Treasury's War Read online

  This project took on additional importance, with our counterterrorism strategy beginning to focus more heavily and directly on the ideological undercurrents and threats from Al Qaeda and its adherents. After the international community adopted a UN resolution in September 2006, driven by British Prime Minister Tony Blair, to highlight the dangers of radical ideology to the incitement to violence, we launched the effort in earnest to designate known terrorist ideologues who were also providing material support to Al Qaeda and related terrorist movements.

  At the top of this target list were two Scandinavian ideologues: Mohammed Moumou and Mullah Krekar. Moumou and Krekar had long lived in the safety and comfort of Sweden and Norway, respectively, and were known to advocate the violent causes of Muslims around the world. But they were more than just cheerleaders for Islamist terrorism. They had deep operational connections with Kurdish and Iraqi terrorist organizations and supported Al Qaeda’s cause directly, sending money, materiel, and new recruits to fight in Iraq.

  Krekar, also known as Najmuddin Faraj Ahmad, was a well-known extremist who, in December 2001, founded the Kurdish terrorist group Ansar al-Islam (AI), now known as Ansar al-Sunnah (AS), and served as AI’s first leader. From the comfort of Norway, he managed a full range of terrorist activities and exhorted others to violence, supplying religious justifications for murder. In a 2004 interview, Krekar supported holy war in Iraq and identified targets, stating, “Not just the officers, but also the civilians who help the Americans. If anyone so much as fetches them a glass of water, he can be killed. . . . Everyone is a target. If an aid organization gives the Americans as much as a glass of water, they will become a target.” By the spring of 2005, Krekar had founded a nongovernmental organization with branches throughout Europe that he used to send money into Iraq and to recruit operatives into AS. He would leave Scandinavia for fundraising trips to Germany and route funds through contacts in Bulgaria.22

  Krekar was doing more than orchestrating financing from Europe into Iraq. He would also travel to Iraqi Kurdish areas to organize militant activities, establishing two terrorist sniper teams in 2005 and recruiting numerous combatants.

  Moumou, a Moroccan national who had gained Swedish citizenship, was a long-standing extremist with ties to terrorism going back to the mid-1990s, when he traveled to Afghanistan to participate in the Al Qaeda–run Khalden terrorist training camp. Moumou kept his Al Qaeda ties to the global network and became the leader of an extremist group in Stockholm centered on the Brandbergen Mosque, known as an extremist hotbed by security services around the world. Moumou would become Abu Mus’ab al-Zarqawi’s representative in Europe, with some reports indicating that he was responsible for helping Zarqawi with his chemical and biological weapons ambitions. Zarqawi, a Jordanian, was the leader of Al Qaeda in Iraq.

  Krekar and Moumou were well-known characters in the world of violent extremism, but they had been allowed to operate under the veil of legitimate political advocacy because they had not violated any domestic laws in Norway and Sweden. They had avoided extradition elsewhere based on human rights grounds. They were also opposing America’s invasion in Iraq, which was a position that matched the opinion of many. The designations were a way of highlighting their misdeeds—not their words—and stopping their activity. It was also a way of making the Blair-led Security Council resolution tangible.

  Hinnen ran the interagency terrorist financing work and drove the back-and-forth of the internal debates of the designation process. Justice lawyers were worried that we were overstepping the First Amendment, while State and Treasury lawyers were concerned that we were expanding the use of targeted sanctions beyond what was intended or wise. These were important debates, but they delayed the action for weeks despite our pushing—with lawyers wrangling over the scope of the designations and how we expressed the reasons we were targeting these individuals. There was no question that Krekar and Moumou should be subject to our designation authorities, but there was angst about highlighting their speech as part of our targeting rationale.

  We eventually worked out the right language, and the 100 percent surety rule remained intact—with some other targets falling by the wayside. By the time we announced the designations on December 7, 2006, Moumou had left Sweden and traveled to Iraq; he later became the number-two leader of Al Qaeda in Iraq when Abu Mus’ab al-Zarqawi was killed by US forces. Moumou relied on his historical ties and specialized in recruiting foreign fighters, especially from Europe. Eventually, he, too, was tracked down by US counterterrorism forces and killed, as Al Qaeda in Iraq was pressured and its leadership hunted in 2007 and 2008. Krekar remained in Norway under constant scrutiny from security services and the media—falling prey to the increased attention to temper his activities. He had also become the target of a comedienne, who approached Krekar on stage in 2005 while he was preaching and proceeded to pick him up and put him down—a mocking and belittling gesture. Krekar had lost his standing and was in the public’s crosshairs. In March 2012, Krekar was convicted by an Oslo court of threatening public officials and other Muslims—who he felt had lost their faith—and sentenced to five years in prison.23

  Money has a way of creating connections and relationships of convenience. Beyond the designation process, by 2003 our Treasury team recognized that we needed to expand our use of targeted sanctions and financial pressure to impact the growing nexus between international criminal activity and terrorism. In many ways, Treasury’s powers and influence were most effective when they were focused on illicit financial activity and individuals who relied on the global commercial system.

  I knew that we could have a dramatic impact by isolating transnational criminals and financial facilitators of concern. Global criminals doing business needed banks and access to accounts and money—and wanted to preserve their ability to do business. They played the game for profit. We could affect that dynamic directly with designations that would both isolate them from the financial system and deter others from following the example of global businessmen who were willing to dabble in gray markets and illicit financing. So we directed our analysts and authorities at key criminal underworld figures who could give global reach and capacities—funding, logistics, or arms—to rogue regimes, criminals, and terrorist organizations. These would become our next fixed targets for financial isolation.

  The first on our financial hit list was Dawood Ibrahim. Ibrahim, a notorious Indian crime lord, represented the nightmare scenario of the allegiance between powerful international organized crime and terror. We needed to put an international spotlight on him.

  Ibrahim, standing at five foot six inches, was born December 26, 1955, the son of a police constable. He launched his criminal career as a gangster in the South Asian criminal underworld on the streets of Mumbai, India. He made money initially by controlling and selling pirated Bollywood films. He built his strength on the legend of his ruthlessness and on the back of his smuggling operations in India, Pakistan, and the United Arab Emirates.

  By the 1980s, he had built a smuggling empire—known as “Company D”—that reached from South Asia and the Middle East to Europe and Asia. Company D expanded to include a wide network of narcotics traffickers, money launderers, and smugglers. He became known as one of the major international crime bosses—wielding power across continents. Ibrahim could get anyone or anything in and out of most countries illegally and with ease. He would do it for a price and for profit.

  Dawood Ibrahim—sometimes known as Sheikh Dawood Hassan—was not just a notorious international crime boss. He demonstrated a willingness to help Al Qaeda and financed and supported Lashkar-e-Taiba (LT)—the Pakistan-based terrorist organization focused on the liberation of Kashmir—against his home country. His help to LT became manifest in the 1993 Mumbai serial bombings facilitated by Company D’s illicit network.

  On March 12, 1993, a powerful bomb exploded in the basement of the Bombay Stock Exchange, killing 50 people in the high-rise above. The blast was followed thirty minutes later
by a series of blasts throughout the city. Over more than three hours, thirteen additional bombs detonated, killing 257 people and injuring more than 700. The attacks followed the 1992–1993 anti-Muslim pogroms in India and were regarded as retaliation by violent Islamic extremists.

  Ibrahim’s network, which had helped to launch these devastating attacks, had direct ties to Pakistani militants and the Pakistani intelligence services, notably the Inter-Services Intelligence Directorate (ISI). Ibrahim fled to Pakistan following mounting international pressure amid investigations and accusations from the Indian government about his complicity in these and other attacks—along with attempts to destabilize the Indian government.

  He has remained in his villa in Karachi ever since—protected from international reach. He has also remained active and dangerous. Ibrahim has been a primary financier of the narcotics trade in Afghanistan and maintained close ties to Al Qaeda’s senior ranks. In the 1990s, he was sponsored and protected by the Taliban when he traveled to Afghanistan. Most disturbingly, Osama bin Laden and Al Qaeda relied on Ibrahim’s smuggling routes, with reports that a financial arrangement had been made for bin Laden to be able to use the routes and elements of the network to move men and materiel for Al Qaeda safely through the Middle East and South Asia.

  Ibrahim may not have been a classic Al Qaeda jihadist, but he was a most dangerous facilitator. And he was the kind of target we needed to isolate financially. On October 16, 2003, we designated Ibrahim, sending messages out to banks and our foreign counterparts around the world to do whatever was possible to identify and freeze Ibrahim’s assets. When we designated him, I laid out what the action meant to our strategy: “This designation signals our commitment to identifying and attacking the financial ties between the criminal underworld and terrorism. We are calling on the international community to stop the flow of dirty money that kills. For the Ibrahim syndicate, the business of terrorism forms part of their larger criminal enterprise, which must be dismantled.”

  Our actions helped to isolate Ibrahim, but he remained protected by the Pakistani government, and the Indian extradition request lay unanswered. When the attacks on Mumbai were launched in November 2008, and we were managing the fallout from the White House, my thoughts fell directly on Ibrahim and Company D. I knew he may have been involved—and would certainly be implicated by the Indian government. When the Indians laid out their list of most-wanted figures—the men they wanted to be handed over by the Pakistanis—Ibrahim topped the list. He remains in Karachi—isolated, but active still.

  We next turned our sights on the Tri-Border Area of South America (TBA), where Brazil, Argentina, and Paraguay meet near the beautiful Iguazu Falls. This major trading zone is also where Hezbollah had found a permissive and lucrative environment for trading and smuggling to raise and move money. Assad Ahmad Barakat was Hezbollah’s treasurer for the region as well as deputy to Hezbollah financial director Ali Kazan and the primary liaison in the TBA for Hezbollah’s secretary general, Sheikh Hassan Nasrallah.

  Barakat ran a string of import-export businesses in the TBA that relied on counterfeit goods and over and under-invoicing to make profits. These activities also acted as cover for the movement of people, money, and information tied to Hezbollah. We identified Casa Apollo and Barakat Import Export Ltd., specifically, because we had information that Barakat used each for Hezbollah’s purposes. Casa Apollo was an electronics wholesale store that served as a cover for Hezbollah fundraising and intelligence operations. Barakat Import Export was used as a front as well—it had been used, for example, in a bank fraud scheme to raise money for Hezbollah in Lebanon. Barakat ran a counterfeit currency ring and was also known to extort Lebanese businessmen in the Tri-Border Area for funding for Hezbollah, often threatening to put their relatives in Lebanon on a “Hezbollah blacklist” if quotas were not paid.

  Funds were then bundled and wired or carried back to Lebanon for use by the Hezbollah leadership. Barakat would also collect information for Hezbollah—for example, he tracked the activities and travel of Arabs in the TBA. He would return at least once a year to meet with Nasrallah and other Hezbollah brass. There were also reports from the Paraguayan press that Barakat had provided funding to Osama bin Laden through real-estate deals and fraud.

  Our intelligence and law-enforcement services had been working since 2001, with their counterparts in the region, to monitor and shut down Barakat’s operation—with some effect. Part of this was helping the countries in the region think about using financial criminal activity and tax evasion as the basis for action. Much like the arrest and prosecution of Al Capone in the United States, Barakat would be arrested in June 2002 by Brazil on the basis of a Paraguayan charge of tax evasion and criminal association. He served six years in prison and was released in 2009.

  Even though Barakat was in prison, we wanted to isolate his financial dealings and make clear what we knew about him and his network. We used the designation to spell out the US government’s bill of particulars—in public for the world to see. When we designated Barakat on June 10, 2004, I noted the following in the Treasury press release: “Today, we are designating a key terrorist financier in South America who has used every financial crime in the book, including his businesses, to generate funding for Hizballah. From counterfeiting to extortion, this Hizballah sympathizer committed financial crimes and utilized front companies to underwrite terror.”

  The designation not only isolated Barakat’s businesses, but laid bare how Hezbollah was using its presence in the TBA to raise and move money and operatives. It also forced the governments in the region to take note—undercutting the argument often heard by the Brazilian government that there was no terrorist financing happening in the TBA. The designation brought the debate into the open and put financial institutions—especially in Latin America—on notice that the United States was watching the financial flows in the region that were tied to terrorism. This focus was not just on Al Qaeda but also on groups like Hezbollah whose activities were threatening the integrity of the financial system. Finally, this action was part of a concerted public diplomacy campaign to demonstrate that Hezbollah (“Party of God”) was not a pious resistance movement in southern Lebanon but a global criminal enterprise whose leaders had no qualms about committing financial crimes to line their pockets.

  That focus would continue for years, with the revelation of a major Hezbollah money-laundering and drug-trafficking operation in 2011. In that operation, Hezbollah relied on the Lebanese Canadian Bank (LCB) to launder millions of dollars of drug proceeds from South America through the United States and then on to Lebanon. Hezbollah also used the trade in used cars—relying on a network of used-car dealers in the United States—to raise millions that were then sent onward to Hezbollah in Beirut.

  We then turned our financial targeting attention to Viktor Bout, the “Merchant of Death.” Viktor Bout reigned as the world’s most notorious arms merchant for nearly two decades. Following the end of the Cold War, Bout built a global network of arms dealers, air transport and logistics experts, and customers in conflict zones worldwide. Born January 13, 1967, in the Soviet Union, Bout served in the Russian military and attended the esteemed Russian Military Institute of Foreign Languages. He is rumored to have received intelligence training while serving in the Russian Air Force.24

  As centrifugal forces tore the Soviet empire apart, the vast arsenals of the Red Army went to the highest bidder. At the age of twenty-five, Bout—recognizing a business opportunity—purchased three Soviet Antonov cargo jets to fly loads of illicit arms and other goods to conflict zones. Bout’s business quickly spread to include a large fleet of aircraft that serviced clients in conflicts ranging from Afghanistan, Pakistan, and North Korea to Liberia, Colombia, the Democratic Republic of the Congo, Angola, Iraq, and elsewhere.

  Bout’s network was unique in that it took care of all aspects of the illicit arms process for the customer: the weapons themselves; transportation of the cargo, regardless of location or
international restrictions on arms transfers; and money-laundering mechanisms to disguise the purchases. If a customer could pay, Bout would deliver arms of any sort—from AK-47s to attack helicopters—to anywhere in the world, without care for international restrictions or moral boundaries.

  Bout became such a prominent fixture in the global airlift market to war zones that he was frequently contracted for services by both sides of a conflict. In the 1990s, he provided arms to the Taliban as well as to the Northern Alliance that was fighting Taliban rule in Afghanistan. He also supported UN peacekeeping missions, delivering food and other supplies, while selling arms to the forces involved in hostilities. His services were well known and profitable—but they were also evading sanctions and fueling horrendously violent conflicts in many places. Following the US invasion of Iraq, Bout’s shell companies flew supplies to US contractors working to reconstruct the country despite the fact that Bout had been officially designated by the Treasury Department years earlier.

  Bout began to draw the attention of Western intelligence and law-enforcement organizations in the mid-1990s as his network increasingly supplied forces in the primary conflict zones across the world. To ensure that his fleet of aircraft had access to airspace anywhere in the world, Bout had registered the aircraft within a broad series of shell companies. The first of these shell companies, and Bout’s flagship entity, Air Cess, was founded in Belgium in 1996 and later registered in Monrovia, Liberia, with Bout at the head. Other firms included Centrafrican Airlines, San Air General Trading, Air Bas, CET Aviation, Irbis, Transavia Travel, and Santa Cruz Imperial. San Air and Centrafrican played key roles in supplying arms to Charles Taylor’s regime in Liberia and the Sierra Leone rebel group, the Revolutionary United Front (RUF). The RUF became infamous for its brutality when its militant members began chopping off hands and limbs with machetes—some of their victims had done nothing more than vote in elections.25