored. Our mandate in the
realm of terrorism was to compile available evidence
establishing that certain foreign entities or individuals that
were owned or controlled by, or acting for or on behalf of, a
foreign government subject to an economic sanctions program.
Such entities and individuals became known as SDNs and are
subject to the same sanctions as the foreign government to
which they are related.
The President harnessed these powers and authorities in
launching the economic war against terrorism in response to the
terrorist attack of September 11 and pursuant to the powers
available to the President under the International Emergency
Economic Powers Act. President Bush issued Executive Order
13224, entitled ``Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism,'' declaring that acts of grave terrorism and
threats of terrorism committed by foreign terrorists pose an
unusual and extraordinary threat to the national security,
foreign policy, or economy of the United States. This order
prohibits U.S. persons from transacting or dealing with
individuals or entities owned or controlled, acting for or on
behalf of, assisting or supporting, or otherwise associated
with persons listed in the Executive Order and those designated
under the Executive Order as specially designated global
terrorists.
After the September 11 attacks, President Bush rallied the
international community to unite in the economic war on
terrorism. The U.S. Government has worked with the United
Nations to pass resolutions that parallel U.S. authorities to
designate entities supporting al-Qaeda. The international
community, including our allies in the Persian Gulf, joined us
and have committed to fully cooperating on all fronts against
al-Qaeda and its supporters. On a regular basis, for example,
the United States works cooperatively with Saudi authorities on
issues relating to the war on terrorism. In some areas,
cooperation is routine and systematic. In others, especially
those touching aspects of terrorist financing and
infrastructure, which touches all aspects of government,
coordination is more complex.
We have acted with Saudi Arabia and other allies in
targeting al-Qaeda and other terrorist infrastructure. These
actions have included a number of multilateral efforts that
many times resulted in notifying and listing at the United
Nations under United Nations Security Council Resolutions 1267
and 1455.
Some of the terrorist supporters we targeted include
financial networks, including the al-Barakaat network, a
Somalia-based hawala operator that was active worldwide. And
the Muslim Brotherhood-backed Nasreddin financial services
network. Other efforts have targeted charitable fronts based in
the United States, including the Benevolence International
Foundation, Global Relief Foundation, and the Holy Land
Foundation, and foreign-based charitable fronts including
branch offices of the Revival of Islamic Heritage Society and
the Afghan Support Committee. We also acted with our allies
against major al-Qaeda-affiliated organizations such as Jemaa
Islamiyah.
In the coming months, we are seeking to significantly
expand these efforts and impact the implementation of the
President's authorities under the Executive Order by adopting a
more systematic approach to evaluating the activities of major
terrorist organizations in various regions. This approach will
focus on identifying key nodes that sustain the abilities of
terrorist organizations to remain operational despite
successful actions by the United States and its allies to
capture and arrest terrorists, cell members, leaders, and
operational planners.
In furtherance of this end, we have initiated a
collaborative effort with the Department of Defense and other
agencies to develop information and strategies against
terrorist financing and infrastructure. Last fall, we began a
pilot project with the U.S. Pacific Command and other DOD
elements that identified terrorist support networks in
Southeast Asia and selected key nodes or priority targets in
these networks. The project focused special attention on al-
Qaeda network affiliates in PACOM's AOR, including Jemaa
Islamiyah, which subsequently carried out the Bali bombings,
and the Abu Sayaff Group and others. This approach identified
the key leaders, fundraisers, businessmen, recruiters,
companies, charities, mosques, and schools that were part of
its support network. Thus far, we have imposed sanctions
against two of these key nodes and are coordinating actions
against several others.
This process is the model that we are seeking to continue
and expand in the collaborative efforts with DOD agencies and
the combatant commands. We are working with USEUCOM
headquarters. Meetings in the near future are planned to lay
the groundwork for a continuing joint project. We also plan to
begin projects with the Central Command Southern Command
shortly thereafter. Working with these commands and other
agencies provides us and DOD partners with, in effect, a force
multiplier that brings together a variety of counterterrorism
tools and resources to enhance opportunities for future
efforts.
Taking a regional approach, following the various command's
areas of responsibility, this effort will seek to identify and
isolate the key nodes of the transnational terrorist support
infrastructure in the respective AORs. This approach seeks to
provide the opportunity to cripple an entire organization at
one time through our implementation of the President's
authority in coordination with possible actions in other
departments and agencies and in cooperation with our allies at
the UN.
We have already taken steps to implement this approach in
some regions. For example, we are working with other DOD
agencies, including the Office of Naval Intelligence, to fully
identify the terrorism support infrastructure in the Horn of
Africa. In this region, shipping and related drug-smuggling
activities appear to be strengthening the terrorist networks in
this area. Working with ONI provides us the opportunity to work
with analysts who have unique experience in other areas less
accessible to us.
I have today a few graphical representations of the key
nodes approach that could be applicable to a terrorist support
network in any region. It is related in Appendix 2 of my
written testimony. Charts 1 and 2 are examples of the various
steps of the funding process. Donors provide money to a variety
of intermediaries often acting on behalf of charitable
organizations to collect funds. The charitable organizations in
turn use the funds both for legitimate humanitarian efforts but
also, either wittingly or unwittingly, allow some funds to be
siphoned off by facilitators who serve as the conduit to the
extremist groups. Facilitators frequently are employees of the
charitable organizations with close ties to the extremist
groups or members of the extremist group with responsibility
for liaising with charitable organizations.
Chart 2 is a theoretical model of how the key nodes of the
terrorist support structure can be more systematically
identified in their respective levels of participation in the
funding network.
Chart 3 is a model of a terrorist support network with the
key nodes highlighted that we believe economic sanctions could
effectively impact. These include financial, leadership, and
influence nodes, which are color-coded in red, blue, and green.
Influence nodes can include individuals and institutions that
provide spiritual or other guidance or serve as recruitment
centers.
Chart 4 shows theoretically how designation and----
Senator Specter. Before you leave Chart 3, what does Chart
3 show?
Mr. Newcomb. Chart 3 shows in green the financial targets,
in red the leadership targets, in purple the influence targets.
And by using an effects-based targeting approach, we are able
on an interagency basis to identify who the key leaders of
these various participating entities are so that when taking
them out, we can result in Chart 4, which shows theoretically
how designation will isolate the key nodes of Chart 3 and sever
the critical ties within the overall network and thereby
disrupt its overall functioning. By removing these key nodes of
the support structure, the leadership, the influence, the
financial, the terrorist group is unable to mobilize people and
resources in support of terrorists, thus rendering it
ineffective.
The funds necessary for a terrorist organization to carry--
--
Senator Specter. Mr. Newcomb, you are double time now plus.
Would you sum up? And we will go to Q and A.
Mr. Newcomb. I have perhaps another minute.
Senator Specter. OK.
Mr. Newcomb. The funds necessary for a terrorist
organization to carry out an attack often are minimal, but the
support infrastructure critical for indoctrination,
recruitment, training, logistical support, the dissemination of
propaganda, and other material requires substantial funding.
The President's power under Executive Order 13224, as well as
other legislation, provide the United States with authorities
that are critical to attacking this threat posed by these
terrorist organizations. Our effectiveness in implementing
these authorities requires strong coordination with other U.S.
departments and agencies and support from U.S. allies under
United Nations Security Council Resolutions 1267 and 1455.
Terrorist organizations including al-Qaeda, the Egyptian
Islamic Jihad, Jemaa Islamiyah, Al-Ittihad Al-Islamiyya, Hamas,
Hizbollah, and others rely on their infrastructure for support
and to shield their activities from scrutiny. The secretive
nature of their activities and their frequent reliance on
charitable, humanitarian, educational, and religious cover are
vulnerabilities we can exploit by making designations under the
Executive Order. Decisive action against high-impact targets
deters others, forcing key nodes of financial support to choose
between public exposure of support for terrorist activities or
tarnishing their reputation, to the detriment of their business
and commercial interest.
Thank you, Senator.
Senator Specter. We will now proceed with questioning, 5-
minute rounds, and the Chairman has deferred to me for the
first round.
Mr. Newcomb, in interviews by staff preparatory to your
coming here, you advised that a good many of your
recommendations for sanctions were rejected. Would you amplify
what has happened on that?
Mr. Newcomb. Yes, Senator. In identifying key nodes, our
responsibility is to identify how these terrorist organizations
fit their activities together.
Senator Specter. Well, after you have identified them and
made the recommendation--I only have 5 minutes. I want to focus
very sharply on the rejections on the recommendations which
involve Saudi sources. Precisely what has happened on that?
Mr. Newcomb. Well, the designation, as we indicated in our
discussions, is not the only possible action. There is also law
enforcement, intelligence, diplomatic, and military----
Senator Specter. Well, let's focus on economic sanctions,
which is my question, before we go into other possible actions.
I want to know about the recommendations on economic sanctions
as to Saudis which have been turned down.
Mr. Newcomb. Senator Specter, we have made numerous
recommendations, including relating to Saudi Arabia and other
terrorist support organizations and groups. This goes through a
Policy Coordinating, PCC process, where all the equities of the
government come to the table, including----
Senator Specter. Well, my question focuses on
recommendations which you have made for sanctions as to Saudi
organizations which have been rejected.
Mr. Newcomb. Well, first let me say it is not--it is the
policy not to comment on internal policy deliberations within
the government. I can tell you these issues have been discussed
with all the key players at the table, and when there is
another possible action that can be taken, we have achieved our
goal by teeing issues up.
Senator Specter. I am not asking about internal
deliberations. I am asking you--and let me be specific with
some organizations which have been discussed with you by staff
prior to your coming here.
Were there recommendations as to the National Commercial
Bank of Saudi Arabia for economic sanctions which were
rejected?
Mr. Newcomb. No, Senator Specter, there was not.
Senator Specter. Were there recommendations for sanctions
against the World Assembly of Muslim Youth?
Mr. Newcomb. There, as in others, these are issues that we
looked at and examined very carefully. There was no
recommendation out of our office on either of those.
Senator Specter. Well, what conclusions did you come to on
the World Assembly of Muslim Youth?
Mr. Newcomb. That along with the whole variety of
charitable organizations operating head offices in Saudi are
organizations that we are looking at, as well as the whole
range of several hundred or so possible organizations that may
be funding terrorist activities. Rising to the level of a
recommendation is a complicated policy----
Senator Specter. Well, I am not concerned about several
hundred others. I would like to know, what about the World
Assembly of Muslim Youth? Were they funding terrorist
organizations, subject to economic sanctions, without any
action being taken?
Mr. Newcomb. I can not conclude that in this hearing today.
It is an organization that we----
Senator Specter. You can or you can not conclude----
Mr. Newcomb. Cannot.
Senator Specter. At this hearing today?
Mr. Newcomb. Well, we did not conclude that in our
deliberations, so I can not say that was a recommendation of
our office.
Senator Specter. How about the International Islamic Relief
Organization? Were there recommendations for sanctions there
which were rejected by higher officials in the Treasury
Department?
Mr. Newcomb. This is an issue that we looked at, and,
again, your question relates to policy deliberations within the
administration which I can not comment on. I can tell you we
did look at that organization.
Senator Specter. I am not interested in your policy
deliberations. What I am interested in is your conclusions.
Were there economic sanctions taken against the International
Islamic Relief Organization?
Mr. Newcomb. To date, there have not been as of this date.
Senator Specter. Do you think there should be?
Mr. Newcomb. It is something that we would look at very
carefully along with the others participating in the policy
process.
Senator Specter. Well, when you look at it very carefully,
how long have you been looking at it up until now?
Mr. Newcomb. Certainly since immediately in the aftermath
of September 11.
Senator Specter. Well, that is almost 2 years. How long
will it take you to come to a conclusion?
Mr. Newcomb. We can recommend and we can designate, but
there is a policy process which takes into account all the
variety of----
Senator Specter. I have got 16 seconds left. Have you
recommended as to any of the organizations I have mentioned to
you some tough economic sanctions which were turned down by
higher officials, implicitly because they were Saudi
organizations?
Mr. Newcomb. I can not say it is because they were Saudi
organizations.
Senator Specter. Well, could you say whether they were
turned down?
Mr. Newcomb. I can say that there have been some charities
and other organizations that we have considered, we have had at
the table, and that have been deferred for other actions which
I would deem as appropriate.
Senator Specter. Well, my red light went on in the middle
of your last answer, but I will be back.
Mr. Newcomb. OK.
Senator Specter. Senator Akaka.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Thank you very much, Mr. Chairman, for
holding this hearing on terrorism financing.
I agree with my colleagues Senator Shelby and Senator
Graham, who say that we need to make public much of the
information from a congressional report on intelligence and the
activities surrounding the terrorist attacks of September 11,
2001. There needs to be a full and open debate on these issues.
And this is an effort partly today at this hearing.
I am also concerned about terrorism in Africa, and I think
that we should put an end to the illicit trade in so-called
blood diamond funds, which funds activities of Liberian
President Charles Taylor, and also supports conflicts in Angola
and the Congo.
I am equally concerned about terrorism in Asia. We must
stop the activities of terrorists in Bali and the laundered
money there that financed the bombing in Bali. These confront
us as we look into Saudi Arabia and our tracking and
coordinating intelligence with them and the lack of some of
this information from them.
What we are learning is that there is a lesson that we
cannot afford to ignore, and this Committee is certainly moving
out on this.
Mr. Pistole, the House-Senate September 11 Commission
report states that intelligence resources to fight terrorism
are stretched thin. Do you believe that the FBI has adequate
resources, people, and funding for training in place to combat
terrorism?
Mr. Pistole. Senator, you have identified some critical
issues for the FBI in terms of ensuring adequate training. To
answer your question, I believe we have sufficient personnel,
nearly 29,000 employees right now, over 11,000 of whom are
special agents, to address the counterterrorism issue facing
the United States domestically. But it is through the
enhancement or augmentation through the Joint Terrorism Task
Forces where we have over 2,000 FBI and other agency, law
enforcement, and intelligence community personnel dedicated to
84 JTTFs around the country that we're able to leverage our
limited resources in an effective means of being the arms and
the operational node of the U.S. Government in fighting
terrorism in the United States
Senator Akaka. Mr. Pistole and Mr. Newcomb, we know there
are frustrations, as you mentioned, Mr. Pistole, about what we
are doing about tracking and coordination. My question to each
of you is: What more needs to be done to improve tracking and
coordination of terrorist funding intelligence?
Mr. Pistole. I think one of the keys is to achieve the
cooperation of foreign governments such as Saudi Arabia where
the assessment is much of the funding stems from, and as I
mentioned earlier, I am leaving Sunday to go to Jiddah. I hope
to achieve some success in that arena with my colleagues from
Treasury and from State and from the National Security Council.
There are a number of issues on the table that will be
discussed, and I would be willing to give the Committee a
follow-up briefing after that trip, if they so desired.
Senator Akaka. Mr. Newcomb.
Mr. Newcomb. Thank you, Senator. I share my colleague's
point of view that we need to continue doing the work that we
are doing, working within the administration and other
government agencies but also with foreign counterparts, to have
a unified front utilizing authorities under the United Nations
to take joint action, coordinating fully with local law
enforcement authorities, but continuing our current efforts.
Senator Akaka. My time is up, Mr. Newcomb, but I noted that
your written statement discusses a terrorist supporter
identification program that has been developed with the Pacific
Command. Given that Hawaii is the gateway to and from the
Pacific, this is of interest, of course, to me, and I certainly
want to hear more about that.
My time is up, but I wish to learn more about that project.
Mr. Newcomb. Fine, Senator. I would be happy----
Senator Specter. Thank you, Senator Akaka. Chairman
Collins.
Chairman Collins. Thank you very much, Senator Specter.
Mr. Newcomb, I want to make sure that the Committee
understands how you compile the list of suspected terrorist
financers. First of all, it is my understanding that the Office
of Foreign Assets Control has the power to recommend that
individuals and entities that are involved in financing acts of
terrorism can be placed on a government list, and the listing
of that individual or entity is critical to depriving them of
the ability to provide funds for terrorists. Is that accurate?
Mr. Newcomb. That is accurate. I would also point out and
add that we also are the implementing and enforcement agency as
well. So it is those two nodes, a recommending function and an
implementation function.
Chairman Collins. And after your office recommends an
entity for listing, that recommendation is then reviewed by an
Interagency Policy Coordinating Committee that you referred to
in your discussions with Senator Specter. Is that correct?
Mr. Newcomb. That is correct, Madam Chair.
Chairman Collins. Have you ever recommended that an entity
be listed and had that recommendation rejected by this
Interagency Policy Committee?
Mr. Newcomb. We have made numerous recommendations on a
variety of different targets, as is our responsibility. And it
goes to the Policy Coordinating Council which has a multitude
of different points of view--State Department, the Justice
Department, the FBI, the CIA, and others. So long as there is a
responsible action to be taken, designation per se is not the
only possible tool within the President's ambit of foreign
policy----
Chairman Collins. And I understand that, that there may be
other ways to approach the problem. But I assume that when you
recommend the listing of an entity, that is based on an
investigation that you have conducted and that there is a sound
factual record for the listing of the entity, that is why you
brought that recommendation forward. Is that correct?
Mr. Newcomb. That is correct. When we have a target we wish
to designate, we develop evidence so that, should a designation
happen, we are able to sustain a challenge to that in Federal
court. So we do develop evidentiary packages as the basis for
recommendations.
Chairman Collins. And it is correct--and I understand there
may be other action taken, but it is correct that your
recommendations are sometimes turned down by this interagency
committee, correct?
Mr. Newcomb. The issue I think we are having somewhat of a
debate about is the characterization of ``turned down.'' Turned
down----
Chairman Collins. For listing on the terrorist financers
list.
Mr. Newcomb. Oftentimes they are not adopted for purposes
of listing at this time.
Chairman Collins. That is the same as being turned down,
not adopted, not--entities that you recommend be listed are not
always listed as a result of the committee, the interagency
committee, not accepting your recommendation that they be
listed. Is that correct?
Mr. Newcomb. That is correct, but I have to add the caveat
that because there are other agencies--for example, the FBI may
say we have law enforcement equities in that particular target
at this time. If you move forward now, you will disrupt those
equities. That is, in my opinion, and in the opinion of the
PCC, a very responsible way to proceed. Let us not interfere
with your case. We will stand down until an appropriate time.
And there have been examples when that objection has been
removed.
Chairman Collins. What percentage of your recommendations
to list Saudi entities or individuals have been rejected?
Mr. Newcomb. Madam Chairman, I don't have the answer to
that information. You sent that to----
Chairman Collins. We have asked for that, as you know.
Mr. Newcomb. You have asked for it, and we will get it to
you for the record.
Chairman Collins. Would you say that more than 50 percent
of the recommendations that you have made to list Saudi
entities or individuals have not been accepted by the
committee?
Mr. Newcomb. I am going to have to get that information for
you for the record. I don't have it at this time.
Chairman Collins. In conversations with staff, you were
asked whether it might be as high as 95 percent. Do you recall
telling the staff that you did not believe it was quite that
high?
Mr. Newcomb. Yes, I certainly did say it wasn't that high.
I don't have the exact figure. Let me also explain to you,
there are a range of specific areas where we have been looking
where there are considerable other equities at stake. I think
the point that has to be made is that there are a whole range
of targets that we are prepared to move forward on, can move
forward on, have developed evidentiary packages on, and other
equities come into play that are responsible equities.
I don't know if the number in every one of these categories
is that high, but we do a thorough examination of potential
targeting.
Chairman Collins. One final question on this area, since my
time has expired. On this interagency committee, as you point
out, there are representatives from various departments and
agencies like the FBI, departments like the State Department
and Justice. Which agency is responsible for most of the
rejections of your recommendations to list Saudi entities and
individuals?
Mr. Newcomb. I would say it is a combination of deferring
action based on recommendations from the State Department, the
FBI, the Justice Department, and the intelligence community
based on a variety of equities that they have involved--
diplomatic, law enforcement, intelligence, and others.
Chairman Collins. So no one agency or department on the
committee is responsible for rejecting your recommendations
more than any other agency or department?
Mr. Newcomb. I think in all conversations relating to
foreign policy and foreign relations, we look very strongly to
the State Department, and the State Department is always a very
active player in these. So they do have a view, as well as the
other agencies. But I think it is a combination of all of
those.
Chairman Collins. Thank you.
Senator Specter. Thank you very much, Senator Collins.
Senator Lautenberg.
OPENING STATEMENT OF SENATOR LAUTENBERG
Senator Lautenberg. Thank you, Mr. Chairman.
There are things that concern me--and I want to examine the
specifics. Unfortunately, we are pushed for time, and I look at
the clock and realize that you have another panel, Madam
Chairman, and we have to get on with it. But I do want to say I
have an active interest in the relationship with Saudi Arabia.
In 1991, immediately after the first Gulf War, I went to Saudi
Arabia, and I was outraged at diplomats, Senators, and
Congressmen with an Israeli stamp on their passports were
prohibited entry. And I got the Saudis to change that in a
hurry, and it is no longer a restriction, that is, for
officials of the U.S. Government. But I think if you are an
ordinary citizen of this great country, you are prohibited
entry if you have had an Israeli stamp in your passport.
It is outrageous. When they dial 911, we answered the phone
immediately, sent over 500,000 people to the area to try and
provide a rescue operation and the resuscitation effort,
because that is what I specifically want to call it. All was
lost there, Kuwait, Saudi Arabia, and then the ingratitude of
the Government of Saudi Arabia not to present a witness here,
not to present someone to offer testimony. Very frankly, it is
compounded even to a more aggravating degree when the President
has refused to permit the full record established in the 900-
page report to be out there when the Saudis themselves say they
would like to clear the record. Or are we looking at a sleight
of hand, forgive the suspicion, that a routine was set up that
said, well, OK, we in the Saudi Government will say make it
public, and, Mr. President, we would thank someone in the
administration if they would simply say that it is being
withheld for methods, etc. It is pitiful.
I am using this time knowledgeably, Mr. Chairman, and I
would like to ask Mr. Pistole for a short view on the Saudi
Government's willingness to cooperate in investigations
subsequent to terrorist attacks on the embassies in Africa and
the USS Cole?
Mr. Pistole. Subsequent to those two incidents, Senator, as
I think you are aware, there was very limited cooperation from
the Saudi Government. As I mentioned in my opening statement, I
believe May 12 was the defining moment for the Saudis in that
the fact that they were attacked, that Saudi citizens were
killed in the attacks, and that al-Qaeda seemed to be thumbing
their noses at the royal family to say we will conduct attacks
in the homeland here and you can not stop us. The cooperation
since May 12 on the Riyadh bombings, as I mentioned, has been
unprecedented in all areas but for the financing issue, which
is still ongoing, and there are a number of issues on the table
for that.
Senator Lautenberg. So there is still a reluctance to open
up the relationship and to say, ``America, you are without a
doubt our best and most needed friend.'' I find that more than
just a curious response to this kind of symbiotic relationship
that we have had for a long time.
I yield back the time here.
Senator Specter. Thank you very much, Senator Lautenberg.
Senator Coleman.
OPENING STATEMENT OF SENATOR COLEMAN
Senator Coleman. Thank you, Mr. Chairman.
Following up on the questions from my distinguished
colleague from New Jersey on the level of cooperation, first
let me backtrack a little bit. I believe in the written
testimony of Mr. Winer, one of the subsequent panelists, he
noted that, ``Saudi Arabia has been the most significant source
of terrorist funds for al-Qaeda.''
Mr. Pistole, would you agree or disagree with that
assertion?
Mr. Pistole. I would at this point say the FBI does not
have enough intelligence or law enforcement information to
agree or disagree with that. There is obviously a tremendous
amount of money that has flown through NGOs and charitable
organizations. As Mr. Newcomb mentioned, the question is how
much of that has gone specifically for terrorist activity. And
in limited situations, we can document that, and I can tell you
affirmatively, yes, that this money has gone for this act. But
to trace it from the government to a particular terrorist, I
can not sit here and tell you that has been done.
Senator Coleman. Mr. Newcomb, could you respond to that?
Mr. Newcomb. I agree with my colleague from the Bureau. We
are aware of large amounts of money going to charitable
organizations. They are dual purpose in the fact that some of
the otherwise legitimate activities are subverted. The extent
to which that takes place is not completely clear, but I would
characterize it as considerable.
Senator Coleman. Mr. Pistole, on the issue of financing,
you indicated at least in the willingness to cooperate there
has been substantial improvements in some areas but still work
to be done on the financing side. Can you identify two or three
things that need to be done that aren't being done today?
Mr. Pistole. Yes, Senator, several areas. One is the Saudi
Government payment of defense counsel, for example, here in the
United States of Saudi citizens who have been charged with
crimes. That is an issue that we have raised with the Saudi
Government and pursuing next week in follow-up meetings. To us,
that is tantamount to buying off a witness, if you will, and so
that gives us concern if the government is supplying money for
defense counsel.
Other areas that we are addressing is the specific funding
through whether it is NGOs or charitable organization, that
they know or should know is going to specific terrorist
organizations or individuals associated with terrorism.
Senator Coleman. Again, short questioning periods. I am
going to switch gears for a second, and I apologize I wasn't
here for your oral testimony, but I read your written
testimony. You give a very spirited defense of the PATRIOT Act,
which has certainly been the source of a lot of discussion.
Can you help me connect the dots? Is there something in the
PATRIOT Act that you didn't have before that specifically
allows you to break an organization that was doing something it
shouldn't be doing?
Mr. Pistole. Absolutely, Senator. The most compelling part
of the PATRIOT Act has been the elimination of what we refer to
as ``the wall'' between law enforcement and intelligence
collection activities. For example, if Mr. Newcomb was an FBI
agent sitting in New York working a criminal investigation on
Osama bin Laden, and I was an intelligence agent, because of
prohibitions under ``the wall,'' we would not be allowed to
share that information. With the passage of the PATRIOT Act, we
are now able to share that information and ``connect the
dots.'' That is the most compelling part of the PATRIOT Act.
Senator Coleman. Does that break in the wall also go down
to the level of local sheriffs, local law enforcement? And let
me explain why I ask. There has been concern raised about crop
dusters and the ability to spread, for instance, something like
anthrax. And I know the FBI often has been notified about that,
but I wonder if our local sheriffs--they know where the grass
fields are. They know where the crop dusters are.
Mr. Pistole. Absolutely, and this week, in fact, with
tomorrow's deadline, our Joint Terrorism Task Forces are going
back and recontacting all those individuals we contacted after
September 11 to see if there has been any suspicious activity.
To answer specifically your question about sharing with
local and State law enforcement agencies, that is done
primarily through the Joint Terrorism Task Forces, and
obviously it is a matter of, if there is classified
information, whether they have the appropriate clearances. We
still pass the information of the threat related but just may
not identify the source or method of acquiring that
information, for example, overseas.
Senator Coleman. Thank you. Thank you, Mr. Chairman.
Senator Specter. Thank you, Senator Coleman. Senator Levin.
OPENING STATEMENT OF SENATOR LEVIN
Senator Levin. Thank you, Mr. Chairman. Just very briefly a
few comments, and then my questions.
Saudi behavior towards terrorism, particularly towards
terrorism aimed at the United States, has been very lax and
very disturbing for many years. The reference has already been
made to the attack on Khobar Towers in Saudi Arabia in 1996
where we lost 19 American servicemen, after which the FBI
complained that Saudi officials failed to cooperate with the
United States probe and denied requests to question key Saudi
officials.
During the 1990's, the Saudi Government became one of the
few governments in the world that supported the Taliban,
despite the Taliban's link to terrorists.
At the same time the Saudi Government was taking steps to
strengthen its relations with the United States, it is said, it
was funding extreme Muslim clerics in educational schools, the
madrassas, that routinely called for attacks on the United
States and hatred of all things American. And those madrassas
in Pakistan, funded mainly by Saudi money, have provided
recruits for the Taliban.
Anti-American statements became standard fare in Saudi-
supported newspapers and publications. In 2001, after the
September 11 attack killed 3,000 people in the United States,
we found out that 15 of the 19 hijackers were Saudi nationals.
The recently released report by the joint inquiry on the
September 11 attack states in the unclassified section that a
Saudi citizen employed by the Saudi Civil Aviation Agency paid
many of the expenses of two of the hijackers and ``had access
to seemingly unlimited funding from Saudi Arabia.''
Until recently, Saudi Government officials and prominent
Saudi citizens routinely contributed huge sums to Muslim
charities which supported terrorism, including support for
families of terrorists. The United States finally shut down
several of those charities which were operating in the United
States.
The question that the President asked not too long ago--
``Are you with us or against us in the war on terrorism?''--in
the case of the Saudis has got to be answered, ``Yes.'' Both.
The rhetoric is that they are with us, but the actions too
often have been that, in fact, they have been against us. And,
of course, there is now a new issue with U.S.-Saudi relations,
and that is that 28-page piece of the September 11 joint
inquiry report which has been redacted, blanked out. These
deletions have been described by the former chairman of the
Intelligence Committee, Senator Shelby, as being related to
embarrassing information and not to information which should be
properly classified. And it seems to me that there just has to
be declassification of all or almost all of that material if we
are going to make public what is in there which is so
critically important.
[The prepared opening statement of Senator Levin follows:]
PREPARED OPENING STATEMENT OF SENATOR LEVIN
Terrorists need money to carry out acts of terrorism. They need
money for explosives, for communications, for travel, and for all the
other details involved in carrying out plans for mass murder and
mayhem. Global terrorist organizations need global financing. They need
to be able to transfer funds across international lines, move money
quickly, and minimize inquiries into their finances, their activities,
and their supporters.
Since the 9-11 attack, stopping terrorist financing has become a
U.S. priority. This Committee has contributed in a significant way to
that priority through a 3-year anti-money laundering investigation
conducted by our Permanent Subcommittee on Investigations. This
investigation, which produced extensive hearings and reports, not only
documented little known methods for transferring illegal funds into the
United States, but also provided important recommendations for
strengthening U.S. laws to detect, prevent, and halt terrorist
financing. These recommendations were included in S. 1371, a bipartisan
bill I introduced in early 2001; they were picked up by the Senate
Banking Committee which improved and expanded them; and they were then
included in Title III of the USA Patriot Act, which was enacted into
law in October 2001, six weeks after the 9-11 attack.
The new anti-money laundering provisions in Title III of the
Patriot Act boosted U.S. efforts to stop terrorist financing. For
example, Title III tightened the rules for money transfers by
completely barring foreign shell banks from opening U.S. financial
accounts, making it harder for offshore banks to arrange transfers of
money into the United States, and requiring U.S. banks and securities
firms to exercise more care before opening accounts for foreign persons
and financial institutions. Title III also targeted informal money
transfer systems, called ``hawalas,'' which are often used in the
Middle East to transfer funds outside normal banking channels without
paperwork or regulatory oversight. The new law essentially requires
these operations to register with the U.S. Government or risk shutdown
and criminal prosecution.
Title III also made it easier to prosecute money laundering
offenses involving foreign offenders by making it easier to freeze and
seize foreign funds, obtain information from foreign jurisdictions, and
prosecute foreign individuals and companies. The new law also required
more U.S. financial institutions to establish ant-money laundering
programs, verify customer information, and report suspicious financial
transactions. Title III also modernized U.S. anti-terrorism criminal
statutes by making it a crime to bring into the United States or take
out of the United States large amounts of cash without disclosing the
action and, if asked, providing an explanation for the funds, and by
making it clear that anti-money laundering prohibitions apply to funds
obtained legally if intended for use in planning, committing or
concealing a terrorist act. The new law has enabled U.S. prosecutors to
apply anti-terrorism prohibitions to funds legally collected by a
charity if that charity intends to use the funds to support terrorism.
The U.S. Government has started to make good use of these new anti-
money laundering provisions to intensify the fight against terrorist
financing, but it would be incorrect to say that the United States has
yet won this fight. We will hear testimony today about the difficulties
of shutting down terrorist financing when some foreign governments are
reluctant to take the necessary steps and may even, directly or
indirectly, support persons or entities facilitating the movement of
terrorist funds.
The example the Committee has chosen to highlight today is Saudi
Arabia. For years, there has been disturbing Saudi behavior regarding
terrorism. In 1996, for example, after bombs killed 19 U.S. servicemen
at Khobar Towers in Saudi Arabia, the FBI complained that Saudi
officials failed to cooperate with the U.S. probe and denied requests
to question key Saudi suspects. Also during the 1990's, the Saudi
government became one of the few governments in the world to support
the Taliban in Afghanistan, despite its links to terrorists. The Saudi
government also funded some extreme Muslim clerics and schools known as
madrassas that routinely called for attacks on the United States and
hatred of all things American. Madrasses in Pakistan, funded mainly by
Saudi money, provided recruits for the Taliban.
Anti-American statements became standard fare in some Saudi-
supported newspapers and publications. In 2001, after the 9-11 attack
killed more than 3,000 people in the United States, it was determined
that 15 of the 19 hijackers were Saudi nationals. The recently released
report by the Joint Inquiry into the 9-11 attack states in an
unclassified section that a Saudi citizen employed by the Saudi civil
aviation agency paid many of the expenses of two of the hijackers, and
``had access to seemingly unlimited funding from Saudi Arabia.''
Saudi government officials and prominent Saudi citizens have
routinely contributed millions of dollars to Muslim charities which
support terrorism, including supporting families of terrorists killed
in bombings or other terrorist attacks. The United States finally shut
down several such charities that were operating in the United States.
The United States also decided earlier this year to vacate its military
posts in Saudi Arabia at least in part due to discontent within the
country at having a U.S. presence and continuing attacks on the United
States by some Saudi clerics and in some Saudi publications.
There are some recent actions taken by the Saudi government to stop
terrorism. Saudi officials have openly identified their country as a
strong U.S. ally and a foe of anti-American terrorism. In May of this
year, after terrorist suicide bombings in Saudi Arabia killed 35
people, the Saudi government began a series of raids to arrest
terrorists within its borders. One such raid in July reportedly
resulted in the arrest of 16 persons linked to al Quaeda and the
dismantling of a weapons arsenal with 20 tons of bomb-making chemicals,
detonators, rocket-propelled grenades, and rifles. Saudi officials also
allegedly used information uncovered in this raid to halt several
terrorist plots. We will also hear testimony today that the Saudi
government has taken steps to strengthen cooperation in terrorist
financing cases and other anti-terrorism efforts.
Today, there is a new irritant in U.S.-Saudi relations. It arises
from the 28-page gap and other blanked out information in the 9-11
Joint Inquiry report. These deletions have been described as based less
on protecting U.S. national security than on protecting Saudi Arabia
from embarrassment. The former head of the Senate Intelligence
Committee, Senator Richard Shelby, recently said, for example, that he
had closely reviewed the deleted information and ``90 to 95 percent''
involved simply ``embarrassing'' information that should be
declassified and disclosed. Recently, the Saudi government itself
called for declassifying the information. Disclosure is the right
course to set the record straight.
The evidence of the past few years indicates that Saudi Arabia has
a mixed record when it comes to stopping terrorism aimed at the United
States. Some of the madrassas and some of the government-controlled
press continue to teach hatred of Americans and the United States. Some
Saudi nationals, including Osama bin Laden, have led terrorist
organizations focused on U.S. destruction. Some Saudi-supported
charities collect money that supports anti-U.S. terrorism. Some Saudi-
supported clerics continue to praise suicide bombings that kill
Americans.
The overly simplistic question of President Bush--``Are you with us
or against us in the war on terrorism?''--is seemingly answered ``yes''
in the case of Saudi Arabia. The disturbing question remains: Is Saudi
Arabia, in too many cases, failing to take the actions needed to cut
off terrorist funding and failing to encourage tolerance and moderation
rather than the hatred and extremism that breeds new terrorists.
Senator Levin. My question of you, Mr. Newcomb, is the
following: You have indicated that the recommendations that
your Department has made relative to listing of entities that
have contributed or have links to terrorist organizations in a
number of cases were not accepted. And you have declined to
identify the organizations, those charities and other entities
that you recommended. On what basis do you decline to share
with us those recommendations? Are you asserting Executive
privilege here this morning?
Mr. Newcomb. No, Senator, I am not.
Senator Levin. Then what is the basis for your refusal to
share with this Committee the names of those entities that you
have recommended?
Mr. Newcomb. Let me be real clear about what it is we have
done. We have looked at evidence or information we believe was
credible, and we have surfaced the target to a Policy
Coordinating Committee chaired by the Treasury Department to
determine what action is appropriate, whether it be
designation, law enforcement, intelligence, or diplomatic. A
number of agencies have come forward in a variety of different
contexts and recommended that action be deferred.
As to the specific names, it is matters that are sensitive
because of law enforcement or other equities that are at stake.
If you wish to have a briefing in a classified session, that
would be more appropriate. But today, in a public hearing, it
is not appropriate to mention actions that we may be taking to
subvert the element of surprise or to in any way interfere with
ongoing diplomatic, law enforcement, or other actions.
Senator Levin. Is that information classified?
Mr. Newcomb. Oftentimes----
Senator Levin. No, not oftentimes. Specifically, are the
names of the entities that you have recommended for listing
classified?
Mr. Newcomb. The evidentiary packages we prepare in most
instances are.
Senator Levin. Now let me ask my question again. My time is
up? I will still ask it one more time, if I may, Mr. Chairman.
I know the Chairman tried very hard and others have tried very
hard to get this information, so let me try again.
Are the names of those entities classified? The names
classified that you have recommended for listing. It is a yes
or no question.
Mr. Newcomb. The names themselves are not classified.
Senator Levin. Then I think you ought to present them to us
today.
Mr. Newcomb. I don't have them with me, Senator.
Senator Levin. I think you ought to present them to the
Committee within the next 24 hours if they are not classified,
unless you are asserting Executive privilege that the President
only can assert.
Thank you.
Senator Specter. Thank you, Senator Levin. When I passed
you the note that the time was up, I was enjoying your
questioning, not so much the answers but the questioning. But
we have got a lot of Senators here and another panel.
Senator Levin. I appreciate that.
Senator Specter. Thank you. Senator Pryor.
OPENING STATEMENT OF SENATOR PRYOR
Senator Pryor. Thank you, Mr. Chairman.
I have a question first for Mr. Pistole, and that is, have
you found Saudi Arabia in general to be cooperative with your
agency?
Mr. Pistole. There is a clear delineation between prior to
May 12 and the bombings in Riyadh and after May 12. Prior to
May 12, there was a lot of frustration. Several Senators have
mentioned Khobar Towers, tremendous frustration with that.
Since the May 12 bombings where Saudi citizens were killed, and
U.S. citizens were killed, there has been, as I described it,
unprecedented cooperation.
Senator Pryor. When you say unprecedented, do you feel like
it is totally transparent cooperation, or do you feel like they
are still holding some things back?
Mr. Pistole. Oh, clearly, I believe they are holding some
things back, just as I think we would in any investigation if
we have the Mabahith come here to conduct an investigation
because Saudi citizens were killed. We would not share
everything with them because of national security concerns. So
I don't for a minute doubt that they are withholding some
information, what they perceive as in their national security
interest. But the level of cooperation that we have had is such
that, for example, having direct access to interview Saudi
citizens who were eyewitnesses, direct access to the evidence,
to bring back to the FBI laboratory if we so desired to do any
type of analysis we wanted, that is what I describe as
unprecedented.
Senator Pryor. Mr. Newcomb, I would ask you the same
question, and that is, the level of cooperation from Saudi
Arabia to your agency.
Mr. Newcomb. Yes, we have achieved a number of successes.
One was the joint designation of two branches of the Al-
Haramain charitable organization in Bosnia and Somalia, as well
as an individual that was affiliated with one of the charities,
Mr. Julaidan. At meetings that we participated bilaterally with
the Saudis, they announced to us and then subsequently
announced in a press release the creation of a ministry
specifically for the oversight of charities. In discussions we
had with the Jeddah Chamber of Commerce, they implemented a
code of conduct relating to standards for charitable giving.
And we have had dialogues with a variety of deep-pocket Saudi
individuals going through the responsibilities that we believed
they were presented in the sanctions initiative and the United
Nations resolutions.
We have had meetings in Saudi and here, people soliciting
us and us soliciting them. So those are things I would point to
of things we have been able to do together, Senator.
Senator Pryor. Thank you. I would also join with Senator
Levin, Mr. Newcomb, that if the names are not classified, I
think you should provide those to the Committee, hopefully
within the next 24 hours.
The last thing I wanted to ask--this is a general question
probably for both of you, and that is, as I understand Saudi
Arabia, there are a lot of internal pressures relating to
terrorist activity, and perhaps the government does not either
have the will or in the final analysis maybe the total control
over some terrorist activities that may be going on within its
borders. And as I understand it, the royal family there has
been subject to acts of terrorism and near acts of terrorism on
a number of occasions.
Has that changed since--you were talking about May 11? I
have forgotten the date.
Mr. Pistole. May 12.
Senator Pryor. Has that changed since May 12?
Mr. Pistole. I believe so because I think that the royal
family in particular sees themselves as being vulnerable to al-
Qaeda efforts in the kingdom and that no longer is this simply
an entity that is focusing on Western interests but has now
turned on the kingdom and the royal family that represents the
kingdom. So, yes, I think they see themselves in a struggle for
survival at this point.
Senator Pryor. Mr. Newcomb, do you have any comments on
that?
Mr. Newcomb. I don't. I have not had discussions since that
date so I could base any summary or conclusions, so I cannot
add to that.
Senator Pryor. Thank you. That is all, Senator Specter.
Thank you.
Senator Specter. Thank you very much, Senator Pryor.
Mr. Pistole and Mr. Newcomb, there are obviously many more
questions to be asked, but we have another panel. What we would
request that you do is stay in the hearing room because
something may arise in the course of the testimony from the
next panel which would lead us to want to ask you some follow-
up questions, if that should arise.
We will now turn to Dore Gold, former Israeli Ambassador--
--
Senator Carper. Mr. Chairman, could I ask one quick
question of these panelists before they leave?
Senator Specter. One quick question?
Senator Carper. Yes.
Senator Specter. With an answer?
Senator Carper. Hopefully.
Senator Specter. OK.
Mr. Pistole, we have had a late arrival here. Senator
Carper has arrived and has one quick question.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. Gentlemen, and Mr. Chairman, thank you for
your consideration.
Gentlemen, the report issued last year on terrorist
financing by the independent task force sponsored by the
Council on Foreign Relations States, ``It is true that Saudi
Arabia has taken two or three important steps to improve its
capability to cooperate on these matters with the United
States, for which it should be commended. A hundred more steps,
and Saudi Arabia may be where it needs to be.''
That is the quote, and that sounds like Saudi Arabia is
about 1 percent of the way where it needs to be. Is that a fair
characterization?
Mr. Newcomb. Senator, I would respond by saying at least
from where we sit, Saudi has taken some important first steps,
steps I have mentioned in answer to Senator Pryor's questions.
I think then the question becomes follow-up, how are they
implementing, what are the oversight of charities that this new
ministry is doing, what future joint designations are we going
to make, and how are they going to be implementing the
regulation of charities and other such activities. So I think
it is an ongoing process and one that we need to continue.
Senator Specter. Senator Carper, you have a second quick
question?
Senator Carper. Thank you, Mr. Chairman.
In terms of getting the other 99 percent of the way, what
do we need to be doing at our end, the legislative end, to
encourage that along?
Mr. Newcomb. I think we need to be doing more of what we
are doing, what we are doing except more of it, and I think we
need to continue dialogues where we are able to focus on the
issues that are relevant to the relationship.
Senator Carper. Mr. Pistole, do you want to add any
comments on this?
Mr. Pistole. My only insight on that, Senator, is that it
is such a broad issue for the U.S. Government as a whole with
so many equities represented that, from an FBI perspective, we
are having some significant successes that we are trying to
build upon and that anything that we would do would need to be
done in concert with the National Security Council, with all
the other equities represented. So we are building on the
successes. We are trying to get into things that we have never
been allowed to before, and we have had some incremental
successes.
Senator Carper. All right. Thanks very much.
Senator Specter. Thank you very much, Senator Carper.
We will now proceed to the second panel. The first witness
is former Ambassador Dore Gold, Israeli Ambassador to the
United Nations, a recognized expert on Middle Eastern strategic
affairs, author of ``Hatred's Kingdom: How Saudi Arabia
Supports the New Global Terrorism.'' Ambassador Gold, we are
very tight on time, and we will set the clock at 5 minutes, and
we look forward to your testimony.
TESTIMONY OF DORE GOLD,\1\ FORMER ISRAELI AMBASSADOR TO THE
UNITED NATIONS, AND PRESIDENT, JERUSALEM CENTER FOR PUBLIC
AFFAIRS
Mr. Gold. Thank you very much, Madam Chairman and Senator
Specter and the Senators who are Members of this Committee, for
inviting me to this panel. I should start by saying my
testimony here, I am speaking on my own behalf. I don't
represent the Government of Israel or any other institution. I
think, however, that there are three dimensions of what Israel
has experienced over the last number of years that will be of
interest to the Committee and to the American people at large
because of the concern about Saudi Arabia's role in support,
both ideological and financial, of the new terrorism that we
are facing.
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\1\ The prepared statement of Mr. Gold with attachments appears in
the Appendix on page 77.
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I believe some of the lessons and some of the experiences
that we are having have direct connections and implications for
the issues that are of concern to you.
Let me begin with a little bit about how we have gotten
into this subject, and I am going to basically restrict my
presentation to just a number of issues that are in a
PowerPoint presentation. You have my written testimony, if you
want to go into further detail on historical elements as well.
If today, for example, a young Palestinian wishes to see
what are the ideological sources on what basis he should commit
a suicide bombing attack against Israelis, and he goes to the
website of the Hamas organization, what you will find here--and
you see it here on the PowerPoint. This is directly from a
Hamas website. Of, let's say, the number of clerics that are
mentioned here who justify suicide attacks, the use of suicide
bombing, and the fact that the person is regarded as a martyr
in Islam, the largest national grouping of clerics that support
these positions are Saudis.
This immediately opened up the question of the Saudi
relationship to the wave of suicide bombing that Israel is
facing. But the problem of ideological support that we are
seeing for these kinds of suicide attacks is not just confined
to the area of Israel.
If we go on to the next presentation, right after the
September 11 attack a book was published on a Saudi website
which was rather alarming since it basically--it is called
``The Foundations of the Legality of the Destruction That
Befell America.'' This basically justifies the attacks on the
United States.
Now, when you find a book like this on a Saudi website--and
what was interesting, of course, is one of the men who is one
of the authors of this book is mentioned on the Hamas website--
you have to ask: Are we dealing with a Saudi extremist, someone
who is on the periphery of society, somebody who is maybe the
equivalent of a Timothy McVeigh in the Saudi system?
Well, we did biographical research on these individuals,
particularly the two that wrote the introduction to the book.
One of them is Sheikh al-Shuaibi, who recently died last year,
in 2002, and he, of course, is one of the ideological sources
on the Hamas site as well. He happens to be an individual who
grew up in the Saudi system, who studied under the Grand Mufti
of Saudi Arabia when King Faisal was in power. His students
look like a ``Who's Who'' of Saudi Arabia, including the former
Minister of Islamic Affairs of Saudi Arabia and the current
Grand Mufti. And, therefore, when someone like this puts his
name on a book justifying the attacks on September 11 and we
find that that individual has a leading role in the education
of elements of the Saudi establishment, that is a source of
very serious concern about what is going on in Saudi Arabia in
terms of religious support for the new wave of attacks that we
are facing.
It also has a relationship to the financial side as well,
because if leading clerics are taking position of this radical
nature, what does that suggest to members of society who are
thinking about what to do about charitable contributions, and
even if an organization is considered tainted because of
terrorist connections? Therefore, looking into the ideological
support structure of the new terrorism becomes very important.
Just to give you a sense of where things can possibly lead,
once you can justify attacks on the United States of September
11, it doesn't become surprising that we have now a new fatwa
that was released in May 2003 which justifies the use of
weapons of mass destruction against the United States,
including the killing of 10 million Americans or other
infidels.
Now, the author of this particular fatwa--his name is
Nasser al-Fahad--happens to have been imprisoned by Saudi
Arabia recently, which is a positive development because I know
many of the Senators are following the post-May 12
developments. But, nonetheless, that these ideas are out there,
that these ideas influence young people, are of tremendous
concern. And, of course, we have also seen in the past in the
1990's where extremist clerics were put in prison by Saudi
Arabia were subsequently let out. So this is an issue that you
should be looking at.
Let me move now into the issue of the terrorist financing
with direct implications for your Committee and for your
concerns. This may be difficult for you to read, but this
particular element of the powerpoint presentation outlines the
three largest Saudi charities that have been suspected of being
involved in terrorist financing: IIRO, WAMY--that is the World
Assembly of Muslim Youth--and al-Haramain. I think the
important element in this particular slide that you should pay
attention to is many times you hear in a lot of these hearings
Saudi NGOs, non-governmental organizations. And you would think
from that, therefore, that the government responsibility in
Riyadh is somewhat minimal when you see connections between
Saudi charities and particular terrorist organizations.
But someone doing the most minimal declassified work
possible, going to the websites of each of these organizations,
in Arabic, you would find--when you try to see who is at the
head of these organizations, what you will find is that these
are not NGOs. These are GOs. These are government
organizations, and let me be very specific.
When you look to see who is the head of the IIRO, which is
a branch or a subset of the Muslim World League, you find that
the chairman of the Constituent Council of the World Muslim
League, the Muslim World League, is no less than the Grand
Mufti of Saudi Arabia, who is, by the way, a member of the
Saudi cabinet. If you look both at WAMY and al-Haramain--I
understand you should have before you also these papers so that
you can see them more clearly--you will see that at the head of
both WAMY and al-Haramain, the chairman of these organizations,
the chairman of the WAMY Secretariat and the chairman of the
al-Haramain Administrative Council, is the Minister of Islamic
Affairs of Saudi Arabia, who is also a Saudi cabinet member. So
that the ultimate corporate responsibility in each of these
organizations is in the hands of a member of the Saudi
Government.
Now, in following how these organizations have been active,
probably one of the earliest sources of evidence of some
problem in the way that these organizations function comes from
documents that were found in Bosnia in the late 1980's. One of
these documents is on the stationery of the International
Islamic Relief Organization, and it summarizes a meeting
between bin Laden representatives and the Secretary General of
the Muslim World League. This document is, of course, not an
Israeli document. It wasn't found by Israeli sources, but it is
certainly well known among those who are following this issue
in the intelligence community.
But I think what directly relates to Israel is the
following document. In Operation Defensive Shield in the West
Bank, when Israel went into Palestinian headquarters, a number
of Saudi documents were found, not just Palestinian documents,
on the pattern of terrorist funding. This document is on
stationery of the International Islamic Relief Organization,
and it summarizes the disbursement of $280,000 to 14 Hamas
front organizations. So here we have IIRO----
Senator Specter. Do you have a date on that document?
Mr. Gold. I can get the date for you, but this document was
undated. We can probably approximate it in the year 2000.
Now, what is very important, I think, for your study of
this situation of Saudi financing of terrorism is to look at
the statements that Saudi officials are making about issues
which we can document. For example, Adel Jubeir, who frequently
appears on American television--he is the foreign policy
adviser of Crown Prince Abdullah--stated on August 16, 2002, on
``Crossfire,'' ``We do not allow funding to go from Saudi
Arabia to Hamas.'' And he has made repeated references of this
sort. On the other side, in the Foreign Ministry of Saudi
Arabia, the Foreign Minister, Prince Saud al-Faisal told Arab
News, an English newspaper of Saudi Arabia, the following on
June 23, 2003. He was asked if the kingdom had ever financed
Islamic movements in Palestine, meaning Hamas and Islamic
Jihad, whether directly or indirectly. And Prince Saud said
that since the establishment of the Palestine Liberation
Organization as the sole legitimate representative of the
Palestinian people, the Saudi Kingdom has been sending the
remittances through the PLO. So, again, we have another firm
denial of any Saudi Arabian support for Hamas.
Senator Specter. Ambassador Gold, you are now double time,
so could you sum up?
Mr. Gold. Yes. I will wrap up with one more document.
One of the strongest sources of evidence showing Saudi
Arabian support for Hamas, a recognized international terrorist
organization, is actually a letter written by Mahmud Abbas,
also known as Abu Mazen, the Prime Minister of the Palestinian
Authority today. This letter was written in December 2000. It
was a fax that was sent to Prince Salman, governor of Riyadh
and a full brother of King Fahd. In this letter, Abu Mazen
specifically requests that the Saudis stop funding al-Jamiya
al-Islamiya, which is a Hamas front in the Gaza Strip.
I would just end by showing you the kind of activities that
this organization does, because many people say, oh, well, they
are involved in civilian activity. This is a graduation of
1,650 kindergarten students in the Gaza Strip in 2001 in which
the children are in uniforms. They are re-enacting terrorist
attacks. For example, here is a young girl re-enacting the
lynching of Israeli soldiers. Many of them are also wearing
suicide belts as well. So this is the kind of education which
Saudi Arabia has been funding and the kind of education which
Abu Mazen has sought that the Saudis stop.
One last element, because terrorist financing is--and this
will be my final slide. This is a check, a corporate check from
the Chase Manhattan Bank in New York. The corporate check
belongs to Al-Rajhi Banking and Investment Company, which has
long been suspected of being a conduit for terrorist financing
by many authorities. In this case, we actually found a check
from 1999 showing how an American account could be used for
funding Hamas. The organization the check is written to is
Lajna Sakat Tulkarm, which means the Tulkarm Charity Board,
which is an unquestionable Hamas front.
I will stop here, and we can go into further elements of my
presentation.
Senator Specter. Thank you, Ambassador Gold.
The Committee had invited Adel al-Jubeir, foreign policy
spokesman for the Kingdom of Saudi Arabia, to appear and he
declined. I want that to be known publicly.
Our next witness is Jonathan Winer, formerly Deputy
Assistant Secretary of State for International Law Enforcement,
and now an attorney with the firm of Alston and Bird. Thank you
very much for joining us, Mr. Winer, and we look forward to
your testimony.
TESTIMONY OF JONATHAN M. WINER,\1\ ALSTON AND BIRD
Mr. Winer. Thank you, Mr. Chairman. Before the team goes
off to Saudi Arabia to try and work these issues out, it may be
useful to recollect what has happened in past missions.
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\1\ The prepared statement of Mr. Winer appears in the Appendix on
page 110.
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Back in 1998, 5 years ago, right after the bombs went off
in Dar es Salaam and Nairobi, the Executive Branch convened an
interagency meeting on the International Emergency Economic
Powers Act to determine whether there should be designations in
connection with those bombings in relationship to terrorist
finance. We tried to assess as a government then what the basis
was for al-Qaeda to carry out its activities around the world,
and we had two false conclusions we were basing our assessment
on at the time. The first is it doesn't take a lot of money to
be a terrorist, and the second is bin Laden is wealthy and
doesn't need money from anybody else. It was an incomplete
theory of the case, an inadequate theory of the case, and
ultimately a wrong theory of the case.
The actual case was it cost a lot of money to create al-
Qaeda. It was a constant fundraising operation. And it took us
some months until late 1998 to figure that out. We now had a
theory. The question was what to do about it.
What we sought to do then was to map the network with
fragmented information, identify the key nodes, and then try to
disrupt those nodes. We also had as a government the enormous
power of the International Emergency Economic Powers Act to
freeze assets of foreign entities--banks, businesses,
charities, whatever. And we recognized that this important
power was not recognized or understood by many countries,
including countries where we saw terrorist finance to be a
problem.
We came to the conclusion that we should do an
International Emergency Economic Powers Act designation against
the Taliban as one way of taking action against al-Qaeda, as a
means of putting pressure not only on the Taliban but their
supporters, as well as other governments in the region. We
wanted to increase the leverage that we had.
We had had sporadic contacts at that point with embassies
in the region, including with the Saudis. These were not
particularly focused, and they weren't particularly high level.
We recognized in late 1998, early 1999 as a government that the
only way you can really deal with the Saudi Government is from
the top down. There were communications between the Vice
President's office and Crown Prince Abdullah which took place
in which the United States said we want to send a team over
that is very high level to discuss something that is very
important in connection with our embassies having been
attacked.
In May or June 1999, these meetings took place in Saudi
Arabia. They were interagency meetings, very similar to the
interagency meetings that are about to take place once again in
Saudi Arabia that have been discussed earlier today in these
hearings.
We had said we didn't want one-on-one's, this agency
meeting with that agency on either side, because when you have
one-on-one's agency after agency, you can get the runaround: We
would love to help you, but you have to go talk to someone
else. We wanted a unified, integrated approach government to
government. That is my understanding of what took place. I was
not directly part of that mission. I received reports when it
came back.
The delegation talked about IEEPA to the Saudi Government.
They talked about how the use of IEEPA could hurt U.S.-Saudi
financial and economic relationships and even result in
substantial freezes of Saudi funds and freezes of funds of
high-level individuals in Saudi Arabia with international
prominence. These meetings took place 4 years ago, prior to the
September 11 attacks.
We advised them that we would be shutting down Ariana
Airlines, the Taliban's airline, and that any airports that
continued to permit Ariana flights to take place, they could
potentially get shut down. At that point, the Moscow airport
and the Saudi airport were two of the airports that Ariana was
using, given cover in part by the Russians. The Saudi ability--
Ariana Airlines' ability to use Saudi Arabia was stopped at
that time, and that provided the first use of IEEPA in that
area relevant to the terrorist area.
We hoped that this would start a new relationship on the
subject of terrorist finance. I left the government in late
1999. I was told that there was a second meeting in early 2000.
Another U.S. interagency delegation went to Saudi Arabia. The
readout that I hear on an unclassified basis very generally is
that there was only marginal benefit from the second meeting,
that the desert sands of Saudi Arabia had ground down this
initiative like so many before it. Again, 3\1/2\ to 4 years
ago, prior to September 11.
One problem we ran into was that the Saudis had very little
centralized integration and their government agencies didn't
talk to one another, didn't trust one another, didn't work
together, didn't communicate with one another. And that had an
impact on the political will of the Saudi Government.
Now, I was asked also to talk briefly about the designation
process. I participated in IEEPA designation processes on
various issues when I was in the Clinton Administration, and I
can tell you that, yes, sometimes it was the State Department
who said no, we don't want to get our foreign partners upset--
not my part of the State Department but other parts of the
State Department. And, of course, geographics trump functionals
most of the time at the State Department. State relationships
are more important. Sometimes it was the FBI. Quite often it
was the FBI because they didn't want to have criminal cases
interfered with. Sometimes it was the Justice Department
backing up the FBI.
In my experience, it was never the CIA or the intelligence
agency. It may have happened in other cases, but not in any
case that I participated in. And very rarely--rarely--it was
the White House or the Treasury, but very rarely. Usually State
or FBI in my experience.
Now, did we shoot down designations that Treasury had the
ability to put together and, in fact, recommended? We
absolutely did. It did not happen to be in the terrorist area
during my time. It was in other areas. But it certainly
happened, in which foreign policy or other considerations
trumped decisions or recommendations made by OFAC. I can say
that as a general matter.
A couple of final points before I run out of time. It has
been my experience that collective leadership is not usually a
mechanism to forceful action. In the Clinton Administration,
through much of the time a fellow named Dick Clark pushed
counterterrorism in a central way, including terrorist finance.
I am sure there is someone doing this in the administration
today. I just don't happen to know who it is. I am concerned
that there isn't somebody in the White House with that job. I
think there should be.
Finally, with regard to the Saudis and this latest mission,
coming 4 years after the first mission on exactly this topic,
denial is not just a river in Egypt, and those who forget the
past are condemned to repeat it.
Thank you, Mr. Chairman.
Senator Specter. Thank you very much, Mr. Winer.
Our next witness is Steve Emerson, an expert on terrorism
and terrorist financing, the author of ``American Jihad: The
Terrorists Living Among Us.'' Mr. Emerson is currently NBC's
terrorism analyst and a special investigative correspondent for
CNN.
Thank you for joining us, Mr. Emerson, and we look forward
to your testimony.
TESTIMONY OF STEVEN EMERSON,\1\ EXECUTIVE DIRECTOR, THE
INVESTIGATIVE PROJECT
Mr. Emerson. Let me clarify that I was formerly a
correspondent for CNN. Thank you to the Committee for holding
this hearing this morning. I think that shining a light on the
whole issue of the very intricate web of connections between
the Saudi Government and the funding of terrorism is absolutely
pivotal to preventing another September 11.
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\1\ The prepared statement of Mr. Emerson appears in the Appendix
on page 131.
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Just recently, in the last month, Adel al-Jubeir, foreign
affairs adviser to the Crown Prince Abdullah, denied that Saudi
Arabia was funding terrorism, and when asked about whether
Saudi charities had complied with the new regulations, he said
he hoped so. He also stated, ``If the UN is headquartered in
New York, is America responsible for everything the UN does?''
Now, I think it is very important to bear out in the very
beginning here that the analogy that Mr. Jubeir has referred to
is not correct. The fact of the matter is that major Saudi
NGOs, non-governmental organizations, as they have been
designated legally, either in Saudi Arabia or in conjunction
with the United Nations, have been tied for years directly and
indirectly to the support for al-Qaeda, Hamas, Islamic Jihad,
and other terrorist groups. Often, it must be stated, the
connections are not neatly compartmentalized, largely because
of the very complex ways in which terrorist funding has been
laundered to terrorist groups. Still at other times, the
evidence shows that NGOs carry out activities that are
``totally legitimate and legal.'' Indeed, it is the very
external legitimacy of these groups that provides the perfect
cover to siphon off, divert, or launder financial support or to
provide cover for terrorist cells. There is also a problem
sometimes in determining whether an affiliate group makes the
entire organization corrupt or whether, in fact, there is just
one bad rogue chapter in that organization.
Let me just briefly go over some of these things that I
have presented in the written testimony to give an indication
of why the problem is not just limited to either select
chapters and why it is connected to the Saudi regime itself.
For example, we have collected several textbooks used and
distributed in the United States, distributed by the Saudi
Embassy in Washington, D.C. They have the full imprimatur of
the Kingdom of Saudi Arabia on the textbooks. In the testimony,
I refer to the curricular used in grades 4 through 11, but let
me just cite a quote from the 7th grade class Book 5. The book
says, `` `What is learned from the Hadith?' and teaches, `The
curse of Allah be upon the Jews and the Christians.' '' Grades
8 through 11 continue to emphasize the notion and piousness of
the jihad, and in grade 11 it warns against taking the Jews and
Christians as friends or protectors of Muslims.
I think this, unfortunately, helps develop a whole
generational mind-set that leads to terrorism, noting that
terrorism is really the culmination of indoctrination and
recruitment. Much of that indoctrination is entirely legal,
with terrorism being the violent, illegal expression ultimately
and representing the culmination of the indoctrination and
recruitment.
The Muslim World League, as has been referred to
previously, is a group that was established in 1962 by the
Saudi Arabian regime. It has continued to fund major Islamic
movements around the world, often defending itself by claiming
it is only involved in promoting education or repelling hatred
against Islam.
However, it is absolutely clear that U.S. investigators,
law enforcement for the FBI and intelligence investigators at
the CIA, have collected abundant material showing MWL
connections to al-Qaeda and to Hamas during the past 20 years--
15 years in Hamas, to be specific, and in the case of al-Qaeda
going back to the late 1980's. Similarly, other groups in Saudi
Arabia, NGOs such as the International Islamic Relief
Organization, established in 1978 as an arm of the MWL. Let me
just briefly point out that in 1994, Muhammad Jamal Khalifa,
Osama bin Laden's 37-year-old brother-in-law, was arrested in
California coming from the Philippines. In his possession were
documents connecting Islamic terrorist manuals to the
International Islamic Relief Organization, the group that he
had headed in the Philippines. In addition, the Canadian
Government has stated in testimony in Canadian courts in the
last 2 years that the IIRO secretly funded terrorism.
I think it is also important to note that Fayez Ahmed
Alshehri, one of the September 11 airline hijackers, told his
father before he set out for the hijacking conspiracy that he
was going to work for the IIRO.
There is another group that is also involved and controlled
by the Saudi Government and also has been cited in terms of its
ties to Bosnian terrorists and to al-Jemaa Islamiyah. This
group is al-Haramain.
Last, I would like to point out that the group called WAMY,
the World Assembly of Muslim Youth, is an organization that,
even though Saudi officials claim have no official connection,
is largely funded by Saudi officials and by senior Saudi
philanthropists. This organization has been tied to the 1993
World Trade Center bombing and has been repeatedly tied to al-
Qaeda in numerous activities around the world. Most of that
material I submit for the record in the testimony.
Thank you very much.
Senator Specter. Thank you, Mr. Emerson.
I had asked FBI Official Pistole to stay, and I have one
question for you at this point as a follow-up to Mr. Winer. Is
Mr. Pistole present?
Mr. Lormel. I am Dennis Lormel, sir. Mr. Pistole had to go
back to the office. I stayed behind. I am chief of the
Terrorist Financing Operations Section.
Senator Specter. Well, when we ask witnesses to come, we
request that they stay for the full hearing because in the
course of the hearing other issues arise where we would like to
have them here.
Mr. Lormel. Sir, that is why I stayed. If I could answer
the question, I would be happy to.
Senator Specter. Well, when the Committee asked Mr. Pistole
to stay, he ought to stay. In his absence, I will ask you the
question.
It has been reported that the FBI will not pursue a
criminal investigation where probable cause exists for the
investigation if there is an objection from the State
Department. Is there any validity to that report?
Mr. Lormel. No, sir, I don't believe so. Maybe if you could
explain a little more, I could better understand the context.
Senator Specter. Well, the report is that where there is
probable cause to pursue an investigation under the criminal
laws of the United States, the State Department can interpose
an objection and prevent that investigation from going forward.
And that is a very relevant point of inquiry at this particular
hearing. It is a point that I have inquired about before.
Would you do two things? Would you identify yourself for
the record? Do that now.
Mr. Lormel. Dennis Lormel, and I am the chief of the
Terrorist Financing Operations Section in the Counterterrorism
Division of the FBI.
Senator Specter. OK. And would you relay that question to
higher authorities in the Federal Bureau of Investigation and
respond to this Committee?
Mr. Lormel. Yes, sir, I will.
Senator Specter. Thank you.
Mr. Lormel. And to my knowledge, I am not aware of any such
cases. I can specifically speak to terrorist financing, and in
our investigations there has been no such interaction with the
State Department requesting that we stand down on criminal
cases.
Senator Specter. Well, take the question up with higher
authorities in the FBI, and while you are doing that, tell them
that when the Committee asks a witness to appear, we like to
have them here for the entire hearing, like the Senators are
here for the entire hearing.
Mr. Lormel. Yes, Senator.
Senator Specter. Mr. Winer, you very delicately stated that
the State Department doesn't want to get our foreign partners
upset. That is a magnificent understatement. Have you ever
heard of a report that the FBI would not pursue an
investigation, a criminal investigation, where probable cause
existed if the State Department raised an objection at the
highest levels?
Mr. Winer. I have not heard such reports, sir. In the time
that I was at the State Department as the senior person for
international law enforcement, I was aware of no such request
from the State Department to the Bureau. Certainly I made none
or would have encouraged or permitted the making of none.
However--and it is an important caveat--when requests of
that nature are made, they are not written down and they are
not done within the system, and they are done at a high level.
I don't mean this specific request because I don't know of such
a request. But if a foreign government wished to be protected
from a particular action by the U.S. Government and a Secretary
of State so chose to do it, they do have the capacity and, in
my experience, take advantage of that capacity to go around the
system on any number of highly sensitive matters to arrange to
have things done.
I think it is very undesirable because I believe every
decision made should be on the record. I believe it is critical
for the integrity of the system not to have decisions taken off
the record. But it did take place during my time in government,
not in connection with the FBI, not in connection with a
criminal justice matter.
Senator Specter. Well, what was it in connection with and
what was it?
Mr. Winer. Inquiries that other people were making other
than the FBI. Matters were essentially calmed, quieted, stopped
as a result of very high-level interventions, but not criminal
justice pertaining to terrorism, not law enforcement per se.
Regulatory.
Senator Specter. Can you be a little more specific in 12
seconds?
Mr. Winer. I can not, not because I am trying to protect
any information from the Committee but because while I
recollect it happening more than once, the exact circumstances
are not at my fingertips, unfortunately. The memory of it is
absolutely precise, but the substance, unfortunately, is not,
sir.
I will say last, if I may, that in the regulatory review
process, the fact that there is no process for integrating the
equities into a solution is a huge problem when it comes to
IEEPA. And, generally speaking, the way in which the Bureau
deals with the State Department is that simply the Bureau does
its thing, the State Department does its thing, and never the
twain shall meet. So the problem is, when you get into everyone
asserting their equities within the interagency process for an
IEEPA designation, if one component objects, often that
terminates, shuts down the whole thing, and that is not a good
outcome.
Thank you, sir.
Senator Specter. Well, there is considerable concern by
many in the Congress about Saudi Arabia being shielded for
foreign policy reasons.
Mr. Winer. I have that concern, sir.
Senator Specter. That has been broadly expressed here today
and in virtually every quarter. And one of the inquiries which
has to be pursued is to what extent that is done and what are
the policy ramifications, and it may be appropriate on public
policy lines. But when you have a criminal investigation, an
investigation into the U.S. Criminal Code, and there is
probable cause to proceed, and it does not proceed because of
foreign policy considerations, that is a matter which should
attract the attention of the Congress at the highest levels.
And that is an issue which is being pursued. It is not an easy
issue to get answered.
Chairman Collins.
Chairman Collins. Thank you very much, Senator Specter.
Ambassador Gold, your exhibits are extremely persuasive and
convincing in casting much doubt on the repeated claims by the
Saudi Government that it is not funneling money to terrorist
groups such as Hamas. Our previous FBI witness believes that
there has finally been a sea change in the commitment of the
Saudis since the bombing in May in Riyadh.
I want to ask you two questions. First, what is your
general assessment of the commitment by the Saudis in the wake
of the May bombing? Do you believe there really is an attitude
change and a commitment now? And, second, have you seen any
evidence that the May 12 bombings have caused the Saudis to cut
back on their financial and other support for Hamas?
Mr. Gold. Let me answer your question, Madam Chairman. I
think one has to draw a fundamental distinction between what is
going on domestically in Saudi Arabia and what might be going
on globally. Certainly that is the evidence that I have at this
point.
I think it is clear, anybody just perusing newspapers since
May 12, that Saudi Arabia is taking a large number of
counterterrorist actions at home in terms of unveiling
different units of al-Qaeda or--and, by the way, in
geographically different parts of the kingdom--or trying to
find weapons caches. That seems to be what is going on there.
Counterterrorism activity at home seems to be considerable in
comparison to what existed before.
However, I can report to you with, let's say, full
authority and perhaps even encapsulating the national
intelligence assessment of Israel that at present, as we speak,
approximately 50 to 70 percent of the Hamas budget comes from
Saudi Arabia. And I would say that portion, the Saudi portion
of Hamas funding, is growing rather than declining.
Now, that is all I can say about the particular case of
Saudi Arabia and Hamas. I think it would be interesting to
compare what is going on globally in the Philippines, in
Russia, in East Africa, and with respect to al-Qaeda as well
outside of Saudi Arabia to see whether their action is only
aimed at protecting themselves domestically, but it is
basically the same old business overseas.
Chairman Collins. Thank you.
Mr. Emerson, you raised a very good point in your statement
that it is not only a matter of Saudi support, financial
support for terrorist organizations but, rather, the
curriculum, the schools, what Saudi children and Saudi-
supported schools elsewhere are teaching young people and
whether or not they are instilling a hatred of Christians and
Jews. And to me that is equally disturbing because it helps
raise a whole new generation of people who are going to be
susceptible to terrorists, to involvement with terrorist
groups.
Have you seen any change in Saudi schools since the events
of September 11 or more recently since the bombing in Riyadh?
Mr. Emerson. Since September 11, I can tell you Saudi
officials have declared that they have reined in some of the
clergy and they fired or, ``re-educated more than a thousand
clerics.''
On the other hand, the fact of the matter is if one looks
at the FBIS reports, the Foreign Broadcast Information Service
reports, plus the Saudi media and Saudi television, which is
openly available on satellite television, one can see routine
demagoguery leveled against the United States, against
Christians and Jews routinely. Saudi websites features are the
demonization of Jews and Christians as well as moderate
Muslims. And I think you should be aware of something else,
very disturbing. This incitement is not necessarily illegal. It
is considered free speech, and particularly in the United
States. The problem is: How does one combat incitement within
the context of an open society?
It is my feeling that incitement needs to have the sunshine
to expose the whole virus of extremism, and those groups,
entities, individuals that are propagating the incitement need
to be delegitimized, or invited to the United States, or
embraced. And I think that goes to the heart of getting Saudi
Arabia to understand and recognize that it must rein in the
extremists that in turn breed the terrorists that carried out
September 11.
Chairman Collins. Thank you. May I do just one quick
question for Mr. Winer?
Senator Specter. Absolutely.
Chairman Collins. Thank you.
Mr. Winer, you have experience in a previous
administration, and I am trying to better understand why the
U.S. Government has not been tougher with the Saudis. Do you
believe that one factor, aside, perhaps, from our bases or oil,
but I have heard that the U.S. Government has been hesitant to
go after some suspected financers of terrorist groups because
they are prominent Saudi business people. Do you think that is
accurate?
Mr. Winer. Yes.
Chairman Collins. Could you expand further on why you think
the Federal Government under both the previous administration
and perhaps this administration as well has been somewhat
reluctant to fully confront the Saudi Government in the wake of
all of this compelling evidence?
Mr. Winer. I think a number of the factors are
institutional and bureaucratic before you get to the additional
factors pertaining to Saudi Arabia itself.
First, institutionally and bureaucratically, the only
businessmen really that the U.S. Government went after prior to
September 11 were Colombian businessmen who were also major
cocaine traffickers. Prior to that, we used the International
Emergency Economic Powers Act against countries or against
military leaders, that kind of thing. These were businessmen.
We were able to go after them because we found a computer in
Colombia from the Cali cartel that listed all the businesses
owned by these people who we had chapter and verse as drug
traffickers. Easy case to make. Justice led making that case.
Treasury, Mr. Newcomb strongly supported doing that because he
felt all the facts were there, and it wasn't going to put IEEPA
powers at risk, because what the U.S. Government is worried
about, if we reach too far and somebody who is well funded goes
after us and says you don't have the authority to do that, you
don't have the public evidence to do that, we might lose some
of that power. So there is an institutional concern. Don't
overreach and then lose some of the power you have. Those are
institutional and bureaucratic but very important constraints.
In the area of Saudi businessmen, you have got the problem
of the fragmentary nature of the information, the fact that
money is fungible, and just because a businessman funded a huge
charity and that charity engaged in terrorist logistical
support and recruitment in the Philippines and in the Middle
East and in Chechnya and Bosnia and wherever, while also doing
lots of wonderful other things, how do you know that that
businessman when he gave that money intended the bad things as
well as the good things? A difficult case to make.
So prior to September 11, you are having tremendous
tensions over what is the right thing to do in light of those
institutional issues, legal issues, practical issues, even
before you get to the sensitivity of the Saudi relationship
itself. The facts about terrorist finance, while voluminous,
are also often rather murky and difficult to fully decipher.
Our intelligence was poorly arrayed prior to September 11 to
gather all the information we needed. The interagency process
didn't work as well as it should have, although Dick Clark
tried valiantly to put it together and did, I think, a
remarkable job. We didn't have as many facts as we should have.
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. I think
those are all facts that are undisputable. The why's and the
wherefore's and the what should's are really up to you all to
determine next.
Thank you very much, Madam Chairman.
Chairman Collins. Thank you, Senator Specter.
Senator Specter. Thank you, Chairman Collins. Senator
Pryor.
Senator Pryor. Thank you.
Mr. Winer, if you can educate this Committee just very
briefly, as I understand Saudi Arabia--tell me if this is true
or not. But as I understand Saudi Arabia, the economic power
and the political power really are merged into one in the sense
of there are families and it is pretty much one and the same.
Mr. Winer. I know of no facts to dispute that assessment. I
think that is right.
Senator Pryor. OK. So sometimes when we talk about
individuals doing something versus the government doing
something, a lot of times it is a matter of an individual maybe
in their personal capacity versus in some other official
capacity, right? It is all a hodgepodge. It is all mixed up. Is
that fair to say?
Mr. Winer. Yes, sir.
Senator Pryor. One thing that we are sensitive to obviously
here in this country is al-Qaeda as a terrorist organization. I
know that Ambassador Gold has mentioned a few times, Hamas. In
this country, we are not quite as tuned into that. But,
Ambassador Gold, what other terrorist organizations in your
personal view have ties to Saudi Arabia besides al-Qaeda and
Hamas?
Mr. Gold. Well, many of these organizations are part of all
the same network. In fact, al-Qaeda should probably be seen as
a consortium of terrorist organizations where they use the
assets, sometimes manpower assets, sometimes financial, conduit
assets, sometimes expertise in explosives, and share them
around the world. Some of those assets are in the Philippines.
Some of those assets are in Indonesia. Some of those assets are
in Chechnya and Dagestan in Russia. Some of those assets are in
Egypt. And Hamas, by the way, is part of that network to a
large extent.
I think you can find the fingers of Saudi financial
involvement through these charities with most of the countries
that I mentioned.
Let me just add one other point to my presentation at this
time. Many times you are going to see Saudi denials, very firm
denials, that they have cleaned up their act, that these
charitable contacts around the world no longer are with
suspected groups. For example, there was a press release put
out on October 18, 2002, by the Saudi Embassy in Washington,
and in it the Saudis asserted that, since September 11, all
charitable groups have been audited to ensure that there are no
links to suspected groups.
Now, I don't know what a suspected group is and they don't
clarify it, but you would think that a suspected group would be
groups that are on the State Department list of terrorist
organizations. Well, the very same month that in Washington the
Saudis were putting this out as a press release to the
Washington Press Corps, you had another little event going on
in Riyadh, Saudi Arabia. You had a WAMY conference. And that
photograph of Khaled Mashal, one of the highest leaders in the
Hamas organization, was taken by Reuters at a WAMY conference
in October 2002, the very same month. So, in Washington, they
are saying that they are cutting off their contacts, the
contacts of the charities, with suspected groups, yet in Riyadh
you have the Saudis inviting one of the leaders of Hamas to a
WAMY conference in Saudi Arabia.
By the way, the Hamas actually prepared a record of Khaled
Mashal's meetings in Riyadh, and it was found by Israeli forces
the following month in the Gaza Strip. And according to that
record, Khaled Mashal was not just a peripheral guest of a
peripheral organization, WAMY. He actually had a for-eyes
meeting with Crown Prince Abdullah, who actually chaired that
WAMY conference.
Senator Pryor. Mr. Winer, if I may ask you, with the
increased financial security on terrorist organizations around
the world, do you see some new tactics out there that they are
trying to do to get around some of our efforts? And what are
those tactics, and what do we need to be looking for?
Mr. Winer. Yes, sir. One quick observation. I am not aware
of any individual or entity that has been arrested for
terrorist finance in Saudi Arabia to date. If there have been
any such arrests, none of them have been publicly announced.
As to new techniques, gold markets and precious metals
generally, commodities, diamonds, as Senator Akaka raised
before, remain essentially unregulated globally. Regulation of
charities globally still is extremely poor, and charities
remain a tremendous opportunity well outside Saudi Arabia for
moving terrorist funds.
The underground alternative remittance systems are still,
by and large, extremely poorly regulated. In every country, we
are beginning a crackdown. Here we have required them to
register in theory. I am not sure whether that is as effective
as it should be. Certainly registration of hawalas in the
Middle East remains relatively minimalist in practice, and
those networks are very substantial. Money continues to move
back and forth in terms of currency from Yemen to Saudi Arabia
and into and out of UAE. So our ability to track all of that,
particularly in connection with remittances, some of which
involve legitimate remittances and some of which don't, is
poor. And the religious schools around the world generally have
no oversight in terms of movements of money.
In the United States, if you go to the IRS filings for
religious groups, mosques, synagogues, or churches--it doesn't
matter what religion--all you have to do is say, ``I am a
mosque,'' ``I am a church.'' That is all you have to report to
the IRS. There is no further detail in the public filings
beyond that. That is in the United States, which is presumably
one of the better regulated countries. So I think that is still
a potentially significant problem.
That said, formal financial institutions cannot risk being
associated with terrorist finance. If the U.S. Government were
to go after any major financial institution anywhere in the
world with a terrorist finance designation, it would create
such a chilling impact that one would imagine further due
diligence, regulatory efforts be put into place by financial
institutions all over the world to ensure that didn't happen to
them and to protect shareholder interests and equities.
Thank you.
Senator Pryor. Thank you for that answer, and I want to
thank the panel for being here.
Senator Specter. Thank you, Senator Pryor.
The Committee intends to pursue the question as to whether
economic sanctions are being imposed, and there are very
substantial indicators that they are not. When Saudi Arabia is
involved, we are soft on economic sanctions. But there is a
broader picture which is emerging, and that is the potential
for criminal sanctions.
We have held in the Judiciary Committee hearings several
years ago on the focus on U.S. citizens being murdered in
Israel by terrorist organizations. And we are pursuing the
question of bringing those terrorists to the United States for
trial.
In 1986, we passed the Terrorist Prosecution Act, which
gives extraterritorial jurisdiction to the United States to
bring terrorists into our courts and to impose the death
penalty. And there are two cases which we are currently
focusing on with Israeli Attorney General Rubenstein and U.S.
Attorney General John Ashcroft. One involves an individual who
is in the United States where requests have been made to get
witnesses to testify about his conduct involved in terrorism
and murder of American citizens, and that evidence has to be
provided by Israel. And contacts have been made at the very
highest level with the Israeli Government, and some assurances
have been received that there will be cooperation.
There is another individual who confessed on television,
with no question about the voluntariness of the confession. And
the issue is getting that individual extradited to the United
States, which is complicated because, as is well known, Israel
does not have the death penalty. But there are exceptions under
Israeli law where national security is involved. And when we go
through the very impressive chart, Ambassador Gold, that you
put up about Saudi national charities and the financing of
international terrorism, and they are not non-governmental
organization, they are governmental organizations, those
individuals who finance Hamas are potentially liable for
prosecution in the United States criminal courts because Hamas
takes credit for the killings. The murders at Hebrew University
were American. U.S. citizens were murdered.
So this is a matter that we need to pursue further on the
hard evidentiary line. But I think that economic sanctions are
fine. I would like to see them imposed, but there is a lot more
that can be done.
Let me yield at this point to Senator Collins, and I will
come back to questioning.
Chairman Collins. I just want to thank you, Senator, for
spearheading this investigation. It is important, and the
evidence we have heard in the statements this morning from the
experts are compelling in painting a picture of the Saudi
Government's many links to these charitable organizations and
those organizations linked to terrorist groups. So I applaud
your initiating this investigation, and I look forward to
continuing to work with you.
Senator Specter. Well, thank you. Thank you, Senator
Collins.
Senator Pryor, do you have any further questions?
Senator Pryor. No.
Senator Specter. Then let me proceed just a bit further.
Ambassador Gold, you have testified about the document
which was signed by the current Palestinian Prime Minister
requesting that Saudi official stop financing Hamas. Would you
go through that again and elaborate on precisely what it says?
Mr. Gold. Well, we actually have an English translation.
Senator Specter. That is from Abu Mazen?
Mr. Gold. Abu Mazen, yes. Also known as Mahmud Abbas.
Senator Specter. Who is the Palestinian Prime Minister.
Mr. Gold. He is the Palestinian Prime Minister, and he
wrote in his own handwriting a fax that was sent to Prince
Salman, the governor of Riyadh and full brother of King Fahd,
probably the fourth most powerful man in Saudi Arabia. And I
can just read this paragraph to you that I have on the screen,
which is an exact translation of the relevant material.
Senator Specter. Please do.
Mr. Gold. ``I hereby wish to inform you that he''--meaning
Yasser Arafat--``has spoken with me on the telephone and asked
me to transmit to you his request that you mediate and
interfere and express his view concerning the ongoing situation
in our homeland. The Saudi committee responsible for
transferring the donations to beneficiaries has been sending
large amounts to radical committees and associations, among
which the Islamic Society''--that is a translation of al-Jamiya
al-Islamiyah--``which belongs to Hamas, the al-Islah
Association''--an association known to be a Hamas institution
in Gaza--``and to the brethren who engage in jihad in all
regions. This fact badly influences the internal situation. It
also results in strengthening these brethren and has,
therefore, a negative impact on all sides. Moreover, the
Committee does not send any money or assistance to members of
Fatah.''
So this is, again, written not by an Israeli but by perhaps
the No. 2 man in the Palestinian Authority today----
Senator Specter. Perhaps the No. 1 man.
Mr. Gold. Well, a lot of people are hoping to make him the
No. 1, Prime Minister Mahmud Abbas. It is in his own
handwriting, and it was written in December 2002.
Senator Specter. I will come to you in a minute, Mr. Winer.
And it is directed to whom, again?
Mr. Gold. Prince Salman is the governor of Riyadh, and it
is directed to him. He is a full Sudairi brother of King Fahd,
and I would say about the fourth most powerful man in Saudi
Arabia.
Senator Specter. Do you have a judgment as to why the
letter was written to him?
Mr. Gold. Well, apparently they had sent messages to others
as well, such as Prince Naif. But Salman has always been a kind
of critical figure in many of the charitable enterprises, and
perhaps that was why he was chosen.
Senator Specter. And when the last line says that no
contributions were given to Fatah, what do you make of that?
Mr. Gold. Well, I think here there is a desire, clearly, to
make sure that all resources coming from Saudi Arabia go
through the Fatah organization, which is the largest national
component inside the Palestinian Authority. They want the money
in their hands and not going to Hamas.
I think the importance of this document is that it clearly
indicates that Saudi Arabia was funding Hamas in the year 2000,
and we would say, as I said earlier, that funding is continuing
to this day, in fact, becoming more significant as we speak.
Senator Specter. Mr. Winer, you had your hand up indicating
a wish to say something?
Mr. Winer. It relates to this topic. Last year, FBIS
reported that President Musharraf in Pakistan sent a similar
communication to senior Saudi officials asking the Saudi
Government to stop funding or Saudi Arabia to stop funding
radical militants in madrassas in Pakistan who were creating
problems of Islamic militancy within Pakistan for President
Musharraf.
Senator Specter. What do you think we ought to do about
that, Mr. Winer? You are a former State Department official.
Mr. Winer. I think that the Congress and the White House
still speak with the bully pulpit, that they are communicating,
as you are doing today, is important. Beyond that, I think
sanctions have to be taken against particular entities, when we
have sufficient evidence to determine that an entity,
regardless of who----
Senator Specter. How about sanctions against the Saudi
Arabian Government?
Mr. Winer. I think the first thing to do is sanctions
against economic entities that are substantial where we have
definitive information that those entities have been used to
fund terrorism. That is what our law permits. That is what we
have warned Saudi Arabia, among others, we could do. To the
extent that we have the ability to do that and the evidentiary
packages are sufficient, I think we should do it. That is my
opinion.
Senator Specter. Ambassador Gold, to what extent, as you
produce documents and show charts, is there an evidentiary
chain which would go to these officials of the Saudi Government
who are chairmen of these organizations, IIRO, WAMY, al-
Haramain, to show the connection between those individuals and
their direction of funds through these specific organizations
to Hamas, which then results in the murders of U.S. citizens?
Mr. Gold. I cannot supply the evidence to show that the
heads, the chairmen of these organizations know where every
dollar is going in these particular allocations to Hamas. But,
again, the material showing that the organizations are
allocating to Hamas is clear-cut.
I would say there is one other aspect here, I think, that
should be taken into account. I cannot speak about how the U.S.
Government should respond. I am an Israeli citizen. But we are
now----
Senator Specter. We are going to reserve those questions
for State Department officials. We are not going to ask an
Israeli former Ambassador to tell us what to do.
Mr. Gold. But I will comment on one aspect affecting policy
today because the United States is now leading the way to
implement what is called the road map, a performance-based road
map to a permanent two-state solution. And in phase one of the
road map--this is from the Department of State website--you can
see that Arab States are expected to cut off public and private
funding and all other forms of support for groups supporting
and engaging in violence and terror. Therefore, I would say the
crown jewels of U.S. Middle East policy, that is, the road map,
specifically refers to cases like Saudi Arabia. In short, Saudi
Arabia ought to go under the road map.
I would also add that at the Sharm El-Sheikh Summit on June
3, 2003, President Bush made a declaration in which he said he
had the assurances of all those present that there would be no
more terrorist funding, and here is the actual phrase that he
used at the summit: ``The leaders here today have declared
their firm rejection of terror regardless of its
justifications. They have also committed to practical actions
to use all means to cut off assistance, including arms and
financing, to any terror group.''
So what you have is clear-cut U.S. policy to make sure that
Saudi Arabia doesn't continue funding Hamas. I would say from
the testimony you have heard today, the same networks that are
working with Hamas are also working with al-Qaeda. If you make
sure that the funding to Hamas stops, you will also, to a large
extent, improve the national security of the United States by
cutting off the funding routes to al-Qaeda as well.
Senator Specter. Ambassador Gold, when you say you can not
say that these officials in these organizations, these
governmental officials knew where every dollar went, I can
understand that. But if they know that there are some dollars
going to Hamas and they know Hamas is engaged in terrorism, and
that terrorism results in murders of U.S. citizens, that is--
you don't have to find where every dollar goes. You just have
to be able to prove that they know that some dollars are going
to terrorists.
Mr. Gold. I would suggest they have a kind of corporate
responsibility standing at the head, at the apex of these
organizations to know about it.
Senator Specter. You can not establish criminal liability
as the head of a corporation. You have got to prove that they
knew what was going on, knowledge, participation, and
acquiescence.
Mr. Gold. The documents that I can supply can show the
organizations' links to Hamas. I can also show you how the
organization is structured. But you would have to go probably
to U.S. agencies to find out whether any other information is
available linking these individuals to Hamas funding.
Senator Specter. And when you have the connection to al-
Qaeda, it is a much broader criminal responsibility. There you
have the murders of 3,000 American citizens.
Mr. Gold. That is absolutely true. But, again, I will only
make statements here about things that I can document. What I
have stated in this Committee hearing I can document.
Senator Specter. Well, the statement by the President that
you have got on the board is about as good as you can get for
him to extract those promises from the leaders of Saudi Arabia
and other countries. And now the issue is pursuit to see to it
that they live up to what they have said.
One other subject before adjourning. Mr. Emerson, your
comment, I think, about the 7th graders who were having hate
materials in their educational portfolios, that has been a
problem ongoing for quite a long time. We have seen in the
Palestinian Authority materials in grade schools, and part of
the funding of the Palestinian Authority after Oslo, before we
stopped the funding, was conditioned on changing, taking those
materials out of the textbooks.
You have had considerable experience in this field. What
recommendations would you have as to how to deal with the
problem of this hate literature going to the next generation?
Mr. Emerson. I think it is probably the most frustrating
problem to deal with insofar as asking Saudi Arabia to stop the
incitement within its own borders is basically asking it to
essentially renounce its own Wahhabist ideology. There is a
fundamental contradiction here.
On the other hand, as a result of the Riyadh attacks, I
think more members of the family realize that the tiger is now
coming to bite it and it cannot afford to keep paying off
cooptation money overseas or even trying to essentially incite
its citizens against Christians or Jews or Israelis or
Americans in an effort to dissuade them from being frustrated
with the regime itself.
But there is a fundamental contradiction here. My belief is
that Saudi Arabia, as you have noted here, should be subject to
the sanctions that were empowered by the PATRIOT Act because of
the fact that foreign national central monetary institutions
are allowed to be subject to sanctions if their funding
mechanisms do not stop or are aware of terrorist financing. And
I think the body of evidence of terrorist ties going back for
the last 15 years on WAMY, IIRO, al-Haramain, and several other
Saudi, ``NGOs are so demonstrably present that it would be
reckless disregard for anyone to say that they were unaware of
those ties, let alone not taking responsibility.''
At this point, I can tell you based on the information we
have collected that there are direct ties between Saudi
Government officials, the members of the family--not all, but
some--and all of those NGOs in terms of the financial support
and the largesse they receive.
One other point I would just like to add, because you have
been very good in terms of pressing the government to make sure
that it does not succumb to any political pressure. I can tell
you based on discussions that I have had with law enforcement
officials and prosecutors that while no one has said to me that
they received a red light from the State Department, they have
repeatedly expressed their frustration at the resistance within
the government decisionmaking process to fully give them the
green light to go after and conduct criminal investigations
against Saudi entities and individuals. Part of the frustration
is because Saudi Arabia has provided diplomatic immunity or
actually pulled back some of the key witnesses, material
witnesses that were being held here or subject to investigation
and not made them available to the U.S. Government.
In other cases, it is the fear of antagonizing the Saudi
regime that has basically put a red light to some of the key
law enforcement prosecutions that are being considered at this
point as we speak.
Senator Specter. Well, first you say there is no red light,
and then you say there is not a green light. And we are not
looking for amber in between. And then you just concluded by
saying that there was a red light on criminal investigations.
Could you amplify that a bit?
Mr. Emerson. The red light insofar as a document that says
we will not support a criminal investigation because of fear of
engendering antagonism of the Saudi regime, I know of no such
document that would ever be produced.
Senator Specter. Well, you wouldn't necessarily expect to
have a document under seal, notarized. You might have a
conversation. Who would want to put that in writing? Some
congressional committee might get a hold of it.
Mr. Emerson. Right, but you might not even have the
conversation. It might just die, on the wane. In other words,
it might not be acted upon.
Senator Specter. Well, there would be a reason for why it
wasn't acted upon.
Mr. Emerson. Well, there would be some type of bureaucratic
reasons. Look, I can tell you documents we received under FOIA
going back to 1996, 1997, and 1998, show that certain radical
Islamic charities were being categorized as terrorist conduits
back in those years--and yet they weren't frozen or had any
sanctions against them until 2001. So something intervened to
stop that designation and stop the asset forfeiture.
Now, I can not tell you what stopped it because I haven't
received the documents--and I deal only with empirical
evidence. But I know something stopped it, and I can only
imagine that it was diplomatic pressure.
Senator Specter. Well, those are subjects we are going to
pursue. One final comment. When you talk about Saudi textbooks
responding to Wahhabi philosophy, there is a limit to how far
you can go, even under those circumstances, as far as inciting
murder. That crosses international lines, and it is an
international crime. And we have got to look at the toughest
lines, economic sanctions, criminal sanctions, whatever it
takes.
Well, thank you very much, gentlemen. I think this has been
informative, and stay tuned.
[Whereupon, at 12:41 p.m., the Committee was adjourned.]
A P P E N D I X
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