FTR #462 Fifth Column Part III: The Subversion of Operation Green Quest

RealAudio

This broadcast highlights the activities of an apparent Fifth Column within the U.S. political, economic and law-enforcement/intelligence establishments. Particular emphasis is on the subversion of Operation Green Quest—the effort to interdict terrorist financing. Central to the frustration of Operation Green Quest is the FBI's refusal to share jurisdiction on the operation with other agencies (the Department of Homeland Security in particular), generating charges that the bureau is deliberately undermining the investigation. In the context of the frustration of Operation Green Quest, it is important to remember that the targets of the 3/20/2002 Green Quest raids include members of the Bush administration's inner circle and that FBI chief Robert Mueller appears compromised because of his less than vigorous investigation of the BCCI case when he was a U.S. attorney under George Bush. In part, the subversion of Operation Green Quest is responsible for the fact that Al Qaeda's funding sources remain largely intact.

Note that this description contains material not included in the original broadcast due to the limitations of time.

Program Highlights Include: The Ptech case—the investigation of a software company financed in part by alleged Al Qaeda financier Yasin Al-Qadi; the fact that Ptech developed software for—among other agencies—the FAA and the Air Force; the possible role of the Ptech software in the anomalous behavior of U.S. air defenses on 9/11; the alleged connections of Ptech director Yaqub Mirza with the highest levels of the FBI; Mirza's role in setting up the organizations targeted in the 3/20/2002 raids; the harassment of Green Quest investigators by both FBI and CIA; review of the connections between the targets of the Operation Green Quest raids and the Bush administration; the charges of FBI whistleblower Sibel Edmonds that the terrorist support network in this country involved people in high places with powerful political connections; details of the Sami Al-Arian investigation that led to the Green Quest raids of 3/20/2002; the "accidental" destruction of key documents in the Al-Arian case (this destruction threatens the case.

1. Beginning discussion of the failure to interdict terrorist financing, the program opens with mention of a report from a British intelligence analysis think-tank. This report notes that Al Qaeda's funding conduits have remained largely intact. " . . . In its annual strategic survey, the International Institute for Strategic Studies (IISS) says al-Qaeda's financial network has survived largely intact, and that the war in Iraq has brought new recruits to its ranks. . . ."
("Al-Qaeda 'May Have 18,000 Operatives'" by Mark Huband and David Buchan in London; Financial Times; 5/25/2004.)

2. FBI translator Sibel Edmonds has noted that her disclosures concerning forewarnings of the 9/11 attacks have been muzzled. Among her disclosures is the allegation that people in high places are blocking investigation of her charges. She seems to imply that these people are implicated to a certain extent in the financing of terrorism. " . . . [Sibel] Edmonds said she had heard the details of the Afghan asset story in an unclassified meeting at the Capitol, but she cannot talk about the specifics because of a Justice Department gag order that classifies as secret what she has to say. She said, however, that 'there are a lot of activities in the U.S. A lot of money . . . and these activities involve money laundering, drugs, a support network for terrorism . . . people in high places . . . [people] in the political arena.' [Italics are Mr. Emory's]"
("This Made Ashcroft Gag" by James Ridgeway; The Village Voice; 5/25/2004; p. 1.)

3. " . . . . Edmonds can't tell what she may know because attorney General John Ashcroft recently invoked an arcane law to make her statements 'classified'—including previously public statements and journalism quoting her on the case." (Ibid.; p. 2.)

4. "At a Senate Judiciary committee hearing last week, Republican Chuck Grassley of Iowa summarized the Edmonds case in questioning FBI director Robert Mueller: 'I would also like to, on a second point, figure out why the FBI is going back in time and classifying some pretty basic information that's already in the public sector in regard to classification of information that we have received in Congress from a whistle-blower, Sibel Edmonds. We have, for instance, an e-mail sent out by the chairman's office last week saying that the FBI is classifying two-year-old information that the committee got in two previous briefings. Ms. Edmonds worked for the FBI as a translator and was fired after she reported problems. As part of the committee's legitimate oversight, we looked into that. The e-mail I have is right here. And so I'm very alarmed with the after-the-fact classification. On the one hand, I think it's ludicrous, because I understand that almost all of this information's in the public domain, and has been very widely available. On the other hand, this classification is very serious, because it seems like the FBI would be attempting to put a gag order on Congress.'" (Ibid.; pp. 2-3.)

5. Supplementing previous discussion of the FBI's failure to cooperate with other agencies in pursuing Operation Green Quest (FTR#'s 432, 433), the program notes that the effort has largely been frustrated, courtesy of the FBI. (FTR#'s 310, 424—among other programs—note that FBI director Robert Mueller's background suggests that his appointment may well have been intended to block any investigations leading in the direction of the Bush/BCCI/Bin Laden nexus that lies at the core of the president's past business relationships. The 3/20/2002 Operation Green Quest raids led directly to elements connected to the GOP. Bush business associate Talat Othman, himself connected to the BCCI milieu, interceded on behalf of the institutions targeted in those raids. For more about the Talat Othman intercession, see—among other programs—FTR#'s 356, 357, 390, 454.) "While the U.S. military wages war in Iraq, the FBI and the new Department of Homeland Security are fighting their own fierce battle—against each other. The casus belli of th

is conflict is Operation Green Quest—the high-profile federal task force set up to target the financiers of Al Qaeda and other international terrorist groups. Ever since Green Quest was created by former U.S. Customs chief Robert Bonner just after the September 11 terror attacks, Green Quest agents have conducted some of the Bush administration's best-publicized and most controversial terrorist-finance cases—including a series of raids against the offices of Islamic charities in the Washington area last year that drew strong protests from American Muslim and civil-rights groups. [These were the Operation Green Quest raids of 3/20/2002—D.E.]"
("Whose War on Terror?"; Newsweek; 12/10/2003; p. 1.)

6. "But as the Green Quest team made headlines, its investigations triggered a bitter dispute within the government. Internally, FBI officials have derided Green Quest agents as a bunch of 'cowboys' whose actions have undermined more important, long-range FBI investigations into terrorist financing. Green Quest sources, in turn, accuse the FBI of jealousy. Now that the Customs-led Green Quest operation has been folded into the new Homeland Security Department, Newsweek has learned, the FBI and its parent agency, the Justice Department, have demanded that the White House instead give the FBI total control over Green Quest." (Idem.)

7. "One senior law-enforcement official called the lack of coordination between the FBI and Green Quest 'an intolerable situation' and noted that the bureau-not Homeland Security—has been formally designated by President Bush as the 'lead agency' for terrorism investigations. 'You can't have two lead agencies' conducting terror cases, the official said." (Idem.)

8. Green Quest investigators from the Department of Homeland Security charge that the FBI is deliberately sabotaging their investigations. "The FBI-Justice move, pushed by DOJ criminal Division chief Michael Chertoff and Deputy Attorney General Larry Thompson, has enraged Homeland Security officials, however. They accuse the bureau of sabotaging Green Quest investigations—by failing to turn over critical information to their agents—and trying to obscure a decades long record of lethargy in which FBI offices failed to aggressively pursue terror-finance cases." (Idem.)

9. " 'They [The FBI] won't share anything with us,' said a Homeland Security official. 'Then they go to the White House and they accuse us of not sharing . . . If they can't take it over, they want to kill it.' If nothing else, the battle over Green Quest illustrates the bureaucratic tensions that still plague the war on terror. The creation of the Homeland Security Department was supposed to put an end to such turf fights. The new department took over a diverse assortment of federal agencies that had various responsibilities for combating terrorism, including the Customs Service, the Immigration and Naturalization Service and the U.S. Border Patrol." (Ibid.; pp. 1-2.)

10. Among the investigations weakened by the interagency friction is the Ptech investigation. Accused terrorist financier Yasin Al-Qadi is one of the main investors in Ptech, which develops computer software for, among other agencies, the Air Force and the FAA. One of the questions that suggests itself in this regard concerns the possibility that the anomalies in the performance of air-defense units on 9/11 may be due, in part, to software sabotage by Ptech. "But even while the White House was preaching cooperation, the various agencies that were being folded into Homeland Security were squabbling with the FBI—the behemoth in the domestic war on terror. One prime example of the tension is the investigation into Ptech, the Boston-area computer software firm that had millions of dollars in sensitive government contracts with the Air Force, the Energy Department and, ironically enough, the FBI. In what turned into a minor embarrassment for the bureau, the firm's main investors included Yasin Al-Qadi, a wealthy Saudi businessman whom the Bush administration had formally designated a terrorist financier under the International Emergency Economic Powers Act. Al-Qadi has vigorously denied any connection to terrorism." (Ibid.; p. 2.)

11. "The Ptech case turned into an ugly dispute last year when company whistleblowers told Green Quest agents about their own suspicions about the firm's owners. Sources close to the case say those same whistleblowers had first approached FBI agents, but the bureau apparently did little or nothing in response. With backing from the National Security Council, Green Quest agents then mounted a full-scale investigation that culminated in a raid on the company's office last December. After getting wind of the Green Quest probe, the FBI stepped in and unsuccessfully tried to take control of the case." (Idem.)

12. "The result, sources say, has been something of a train wreck. Privately, FBI officials say Green Quest agents botched the probe and jeopardized other more promising inquiries into Al-Qadi. Green Quest agents dismiss the charges and say the problem is that the bureau ws slow to respond to legitimate allegations that an outside contractor with terrorist ties may have infiltrated government computers. [Italics are Mr. Emory's.] Whatever the truth, there is no dispute that the case has so far produced no charges and indictments against Al-Qadi or anyone else connected with Ptech. The company has denied wrongdoing." (Idem.)

13. Still more about the turf war between the FBI and the DHS over Green Quest: "A war has broken out on American soil, largely below the public radar screen. On May 13, 2003, Attorney General John Ashcroft and Secretary of Homeland Security Tom Ridge signed a 'memorandum of Agreement' between the Department of justice and Department of Homeland Security (DHS) that gives the Federal Bureau of Investigation (FBI) unprecedented unilateral control of all terrorist-financing investigations and operations. The agreement raises questions about the need for a Department of Homeland Security, if the FBI will be handling all relevant terror investigations."
("Perilous Power Play: FBI vs. Homeland Security" by Rita Katz & Josh Devon; National Review; 5/27/2003; p. 1.)

14. "Several seasoned government agents fear for the nation's security should the FBI be tackling most terrorism cases, as their ineptitude in preventing terrorism has been established time and time again. Yet, the memorandum between Ashcroft and Ridge places the FBI in an incredibly powerful position over Homeland Security. According to the memorandum, '[A]ll appropriate DHS leads relating to money laundering and financial crimes will be checked with the FBI.'" (Idem.)

15. "This usurpation creates a gigantic imbalance of power in criminal investigations, as the FBI now has the power to create or kill any terrorist-financing investigation it deems appropriate or inappropriate to investigate. This puts the FBI in a position to control too much and is eerily reminiscent of the former Soviet Union's oppressive intelligence agency, the KGB. Like the KGB, the FBI seeks to run itself with no checks and balances, a necessary hallmark of the American system of government and civil rights. The memorandum makes the point that FBI agents assigned to work in conjunction with DHS agents 'are provided full an

d timely access to all data developed in ICE's [Bureau of Immigration and Customs Enforcement] money laundering and financial crimes cases on an ongoing basis.' The reciprocal is not stated in the agreement, continuing the FBI's long-held policy of refusing to share their information with other agencies." (Idem.)

16. A point of information that raises serious questions about the FBI's motivation for attempting to monopolize Green Quest investigations concerns the bureau's admission that it did not have the ability to handle counterterrorism cases! "Amazingly, though, just after 9/11 the FBI admitted it did not have the ability to handle counterterrorism cases. According to a May 2003 General Accounting Office (GAO) Report about interagency information sharing, 'the Director of the FBI testified in June 2002 that implementing a more proactive approach to preventing terrorist acts and denying terrorist groups the ability to operate and raise funds require a centralized and robust analytical capacity that did not exist in the FBI's Counterterrorism Division.' Yet, because the FBI is so well funded and staffed compared to the other agencies, the bureau can play the PR game better than any other agency. Thus, while strong-arming other agencies and bullying them out of investigations, the FBI maintains a positive face in the eyes of the American public and takes credit for investigations in which they were only tangentially involved." (Ibid.; pp. 1-2.)

17. "For those who do not fear that the FBI will be handling future terrorist financing investigations, let's look at the agency's track record when it comes to protecting the United States from terrorist financing: Even after the September 11 attacks, the FBI failed to pursue obvious terrorist financing leads. In a hugely embarrassing moment, the FBI failed to do anything about Ptech, Inc. a company whose prime investor was a Specially Designated Global Terrorist entity, Saudi Yassin al-Qadi. In desperation, the vice president of sales at Ptech contacted the FBI and pleaded with them to look into the organization, as he saw in the news that Qadi was allegedly connected to funding al Qaeda. After repeated meetings with increasingly higher-ranking FBI officials where the employees beseeched the agency to look into the company, the bureau did nothing, despite knowing that Qadi was a primary financier of Ptech." (Ibid.; p. 2.)

18. Among the more alarming details about the Ptech debacle concerns a statement attributed to the president of Ptech. He allegedly told a subordinate that Yaqub Mirza—a member of the board of directors—had connections high up in the FBI! Mirza set up the organizations targeted in the Operation Green Quest raids of 3/20/2002! "Furthermore, the FBI was aware that Ptech provided computer software for several government agencies, including the FBI itself, the FAA, the U.S. Treasury, the Department of Defense, the IRS, and the White House, proving a visible and viable threat to national security. The FBI ignored the repeated requests of concerned employees. Frighteningly, when an employee told the President of Ptech he felt he had to contact the FBI regarding Qadi's involvement in the company, the president allegedly told him not to worry because Yaqub Mirza, who was on the board of directors of the company and was himself a target of a terrorist financing raid in March 2002, had contacts high within the FBI. [Italics are Mr. Emory's]." (Idem.)

19. "After months of the FBI refusing to do anything substantive, it took the efforts of U.S. Customs, now a part of Homeland Security, to raid the business in December 2002 and jumpstart the investigation into the alleged terrorist financial network." (Idem.)

20. The FBI had previously ignored the organizations set up by Mirza and targeted in the 3/20/2002 Green Quest raids (the SAAR network). "Perhaps the FBI's biggest blunder was in ignoring the enormous alleged terrorist financial network of companies and nonprofit organizations mostly in Herndon, Virginia, named by investigators as the 'SAAR Network.' The FBI had been aware of the SAAR Network was funneling money to al-Arian. The FBI chose to ignore the case for unknown reasons, though some have speculated it was due to the SAAR Network's close association to wealthy Saudis who funded the network." (Idem.)

21. "It was not until Operation Green Quest, a joint task force headed by U.S. Customs which sought to disrupt terrorist financing, picked up the scent of the SAAR Network that a raid occurred. In March, 2002, Green Quest, in a victory for Americans everywhere, raided the SAAR Network in 15 locations in the largest terrorist financial bust in U.S. history. . . ." (Ibid.; pp. 2-3.)

22. More about the frustration of Operation Green Quest: " . . . Now, the FBI is attempting to wrest the SAAR Network investigation from Green Quest and take all the credit for Green Quest's dedication and hard work. The agreement between Ashcroft and Ridge is a crushing blow to Green Quest, as it effectively dissolves the outstanding task force. According to the memorandum, 'The secretary of [Homeland Security] agrees that no later than June 30, 2003, Operation Green Quest (OGQ) will no longer exist as a program name.' [Italics are Mr. Emory's]." (Ibid.; p. 3.)

23. "Green Quest, the most successful antiterrorist-financing task squad in history of the United States, is being disbanded because of the FBI's lust for power and glory. At a time when al Qaeda is resurging, the more agencies we have sharing information and investigating terrorism, the better off this nation will be. Given the FBI's track record, the bureau should be punished, not rewarded for unjustifiably bullying a new department into giving it more power, especially after FBI Director Robert Mueller admitted the bureau does not have the analytical capability to provide effective counterterrorism. . . ." (Idem.)

24. Reviewing information presented in FTR#460, the program notes the allegation that among the people enlisted by Bin Laden to assist his efforts was the chief of the Pakistani air force. When taken in combination with the allegedly Al Qaeda-linked Ptech (which developed software for the Air Force and the FAA), this detail may account for some of the anomalous behavior of air defense unites on 9/11. Might elements within Ptech, with the assistance of Mir, have engineered a way to delay interception? "Nor was that the end of it. During his interrogation, Zubaydah had also said that Osama bin Laden had struck a deal with Pakistani air force chief Air Marshal Mushaf Ali Mir, and had told him that there would be unspecified attacks on American soil on 9/11. Seven months after the Saudi deaths, on February 20, 2003, Mir and sixteen others were killed when their plane crashed in a northwest province of Pakistan. Sabotage was widely speculated to be behind the crash but could not be proved."
(House of Bush, House of Saud; by Craig Unger; Scribner [HC]; Copyright 2004 by Craig Unger; ISBN 0-7432-5337-X; p. 269.)

25. As discussed in (among other programs) FTR#'s 356, 454, Talat Othman (a close associate of both Georges Bush) interceded o

n behalf of the targets of Operation Green Quest. (For more about this, see FTR#'s 356, 376, 415.) "And the connections do not end there. One of the Muslim activists who met with O'Neill was Talat Othman, a longtime friend and former business associate of President Bush. The two served together on the board of the Texas-based oil company Harken Energy starting in the late 1980's and have remained close ever since. Othman sat on Harken's board as the representative of Abdullah Taha Bakhsh, a Saudi business magnate and a close associate of suspected terrorist financier Khalid bin Mahfouz. [Bin Mahfouz was one of the principal figures in the BCCI investigation, overseen by now-FBI chief Robert Mueller—D.E.] Bakhsh now heads an oil company that is a subsidiary of Halliburton, the energy giant formerly run by Vice President Dick Cheney."
("Charity Cases: Why Has the Bush Administration Failed to Stop Saudi Funding of Terrorism?" by David Armstrong; Harper's; March/2004; p. 82.)

26. More on Yaqub Mirza and Talat Othman: "In addition to his work at the Islamic Institute, Othman serves on the board of Amana Mutual Funds Trust, an Islamic investment group that had close ties to raided entities and yet was not itself targeted. At the time of the Green Quest raids, in March 2002, at least four figures from the targeted groups were affiliated with Amana, including M. Yaqub Mirza, the individual who set up the U.S. branch of MWL, the fund-raising arm of the U.S. branch of IIRO, and many of the other raided organizations. Despite Mirza's presence on the board, and despite the fact that large sums of money from the suspect groups have moved through Amana, Green Quest agents chose not to raid the firm." (Idem.)

27. The milieu of the 3/20-targeted SAAR network significantly overlaps the GOP's ethnic outreach organization and the Bush administration. That fact may well explain the FBI's and CIA's hostile interest in the investigators of Operation Green Quest. The investigators who were so harassed included Rita Katz, A.K.A. "Anonymous." "The CIA was investigating me and the SAAR investigators from Green Quest and Customs. The CIA and the FBI investigated everyone who had anything to do with the SAAR investigation. White vans and SUV's with dark windows appeared near all the homes of the SAAR investigators. All agents, some of whom were very experienced with surveillance, knew they were being followed. So was I. I felt that I was being followed everywhere and watched at home, in the supermarket, on the way to work . . . and for what? . . ."
(Terrorist Hunter by "Anonymous" [Rita Katz]; CCC [imprint of Harper Collins]; Copyright 2003 by Harper Collins [HC]; ISBN 0-06-052819-2; p. 328.)

28. " . . . The Customs agents were questioned. So were their supervisors. So was the U.S. attorney on the SAAR case. One of the questions they were all asked was whether they'd leaked material to me. They all kept saying that this was the most preposterous idea; they all said that before I came, none of them had the slightest clue about SAAR and 555. They said that there was nothing of value they could give me that I didn't have already. That it was I who gave them the material, not the other way around. None of the investigated parties has the slightest clue as to the real reason they were being investigated." (Ibid.; p. 329.)

29. "Risking criticism for being unfoundedly paranoid, I must convey my theory about the investigation and CIA's involvement in it, I don't know for certain what's the deal with the CIA investigating the SAAR investigators, but it sure feels as if someone up in that agency doesn't like the idea that the Saudi Arabian boat is rocked. The raids on 555 had taken place already—the CIA couldn't change that—but investigating and giving the people behind the raids a hard time is a most efficient way of making sure the SAAR investigation stops there. Which, come to think of it, may be the reason the government looks so unfavorably on the lawsuit filed by 9-11 victims' families against several Saudi entities and individuals, accusing them of funding terrorism and seeking damages." (Idem.)

30. Another example of the Saudi/Bush-linked Fifth Column for which the program is named concerns an operational connection between Prince Bandar and former FBI director Louis Freeh. This link was established behind the back of the Clinton administration and served to frustrate the investigation into the 1996 Khobar Towers investigation. Former president George H.W. Bush was Freeh's liaison man to Bandar. One wonders if this connection may have had something to do with the allegation (noted above) that M. Yaqub Mirza allegedly had links high inside the FBI. "After the Khobar Towers bombing in 1996, Clinton's national security adviser, Sandy Berger, repeatedly met with Prince Bandar to press for better Saudi cooperation with the FBI. But the Saudis still refused to allow the FBI access to the suspects or relevant materials and tried to blame Iran for the bombing. Berger got nowhere. According to Benjamin and Simon, Bandar's unending evasions were so frustrating that Berger described them as 'Groundhog Day' rituals, a reference to the Bill Murray movie in which one day repeats itself endlessly."
(House of Bush, House of Saud; by Craig Unger; Scribner [HC]; Copyright 2004 by Craig Unger; ISBN 0-7432-5337-X; p. 176.)

31. "At the same time Prince Bandar was stalling Berger, however, he had secretly established a back channel to FBI director Louis Freeh. A 1993 Clinton appointee, Freeh had never enjoyed a good relationship with the White House, partly because of the bureau's disastrous failure in counterterrorism. According to Benjamin and Simon, Bandar eagerly exploited Freeh's well-known antipathy toward Clinton to 'undercut U.S. efforts to pursue the investigation.'" (Idem.)

32. "Notwithstanding Berger's repeated efforts to get Saudi help, Bandar told Freeh again and again that the White House had absolutely no interest in the investigation whatsoever. But President Clinton kept after the Saudis. When he met with Saudi crown prince Abdullah in 1998, Clinton warned Abdullah that Saudi-American relations would suffer if the Saudis did not cooperate on the Khobar Towers investigation. Nevertheless, Bandar continued to tell Freeh that he was the only one in Washington who cared about the Americans who had died in Khobar Towers." (Idem.)

33. "In response, Freeh did something highly irregular. He reached out to former president Bush, knowing full well how Bush was revered by the Saudis, and asked Bush to be his secret emissary to get the Saudis to cooperate with the investigation. Later, Bandar invited Freeh to his estate in northern Virginia and told him the FBI would be allowed to watch through a one-way mirror while Saudis interrogated the suspects. According to Elsa Walsh of the New Yorker, Freeh credited this sudden breakthrough not to the Clinton administration's efforts, but to former president George H.W. Bush." (Ibid.; pp. 176-177.)

34. "Whether it was Bush's phone call or pressure from Clinton that actually triggered the Saudi cooperation is not entirely clear. But one thing was certain: the House of Saud preferred Bush, not Clinton, in part because the Democratic administration was violating the unwritten rule about Saudi-American relations: Don't ask any questions about what really goes on in Saudi Arabia. . . ." (Ibid.; p. 177.)

35. Supplementing previous discussion about the genesis of the GOP/Islamist link, this description presents information from Craig Under's book that was not included in the original broadcast. "As a result, Norquist's Muslim strategy was sometimes criticized—usually from the right—for giving credibility to Muslim groups that seemed harmless, but were in fact supporting extremist interests. . . . Nevertheless, with Norquist working behind the scenes, Bush aggressively pursued the Islamists in hopes of winning their endorsements. In appearances on TV, Bush and fellow campaign staffers referred not just to churches and synagogues as places of worship, but to mosques as well. Again and again, Governor Bush sought out meetings with Muslim leaders—often without looking into their backgrounds. He invited the founder of the American Muslim Council, Abdurahman Alamoudi, to the governor's mansion in Austin. In the mid-1990's, Alamoudi had played an important role in recruiting as many as a hundred 'Islamic lay leaders' for the U.S. military. The Wall Street Journal reported that he had arranged for 'an arm of the Saudi government' called the Institute of Islamic and Arabic Sciences to train 'soldiers and civilians to provide spiritual guidance when paid Muslim chaplains aren't available.' The Journal added that there were indications that there were indications that 'the school . . . disseminates the intolerant and anti-Western strain of Islam espoused by the [Saudi] kingdom's religious establishment.' A self-proclaimed supporter of Hamas and Hezbollah, Alamoudi reportedly attended a terrorist summit in Beirut later in 2000 with leaders of Hamas, Hezbollah, and Al Qaeda. But such a militant background did not keep Alamoudi away from Norquist and Bush. According to an article by Frank Gaffney, Alamoudi wrote two checks for $10,000 each, one an apparent loan, to help found Norquist's Islamic Institute." (Ibid.; pp. 205-206.)

36. "On March 12, 2000, Bush and his wife, Laura, met with more Muslim leaders at a local mosque in Tampa, Florida. Among them was Sami Al-Arian, a Kuwaiti-born Palestinian who was an associate professor of engineering at the University of South Florida. . . . But Al-Arian had unusual credentials for a Bush campaigner. Since 1995, as the founder and chairman of the board of World and Islam Enterprise (WISE), a Muslim think tank, Al-Arian had been under investigation by the FBI for his associations with Islamic Jihad, the Palestinian terrorist group. Al-Arian brought in Ramadan Abdullah Shallah, the number-two leader in Islamic Jihad, to be the director of WISE. A strong advocate of suicide bombings against Israel, Shallah was allegedly responsible for killing scores of Israelis in such attacks." (Ibid.; pp. 206-207.)

37. "Al-Arian also brought to Tampa as a guest speaker for WISE none other than Hassan Turabi, the powerful Islamic ruler of Sudan who had welcomed Osama bin Laden and helped nurture al Qaeda in the early nineties. . . .Nor were those Al-Arian's only ties to terrorists According to American Jihad by Steven Emerson, in may 1998 a WISE board member named Tarik Hamdi personally traveled to Afghanistan to deliver a satellite telephone and battery to Osama bin Laden. In addition, Newsweek reported that Al-Arian had ties to the 1993 attack on the World Trade Center. Among his claims to fame, the magazine said, Al-Arian had 'made many phone calls to two New York-area Arabs who figured in the World Trade Center bombing investigation.'" (Ibid.; p. 207.)

38. "There were also Al-Arian's own statements. In 1998, he appeared as a guest speaker before the American Muslim Council. According to conservative author Kenneth Timmerman, Al-Arian referred to Jews as 'monkeys and pigs' and added, 'Jihad is our path. Victory to Islam. Death to Israel. Revolution! Revolution! Until victory! Rolling, rolling to Jerusalem!' That speech was part of a dossier compiled on al-Arian by federal agents who have had him under surveillance for many years because of suspected ties to terrorist organizations. In a videotape in that file, al-Arian was more explicit. When he appeared at a fund-raising event, Timmerman says, he 'begged for $500 to kill a Jew.'" (Idem.)

39. "Al-Arian would be arrested in Florida in February 2003 on dozens of charges, among them conspiracy to finance terrorist attacks that killed more than one hundred people—including two Americans. The indictment alleged that 'he directed the audit of all moneys and property of the PIJ [Palestinian Islamic Jihad] throughout the world and was the leader of the PIJ in the United States.' The charges refer to the Islamic Jihad as 'a criminal organization whose members and associates engaged in acts of violence including murder, extortion, money laundering, fraud, and misuse of visas, and operated worldwide including in the Middle District of Florida.' Al-Arian was still facing prosecution in December 2003." (Ibid.; p. 208.)

40. " . . . 'The Al-Arian case was not a solitary lapse. . . . That outreach campaign opened relationships between the Bush campaign and some very disturbing persons in the Muslim-American community.' Nevertheless, Norquist continued to build a coalition of Islamist groups to support Bush. On July 31, 2000, the Republican National Convention opened in Philadelphia with a prayer by a Muslim, Talat Othman, in which Othman offered a duaa, a Muslim benediction. It was the first time a Muslim had addressed any major U.S. political gathering. A third-generation American and a businessman from Chicago of Muslim-Arab descent, Othman was chairman of the Islamic Institute. He had also been the board member of Harken Energy representing the interests of Abdullah Taha Bakhsh, the Saudi investor who had helped Bush make his fortune by bailing out Harken in the late eighties. When the convention ended on August 3, after George W. Bush had formally been nominated for president, between his family's extended personal and financial ties to the House of Saud and his campaign's ties to Islamists, it could be said that he was truly the Arabian Candidate. . . ." (Ibid.; pp. 208-209.)

41. Again, it was the investigation into Al-Arian that led to the Green Quest raids of 3/20/2002. In that context, it is frightening to note that search warrants in the Al-Arian case were "accidentally" destroyed. Was this REALLY an accident? The destruction of the documents threatens the Al-Arian case! " . . . In December 2003, clerks at a federal courthouse in Tampa accidentally destroyed search warrants in the Al-Arian case. The documents contained affidavits from federal agents that supported 1995 searches of Al-Arian's home and offices and were among thousands of documents shredded sometime between 1998 and 2002. As this book went to press, there were serious questions as to whether the destruction of the documents might affect his prosecution." (Ibid.; p. 208.)

FTR #461 Update on 9/11 and Related Matters

Recorded May 23, 2004
REALAUDIO

In addition to updating the investigation of terrorist financing, this broadcast highlights behind-the-scenes deals between the Bush family, the oil industry and Saudi Arabia to manipulate the results of American elections. The broadcast also sets forth the impending arrival in the United States of Tariq Ramada, the son of Muslim Brotherhood kingpin Said Ramadan and the heir to his father’s unsavory political tradition.

Program Highlights Include: A meeting of the Carlyle Group allegedly involving discussion of the Saudi Binladen Group’s continued funding of Al Qaeda; continued investigations of the funding of terrorism by Saudi charities and businesses targeted by Operation Green Quest; review of some of the Bush administration’s connections to the above-mentioned businesses and charities; proof of Bank Al Taqwa’s involvement in the funding of Al Qaeda; the alleged involvement of Yassin Al-Qadi in the funding of terrorism; allegations in a recent book that the Saudis were conspiring with the Bush administration to lower gas prices in order to assure Bush’s election; recent announcements by the Saudis that give credence to the allegations in that book; review of the 1970’s conspiracy between George H.W. Bush’s CIA, the Saudis and the petroleum industry to create a phony oil shortage; the role of that phony oil shortage in destabilizing the Carter administration, justifying the defense and budgetary policies of the Reagan/Bush administrations and justifying arms sales to Saudi Arabia.

1. Much of the first part of the program deals with the issue of terrorist funding—Operation Green Quest in particular. Discussion begins with an allegation that the Carlyle Group was considering the issue of continued funding of Al Qaeda by the Saudi Binladen Group—the primary Bin Laden family business enterprise. (For more about the Carlyle Group, see—among other programs—FTR#’s 329, 342, 347.) “Directors of one of the world’s largest armament companies are planning on meeting in Lisbon in three weeks time. . . . The financial assets of the Saudi Binladen Corporation (SBC) are also managed by the Carlyle Group. . . . The Portugal News has been told by a reliable source that the Carlyle Group meeting in Lisbon will discuss the relationship between the Saudi Binladen Corporation [sic] and Osama bin Laden. Many US officials claim that the SBC continues to finance his political activities, and has done so for many years. If true, this would place George Bush senior and his colleagues at the Carlyle Group in an embarrassing position. As managers of SBC’s financial investments they might well be accused of indirectly aiding and abetting the United States’ number one enemy.”
(“US Arms Group Heads for Lisbon”; The Portugal News; 4/4/2003.)

2. Next, the broadcast turns to discussion of Operation Green Quest, the code-name for the operation directed at interdicting the terrorist-funding apparatus behind Al Qaeda. (For more about Operation Green Quest, see—among other programs—FTR#’s 356, 357, 359, 366, 382, 387, 390, 406, 415, 423, 425, 432, 433, 454.) The Herndon Group and the Al-Rajhi interests were targets of the 3/20/2002 Operation Green Quest raids. FTR#462 details the subversion of Operation Green Quest by the Bush administration, some of whose elements and associates belong to the milieu targeted by the operation. “Federal prosecutors plan to seek indictments in the next six to 12 months of a group of prominent Muslim businessmen who are at the center of the U.S. government’s largest domestic investigation into the financing of terrorism. In an unusual hearing sought by lawyers for the businessmen, a federal judge pressed prosecutor Gordon Kromberg to spell out the Justice Department’s plans. The wealthy Islamic activists are involved in a group of commonly controlled businesses and charities in Herndon, Va., that allegedly has financial links to the Al-Rajhi banking empire of Saudi Arabia.”
(“U.S. to Seek Charges in Terror Probe” by Glenn R. Simpson; The Wall Street Journal; 4/26/’04; p. A6.)

3. “Former federal officials allege that the Al Rajhi Banking and Investment Corp. has links to the financing of terrorists. The bank has denied the allegations. Mr. Kromberg told the court that he expects to ask a grand jury to hand up charges, possibly involving a racketeering conspiracy. ‘We think we have a good case and we are going to bring it,’ Mr. Kromberg said. Since the mid-1990’s, the U.S. government has conducted an on-and-off investigation into whether the charities support terrorist group such as Hamas, Palestinian Islamic Jihad, and al Qaeda. Some figures in the Herndon group have been prominent politically in Washington, and several are affiliated with a world-wide society called the Muslim Brotherhood that has ideological links to terrorist groups. [Italics are Mr. Emory’s] . . .” (Idem.)

4. FTR#462 will develop apparent links between the targets of the Operation Green Quest raids and the FBI. “ . . . Mr. Parker [lawyer for the Al Rajhi interests Wilmer ‘Buddy’ Parker] asserted that FBI agents have recently told Ms. Luque that the Herndon inquiry is no longer a terrorism case, prompting a sharp rebuttal from Mr. Kromberg, an assistant U.S. attorney. ‘For Mr. Parker to get up here and with a straight face tell this court that the FBI is not investigating this case and . . . that the justice Department doesn’t believe that there is a real terrorist-financing case here, boggles the mind,’ he said.” (Idem.)

5. Yet another evidentiary tributary connecting the Bush milieu to terrorist-funding activities concerns the Riggs Bank, one of whose directors is Jonathan Bush, the president’s uncle. (For more about Riggs Bank, see—among other programs—FTR#431.) “The Senate Finance Committee chairman has asked the 9/11 commission to look into transactions totaling tens of millions of dollars at two U.S. banks by Saudi Arabian diplomats. Sen. Charles Grassley (R., Iowa) sent letters to members of the commission investigating the terrorist attacks of Sept. 11, 2001, detailing ‘suspicious’ activity by Saudi officials and citizens at Fleet-Boston financial Corp. and Riggs National Bank. People familiar with the letter said Mr. Grassley cited Saudi Embassy payments for Saudi citizens’ flight-training and payments to Islamic groups suspected of supporting terrorism. . . .”
(“Senator Requests 9/11 Panel Probe of Saudis, Banks” by Glenn R. Simpson; The Wall Street Journal; 4/29/2004; p. A5.)

6. Abdurrahman Alamoudi is a principal figure in the Operation Green Quest investigation, connected both to the GOP-affiliated Islamic Institute milieu and to the Al Taqwa network discussed below. (For more about Alamoudi, see—among other programs—FTR#’s 433, 435.) “ . . . The Saudi donations of concern to Sen. Grassley include payments through Riggs to the American Muslim Council of Alexandria, Va., two people involved in the matter said. The council’s former president, Abdurrahman Alamoudi, is currently jailed on charges of violating terrorism sanctions.” (Idem.)

7. Next, the program turns to the Bank Al Taqwa. A recent book about former Treasury Secretary O’Neill highlights Al Taqwa’s role in the funding of Al Qaeda. “ . . . Al Taqwa was an association of offshore banks and financial management firms that had helped al-Qaeda shift money around the world. It was based in the Bahamas, and virtually all the known money of al-Qaeda at that point--$20 million—was housed there. It was identified thanks to a break that was anything but exotic: a Bahamian banking official simply blew the whistle on the group. Internal Treasury documents estimated that another $80 to $100 million of al-Qaeda funds was tucked into other, undetected accounts around the globe. . . .”
(The Price of Loyalty; by Ron Suskind; Simon & Schuster [HC]; Copyright 2004; 0-7432-5545-3; p. 198.)

8. Continuing the discussion of Operation Green Quest, the broadcast develops the subject of the Al Taqwa network. Information about Al Taqwa’s role in financing Al Qaeda was contained in a letter from a U.S. Treasury Department official to a Swiss governmental officer. (For more about Al Taqwa, see—among other programs—FTR#’s 343, 354, 356, 357, 359, 371, 377, 378, 382, 387, 415, 416, 423, 425, 432, 433, 435, 454, 455, 456.) “A Bahamian bank controlled by a controversial Islamic financier in Switzerland set up a highly secretive line of credit for a top associate of Osama bin Lden as part of an elaborate scheme to finance attacks by Al Qaeda and other terrorist organizations, according to a newly disclosed U.S. Treasury document. In a January 2002 letter to Swiss authorities, a senior Treasury official privately spelled out the U.S. government’s case that the Bahamian bank, one arm of an international financial network known as Al-Taqwa (Arabic for ‘Fear of God’), had a lengthy history of financing and facilitating the activities of terrorists, including providing millions of dollars in funding for Al Qaeda and Hamas.”
(“Paying for Terror: Treasury Department Documents Detail the Murky World of Al Qaeda” by Michael Isikoff and Mark Hosenball; MSNBC/Newsweek; 5/12/2004.)

9. “The Treasury letter, and another one involving Saudi businessman Yassin A. Qadi, provide a revealing new window into the murky world of terror finance, at least as viewed by U.S. counterterrorism officials. Based largely on secret intelligence sources, the Treasury documents attempt to show how Qadi and Al-Taqwa and its founder, Youssef M. Nada, used concealed bank accounts, complex land deals and other hard-to-trace methods to steer large sums of money to terrorists.” (Idem.)

10. “The letters were recently obtained by Ron Motley, the lead lawyer in a massive lawsuit against Saudi business figures and others accused of complicity in the financing of the September 11 attacks. In a little-noticed court filing on Monday, Motley placed the document in the public record, a move that seemed to startle at least one defense lawyer who noted that such private, government-to government communications are almost never made public. The letters were written by Treasury in an effort to persuade the Swiss to take legal action to shut down the operations of suspect organizations. The most significant of the letters involves Al-Taqwa and its founder, Nada, an Egyptian-born businessman based in Switzerland who has long been a prominent figure in the world of Islamic finance and who has consistently denied any involvement in the financing of terrorism. . . .” (Idem.)

11. “In the letter dated Jan. 4, 2002, George B. Wolfe, then Treasury’s deputy general counsel, tells Switzerland’s deputy chief federal prosecutor, Claude Nicati, that money pours in to branch offices of the Al-Taqwa network in Lugano and Malta from Kuwait and the United Arab Emirates for bin Laden. It alleges that, as late as September 2001, Nada and a business associate, Ali bin Mussalim, provided indirect investment services for al Qaeda, investing funds for bin Laden, and making cash deliveries on request to the Al Qaeda organization.” (Idem.)

12. “The most startling allegation is that Nada’s Bank Al Taqwa appeared to be providing a clandestine line of credit for a close associate of bin Laden, according to the Wolfe letter. This bin Laden lieutenant had a line of credit with a Middle East financial institution that drew on an identical account number at Bank Al-Taqwa. Unlike other accounts, even accounts of private banking customers, this account was blocked by the computer system and special privileges were required to access it. Noting that no identifiable names were associated with the account, the letter calls the circumstances surrounding the account highly unusual, and suggest that they were created to conceal the association of the bin Laden organization with Bank Al-Taqwa.” (Idem.)

13. “A legal source familiar with the investigation into Al-Taqwa said that another U.S. intelligence document states that the Al-Taqwa account was originally set up for Mamdouh Mahmoud Salim, a one-time member of Al Qaeda’s governing Shura Council who was captured in Germany after the 1998 U.S. Embassy bombings in Africa and has been awaiting trial while in prison in the United States ever since. Just last week. Salim was sentenced to 32 years in prison in a separate case stemming from charges that he stabbed a prison guard in the eye with a sharpened plastic comb as part of a failed plot with other accused Al Qaeda codefendants to break out of the Metropolitan Correctional Center in lower Manhattan. (The prison guard suffered brain damage, lost an eye and is partially paralyzed as a result of the attack.) After Salim’s arrest, other al Qaeda figures continued to access the account, the legal source said. The Wolfe letter also reveals for the first time that the government of Jordan had accused Bank Al-Taqwa of financing a terrorist network linked to bin Laden that was involved in plotting terror attacks at Western and tourist targets in Jordan during the millennium celebrations. . . .” (Idem.)

14. “ . . . In addition, the letter notes that one of Al-Taqwa’s board members, Ahmed Huber, had confirmed that he had met with members of bin Laden’s organization in Beirut and had defended the attacks on the World Trade Center and the Pentagon. Huber, a notorious Swiss Holocaust denier and far-right activist, is described in the Wolfe letter also states that another Al-Taqwa board member, Ahmed Idris Nasreddin, has supported an Islamic center in Milan that the U.S. government believes may be Al Qaeda’s most important base in Europe, and which was linked to the 1993 World Trade Center bombing, among other terror plots. . . .” (Idem.)

15. Another Treasury Department communication concerned Yassin Al-Qadi, another alleged terrorist financier. Al-Qadi is discussed at greater length in FTR#462.) “ . . . The same goes for Qadi, a prominent Saudi businessman who, in a Nov. 29, 2001, letter to the Swiss written by then Treasury general counsel David Aughauser, is a described as having a long history of financing and facilitating the activities of terrorists and terrorist-related organizations, often acting through seemingly legitimate charitable enterprises and businesses.’ Qadi was the founder of Muwafaq (“Blessed Relief”) Foundation, an Islamic charity that employed or served as cover for a number of Islamic extremists connected with bin Laden and other terror groups, according to the Aufhauser letter. A lawyer for Qadi, whose assets have been blocked by the Treasury Department in the United States, said that the businessman is in the process of presenting evidence to U.S. officials challenging the allegations against him.” (Idem.)

16. “U.S. counterterrorism officials have privately acknowledged their frustration in pursuing cases against both Al-Taqwa members and Qadi as well as numerous other targets in terror-finance investigations. Intelligence is one thing, but gathering the evidence to support these allegations is another story, said one former top U.S. law-enforcement official who worked on terror-finance cases. Still, the justice Department is not done trying. In a recent court hearing, Gordon Kromberg, the senior federal prosecutor in charge of a long-running probe into Islamic charities based in Northern Virginia, including some whose directors have been associated with Nada and Qadi, said that his case was proceeding. ‘We expect them to be charged’, Kromberg said in a court hearing, referring to the Islamic charities that have been targets of the investigation. There will be indictments coming.’” (Idem.)

17. Among the institutions allegedly used by Al Qadi to finance terrorism is the Al Haramain Foundation, a Saudi-financed Islamic charity. That group is, in turn, tied to the Muslim World League, founded at the instigation of Said Ramadan of the Muslim Brotherhood. “The Treasury Department has designated an Islamic charity that is a subsidiary of the Muslim World League, a Saudi religious organization, as a terrorist entity. The Haramain & al Masjid al Aqsa Foundation of Bosnia was designated last week as a ‘global terrorist’ organization by the U.S. government. The Treasury didn’t disclose the group’s ties to the Muslim World League, which lists Al Haramain as a subsidiary on its Web site. The League, which is controlled by the grand mufti of Saudi Arabia, seeks to spread fundamentalist Islam around the world, according to scholars. Saudi officials insist the group is independent of the government, although most scholars—and even one of the group’s own officials—have described it as government-sponsored.”
(“U.S. Treasury Ties Bosnian Arm of Saudi Charity to Terror Funds” by Glenn R. Simpson; The Wall Street Journal; 5/11/2004; p. A6.)

18. “The Treasury designation is only the second time since the attacks of Sept. 11, 2001, that the U.S. has moved against an entity controlled by the League, which has tremendous clout within Saudi Arabia’s deeply religious society. U.S. officials have been wary of targeting the league for diplomatic reasons. . . .” (Idem.)

19. “ . . . The al Haramain & al Masjid al Aqsa Charity Foundation of Bosnia was set up to aid Bosnia’s embattled Muslim population during that country’s civil war in the mid-1990’s. It is a separate organization from the al Haramain Foundation, another Saudi charity also under investigation for financing terror. Al Haramain al Masjid’s board includes influential Saudi financier Yassin Qadi, another alleged financial supporter of terror. Mr. Qadi’s lawyers had no immediate comment yesterday, but Mr. Qadi has insisted the group, which was run by his longtime associate Wael Julaidan, had nothing to do with terrorism.” (Idem.)

20. Said Ramadan’s son Tariq is going to be occupying a position at the University of Notre Dame. (For more about Tariq Ramadan and allegations by Western intelligence experts that he is anything but a “moderate,” see—among other programs—FTR#455.) “The University of Notre Dame, the elite university founded by the Holy Cross Order, (thanks to numerous readers for the correction of the founding order) in South Bend, Indiana, has offered a three-year professorship to the ‘moderate’ Muslim scholar Tariq Ramadan, a resident and citizen of Switzerland. . . . For starters, he is the grandson of Hassan Al Banna, the founder of the Muslim Brotherhood, an Islamist terrorist organization born in Egypt in 1928. The Palestinian branch of the Muslim Brotherhood is none other than the terrorist movement Hamas, which routinely commits brutal suicide attacks against Israeli civilians. . . .”
(“Danger: Tariq Ramadan is Coming to the US”; p. 1.)

21. “ . . . According to the French daily newspaper Le Monde, he is suspected of having links with al Qaeda. In fact, Ramadan is said to have organized a meeting back in 1991 between Ayman al Zawahiri, Al Qaeda’s number two, and Omar Abdel Rahman, plotter of the first World Trade Center bombing. Other troubling allegations can be found in a lawsuit filed by the victims of the September 11 attacks: Ramadan greatly influenced Jamel Beghal, a French citizen arrested for plotting to bomb the US Embassy in Paris and Ahmed Brahim, an al Qaeda member arrested in Spain.” (Ibid.; p. 4.)

22. The conclusion of the broadcast deals with the Saudi/Bush/petroleum industry relationship. A recent book by Bob Woodward maintained that Saudi Prince Bandar (a long-time intimate and political co-conspirator of the Bush family) had promised George Bush that Saudi Arabia would attempt to influence the price of oil in such a way as to assure that the cost per barrel would come down—thereby benefiting W’s chances for re-election. “ . . . Accusing President Bush of having a ‘sweetheart relationship’ with Saudi Arabia, Democratic presidential candidate John Kerry on Monday described as ‘disgusting’ a report that the Saudis had promised the president to lower oil prices before the November vote. Kerry was responding to an allegation by reporter Bob Woodward that Saudi Ambassador Prince Bandar bin Sultan had promised Bush that his country will increase oil output in the months before the election—which would have the effect of driving down U.S. gasoline prices and giving the Bush re-election campaign a big boost.”
(“Election Gift? Kerry Blasts Price Deal Book Says Bush Made with Saudi Prince” by Robert Collier; San Francisco Chronicle; 4/20/2004; p. A1.)

23. “ ‘If . . . it is true that gas supplies and prices in America are tied to the American election, tied to a secret White House deal, that is outrageous and unacceptable to the American people,’ Kerry said during a campaign stop in Florida. Woodward’s new book about the Iraq war, Plan of Attack quotes Bush as saying ‘I’m worried about the capacity of the oil market’ after an invasion of Iraq and asking about Saudi Arabia’s ability to increase production. Woodward writes that Bandar said his country ‘hoped to fine-tune oil prices over 10 months to prime the economy for 2004.’” (Idem.)

24. Recent developments indicate that Woodward’s allegation is not without substance. “In a significant shift, Saudi Arabia’s oil minister said Monday that crude prices have risen far enough, and he will urge OPEC to increase production, reversing an output cut that began just last month. The change in Saudi oil policy, Oil Minister Ali Naimi said, is due to concern that high prices could hurt the world economy and reduce demand for oil. Oil prices have risen steadily in recent weeks, with U.S. crude oil prices touching $40 a barrel Friday. . . .” (“Saudi Oil Official: Price High Enough” [AP]; San Jose Mercury News; 5/11/2004; p. 4C.)

25. Further indication that the Bush/Bandar accord is substantive: “In an effort to drive down record crude oil prices, Saudi Arabia, the world’s largest oil producer, offered on Friday to increase its output by at least 500,000 barrels, to 9 million barrels a day, starting June 1. In contrast to an earlier suggestion by the country that OPEC increase its quotas, the offer is important because it would truly add more oil to the market rather than simply formalizing existing overproduction by the group’s members.”
(“Saudis Offer to Increase Oil Output by About 6%” by Neela Banerjee; The New York Times; 5/22/2004.)

26. “With global demand relentlessly high, oil prices rose above $40 a barrel in New York on May 11 and remained there until Friday. Nearly all oil-producing countries are pumping at maximum capacity, and almost all the world’s spare capacity is in Saudi Arabia. The offer, made by the Saudi oil minister, Ali al-Naimi, at a conference in Amsterdam and confirmed by an official at the Saudi embassy in Washington, shows the mounting concern—even among oil producers reaping a windfall from high prices—that oil has become so expensive and volatile that it could slow economic growth and encourage the development of alternative fuels, Saudi officials and oil experts said.” (Idem.)

27. Excerpting FTR#’s 214, 248, the broadcast reviews information about an arrangement among George H.W. Bush’s CIA, the Saudis, and the petroleum industry to create a deliberate, phony oil shortage. This oil shortage created dissatisfaction with the Carter administration (and inflation), thereby helping to defeat him in 1980. In addition, this phony oil shortage served as a pretext for drastically increasing defense spending and arming the Saudis with the latest American weaponry. The Saudi/Bush/petroleum industry axis manipulated oil prices to defeat Carter in 1980. It appears that they are working to manipulate oil prices in 2004 in an attempt to assure Bush’s re-(?) election. “It is hard to recall why he [Carter] was so despised when he was in office. Much of it has to do with the secret history of oil politics. Even during the 1976 election campaign, the oil companies viewed the Democratic candidate as Public Enemy Number One. Carter certainly had some radical ideas about energy policy, which made the oil companies fearful for the future and their profit levels. Carter’s first move after the election didn’t please them. He nominated former CIA head and defense secretary James Schlesinger as his secretary of energy. . . .Worse still, Schlesinger was now a convert to ‘environmentalism.’ Conversation and efficiency were the new buzz words. In their first few months in office in 1977, Schlesinger and Carter made energy their number-one policy issue. . . .”
(The Secret War Against the Jews: How Western Espionage Betrayed the Jewish People; John Loftus and Mark Aarons; Copyright 1994 [HC]; St. Martin’s Press; ISBN 0-312-11057-X; p. 333.)

28. “Even before Americans voted for Carter, the oil industry had launched a quiet crusade of its own, in anticipation of a Democratic victory. In the last months of the Ford administration, the CIA had developed a series of papers on energy and oil issues. Just after his victory in November 1976, Carter was shown a classified CIA analysis of global oil supplies. The ‘old spies’ we asked about this point insist that the report had a powerful impact on Carter and helped to define his policies on the ‘energy crisis.’” (Idem.)

29. “When Carter launched his national energy plan in April 1977, he confirmed that the CIA had provided him with intelligence assessments which made dire predictions about future energy supplies in the Soviet Union. The CIA warning made front-page news: ‘Russia would be importing oil from the Middle East by 1985.’ The Soviets would need to buy three and a half million barrels per day, to be precise, whereas in 1977 they actually exported one and a half million barrels daily. ‘Previously, the assumption had been that the Soviets would continue to be self-sufficient in meeting their oil and gas needs.’” (Idem.)

30. “ . . . In effect, the CIA was telling President Carter that the Soviet Union would face a domestic oil shortage in 1985, causing the worst energy crisis in American history. When the Soviets ran out of domestic oil supplies, they probably would look to the traditional oil suppliers of the United States, especially Saudi Arabia and Kuwait. Our sources in the intelligence community say that the CIA’s ‘oil shortfall’ probably was the greatest intelligence fraud in American history. . . .” (Ibid.; p. 334.)

31. Bush’s father appears to have been a principal player in the creation of the phony oil shortage. “ . . . According to several of our sources, the scheme to manufacture phony CIA estimates and push them on Carter began in the last days of Gerald Ford’s term. They claim that a cabal within the CIA realized that Carter would be the new president, produced the first phony report, and then promptly gave it to Carter as soon as he won, knowing how it would affect his view of the energy crisis. It should be recalled that George Bush was the director of the CIA at the time the oil scam was put in place in 1976. There is some evidence to suggest that it was Bush himself who passed the fake oil estimates to Carter.” (Ibid.; pp. 334-335.)

32. “ ‘You have to understand who was screwing the Jews,’ one ‘old spy’ told us. ‘The whole phony scheme—the oil shortages, the predictions about Soviet troops in the Middle East, the Saudi arms buildup—all of that crap started coming out of the agency back in ’76. The CIA told their boss what he wanted to hear, and in those days, the head of the CIA was an oil man.’” (Ibid.; p. 334.)

33. “ . . . The oil companies and the Saudi government both had access to similar advice from old CIA hands. It almost seemed that Aramco had more of its ex-employees inside the CIA than the CIA had agents in the Middle East. In public, the Saudis dismissed the report as ‘ridiculous and obviously untrue.’ In private, they went along with the CIA’s ‘declining production’ fraud. After some reflection, the House of Saud realized that here was an opportunity to sell less oil but make more money.” (Ibid.; p. 338.)

34. “In public, the Saudis continued to insist that they had plenty of oil. In practice, they helped create an oil shortage. The CIA had created a self-fulfilling prophecy. The Saudis’ reserves mysteriously fell by millions of barrels a day, and their pumping efficiency was said to be atrocious and sure to get worse. In a very short time, American consumers would find themselves running out of gas.” (Idem.)

35. “ . . . In the short run, of course, the motive was more money for American oil companies. Our sources in the intelligence community say that the oil industry used its CIA contacts to fabricate both the Soviets-will-steal-our oil hysteria as well as the dry-wells-in-Saudi Arabia predictions. The immediate goal of the phony predictions was to scare the White House into doing what the oil companies wanted: (1) lift the laws holding the price on domestic American oil; (2) provide a panic to excuse raising world oil prices; and (3) appease the Arabs, by arming the Saudis instead of the Israelis.” (Ibid.; p. 339.)

36. “The oil men in the intelligence services promoted the fear that the Soviets would have no other option than to move down into the Middle East, invade Saudi Arabia, Kuwait, and Iran, and seize U.S. oil for themselves. If Carter didn’t move soon, there would be no hope of withstanding a Soviet invasion of the Middle East. The most powerful army in the area was Israel’s. But the Jews could hardly be expected to go to war to save the Arabs’ oil for the West’s often anti-Semitic oil companies. The time had come for the president to make a clear-cut decision: either bow to the Jews’ resolute opposition to U.S. arms sales to the Arabs and risk losing Middle Eastern oil to the Soviets, or arm the Arabs, thereby ending Israel’s military supremacy—a sacrifice that would have to be made in the American national interest.” (Idem.)

37. “Our sources say that the oil companies, and their friends in the CIA, had a very willing ally in the Saudis, who secretly cooperated with the CIA’s fraud by artificially decreasing production and simultaneously increasing the price per barrel of oil. It was all meant to be a very profitable game, in which both the Saudis and the companies would get huge windfalls, while their Jewish enemies were finally put in their place. The Arabs soon would have the weapons they needed to see to that.” (Idem.)

38. “ . . . The fact is that the CIA reports on the Soviet threat were as false as they were frightening. As one of our sources put it: ‘Look, the Soviets couldn’t even hang on to their puppet colony in Afghanistan. They were bleeding themselves white. At one point during the Afghan war, the military was consuming nearly 28 percent of the gross productivity of the Soviet Union. The last thing the Kremlin wanted was all out war with the Moslem world. They couldn’t finance their own PLO hit squads, let alone start a second front in the Middle East. The whole idea of the Russian army marching into the Saudi oil fields was a fraud.’ But the fraud worked. According to the Red scare scheme, there was only one thing to do: arm the Arabs so they could defend the oil fields themselves.” (Ibid.; pp. 350-351.)

39. “The cardinal sin of statesmanship is naivete. Carter and Turner never suspected that their own people would lie to them. The phony CIA oil reports completely fooled them. ‘Don’t you get it?’ asked one of our sources. ‘The gas shortage during the Carter administration was as phony as the CIA’s prediction about the Soviet oil shortage. The goddamn Middle East was swimming in oil during the Carter administration, but less and less of it was shipped to America. For chrissakes, there was so much oil in South America that they had to shut down refineries in the Caribbean to keep it away from the U.S.’” (Ibid.; p. 353.)

40. “This source has a point. One of the largest refineries in the Western Hemisphere is located on St. Croix, in the U.S. Virgin Islands. Most of its capacity went unused during the Carter administration’s ‘oil shortage,’ yet it was greatly expanded during Reagan’s term, despite the world glut of oil and falling prices. Most of the ‘old spies’ are adamant that the oil companies cut refinery production to cause as much damage to the Carter administration as possible.” (Ibid.; pp. 353-354.)

41. “By mid-1981, it was embarrassingly clear that all of the CIA’s predictions, upon which Carter had relied, were completely false. Not only was there not an oil crisis, the whole industry had suddenly gone the other way. There was a worldwide surplus of oil, not a shortfall. The CIA figures on Saudi oil were just as false as their Soviet production estimates. By June that year, the Saudi Arabian government had created an oil glut and was under intense pressure in the Arab world to cut its production. The Middle East was drowning in oil. . . .” (Ibid.; p. 354.)

42. Like his father and Ronald Reagan, George W. Bush’s combination of tax cuts and massive defense spending are destroying the American fiscal landscape. “ . . . Under the Republicans, lucrative arms factories sprouted in what had previously been rural Democratic states. The votes went where the jobs were. In the course of the Reagan-Bush administrations, the defense budget was increased to a point where more money was spent on arms than in all the wars in U.S. history combined. To accomplish this massive defense buildup, the Reagan-Bush administrations borrowed three times more money than all U.S. presidents combined. The largest debt in America history was based on the faulty premise that the Soviet Union was going to attack the Middle East.” (Ibid.; p. 355.)

FTR #460 War Emblem

Recorded May 10, 2004
REALAUDIO
NB: This stream contains both FTR #s 459 and 460 in sequence. Each is a 30 minute broadcast.

A brutal irony about the name of a prize racehorse gives this program its title. Owned by Prince Ahmed—one of the members of the Saudi royal family allowed to leave the U.S. right after the 9/11 attacks without being adequately interrogated—War Emblem won two thirds of horse racing’s famed Triple Crown. In the spring of 2002, War Emblem won the Kentucky Derby and the Preakness Stakes, and Mr. Emory noted at the time that the horse’s name was ironic in light of documented support by wealthy Saudis for Al Qaeda. This program highlights allegations that Prince Ahmed was one of three members of the Saudi royal family who functioned as liaison personnel to Al Qaeda. This information was allegedly disclosed during the interrogation of Abu Zubaydah—a key Bin Laden aide.

Program Highlights Include: The precipitous deaths of all three members of the Saudi Royal family (named by Zubaydah) over the space of eight days in 2002; the suspicious air crash that took the life of the head of the Pakistani air force—also alleged by Abu Zubaydah to be in the pay of Bin Laden; the unusual interrogation methods allegedly employed by the CIA to obtain the information provided by Abu Zubaydah.

1. Beginning with discussion of the evacuation of key Saudis in the immediate aftermath of 9/11, the program notes that one of the evacuees had the same last name as one of the hijackers, who had received financial support from the wife of Prince Bandar, the Saudi Ambassador to the U.S. (For more about the evacuation flights, see—among other programs—FTR#’s 334, 337, 423, 425, 454.) “Right after 9/11, four private Saudi jets were given special dispensation to fly out of the US, beginning on September 15, 2001. The flight manifests showing passenger lists are now viewable on line at the website of Craig Unger, the author of House of Bush, House of Saud. As noted by Tom Flocco, the first flight corroborates earlier stories of a fifth ‘phantom’ flight from Tampa to Lexington on September 13, when all regular flights were still grounded. All four flights carried members of the Saudi royal family. The first, from Lexington, Kentucky to London, 9/15/01, also carried a young man, Ahmad A.M. Alhazmi, with the same family name as Nawaf Alhazmi, one of the hijackers.”
(“More on the Saudi Private Jet Flights right after 9/11” by Peter Dale Scott; p. 1.)

2. Among the other evacuees was Prince Ahmad bin Salman bin Abdul Aziz—the owner of War Emblem, the horse that won two thirds of horseracing’s triple crown in 2002. (Obviously, that horse is the subject of the program’s title.) “There is nothing to connect the two Alhazmis directly. But the hijacker Nawaf had already been connected in press stories to the Saudi royal family, as the recipient of funds coming indirectly from the wife of Prince Bandar, the Saudi Ambassador to the United States. ‘Scandal struck again in November 2002 and touched Princess Haifa al-Faisal, wife of Prince Bandar bin Sultan, the longtime Saudi ambassador to Washington (and nephew of Prince Nayef). It was learned that money had gone from her purse to the pockets of two 9/11 hijackers, Khalid al-Midhar and Nawaf Alhazmi, by way of two Saudi intermediaries, Omar al-Bayoumi and Osama Bassnan (Stephen Schwartz, Weekly Standard, 8/12/03). On the flight was the noted horse breeder Prince Ahmad bin Salman bin Abdul Aziz, the owner of the Kentucky Derby winner War Emblem. After returning to Saudi Arabia, he died suddenly of a heart attack at the age of 43, his cousin, Prince Sultan bin Faisal bin Turki bin Abdullah, aged 41, was killed in a car accident the next day, on his way to Prince Ahmad’s funeral. . . .” (Idem.)

3. The program highlights information that came to light after the capture of Aby Zubaydah, a key aide to Osama bin Laden. Zubaydah disclosed that War Emblem’s owner was among the contact points between Al Qaeda and the Saudi royal family. “Just how wrong this decision was [to allow the Saudis to leave] became apparent several months later, when the war in Afghanistan was in full swing. On Thursday, March 28, 2002, acting on electronic intercepts of telephone calls, heavily armed Pakistani commando units accompanied by American Special Forces and FBI SWAT teams, raided a two-story home in the suburbs of Faisalabad, in western Pakistan. They had received tips that one of the people in the house was Abu Zubaydah, the thirty-year-old chief of operations for Al Qaeda who had been head of field operations for the USS Cole bombing and who was a close confidant of Osama bin Laden’s.”
(House of Bush, House of Saud; by Craig Unger; Scribner [HC]; Copyright 2004 by Craig Unger; ISBN 0-7432-5337-X; pp. 263-264.)

4. “Two days later, on March 30, news of Zubaydah’s capture was spreading all over the world. At first, the administration refused to corroborate the reports; then it celebrated the capture of the highest-ranking Al Qaeda operative every to be taken into custody. ‘This represents a very significant blow to Al Qaeda,’ said White House spokesman Ari Fleischer. He called Zubaydah ‘a key terrorist recruiter, an operational planner and a member of Osama bin Laden’s inner circle.’” (Ibid.; p. 264.)

5. “Donald Rumsfeld told a news conference that Zubaydah was ‘being given exactly the excellent medical care one would want if they wanted to make sure he was around a good long time to visit with us.’ The international media speculated as to what Zubaydah might know, what he might say. On Sunday, March 31, three days after the raid, the interrogation began. . . .” (Idem.)

6. “ . . . First, they [CIA] administered thiopental sodium, better known under its trademarked name, Sodium Pentothal, through an IV drip, to make Zubaydah more talkative. Since the prisoner had been shot three times during the capture, he was already hooked up to a drip to treat his wounds and it was possible to administer the drug without his knowledge. Second, as a variation on the good cop-bad cop routine, the CIA used two teams of debriefers. One consisted of undisguised Americans who were at least willing to treat Zubaydah’s injuries while they interrogated him. The other team consisted of Arab Americans posing as Saudi security agents, who were known for their brutal interrogation techniques. The thinking was that Zubaydah would be so scared of being turned over to the Saudis, ever infamous for their public executions in Riyadh’s Chop-Chop Square, that he would try to win over the American interrogators by talking to them.” (Ibid.; pp. 264-265.)

7. “In fact, exactly the opposite happened. When Zubaydah was confronted with men passing themselves off as Saudi security officers, his reaction was not fear, but instead relief . . . . ‘The prisoner, who had been reluctant even to confirm his identity to his American captors, suddenly started talking animatedly. He was happy to see them, he said, because he feared the Americans would torture and then kill him. Zubaydah asked his interrogators to call a senior member of the ruling Saudi family. He then provided a private home number and cell phone number from memory. ‘He will tell you what to do,’ Zubaydah promised them.’” (Ibid.; p. 265.)

8. More about Zubaydah’s fingering of Prince Ahmed (War Emblem’s owner) and his role as contact person for Al Qaeda on behalf of the royal family: “The name Zubaydah gave came as a complete surprise to the CIA. It was Prince Ahmed bin Salman bin Abdul Aziz, the owner of many legendary racehorses and one of the most westernized members of the royal family. On September 16, 2001, Prince Ahmed, of course, had boarded the flight in Lexington as part of the evacuation plan approved by the Bush White House.” (Idem.)

9. “Prince Ahmed was well known not just in Saudi Arabia, but also in publishing circles in London and horse-racing circles in Kentucky. He was such an unlikely name that the interrogators immediately assumed Zubaydah was lying to buy time. . . .The interrogators then keep their prisoner on a ‘bare minimum’ of pain medication and interrupted his sleep with bright lights for hour after hour before restarting the Sodium Pentothal drip.” (Ibid.; pp. 265-266.)

10. In addition, Zubaydah named two other members of the Saudi royal family as Al Qaeda liaison personnel. “When they returned, Zubaydah spoke to his faux Saudi interrogators as if they, not he, were the ones in trouble. He said that several years earlier the royal family had made a deal with Al Qaeda in which the House of Saud would aid the Taliban so long as Al Qaeda kept terrorism out of Saudi Arabia. Zubaydah added that as part of this arrangement, he dealt with Prince Ahmed and two other members of the House of Saud as intermediaries, Prince Sultan bin Faisal bin Turki al-Saud, a nephew of King Fahd’s, and Prince Fahd bin Turki bin Saud al-Kabir, a twenty-five-year-old distant relative of the king’s. Again, he furnished phone numbers from memory.” (Ibid.; p. 266.)

11. Zubaydah alleged that Prince Ahmed had foreknowledge of an impending terrorist attack in the U.S. on 9/11. “ . . . The interrogators responded by telling Zubaydah that 9/11 had changed everything. The House of Saud certainly would not stand behind him after that. It was then that Zubaydah dropped his real bombshell. ‘Zubaydah said that 9/11 changed nothing because Ahmed . . . knew beforehand that an attack was scheduled for American soil that day . . . ‘They just didn’t know what it would be, nor did they want to know more than that. The information had been passed to them, said Zubaydah, because bin laden knew they could not stop it without knowing the specifics, but later they would be hard-pressed to turn on him if he could disclose their foreknowledge.’” (Idem.)

12. “Two weeks later, Zubaydah was moved to an undisclosed location. When he figured out that the interrogators were really Americans, not Saudis, . . . he tried to strangle himself, and later recanted his entire tale. As this book went to press, no one had convincingly refuted [this] account.” (Idem.)

13. After discussing Prince Ahmed’s purchase of War Emblem, the horse’s success in the Kentucky Derby and the Preakness, and the awkward presence at the Derby of New York firefighters who had lost many of their co-workers on 9/11, the program highlights Prince Ahmed’s curious absence from the U.S. when War Emblem was running in the Belmont Stakes. Prince Ahmed then died on 7/22/2002, allegedly of a heart attack. “ . . . But on June 8, Prince Ahmed did not even show up at the Belmont Stakes, the third part of the Triple Crown. ‘I’m disappointed the prince wasn’t here,’ said trainer Bob Baffeert. Ahmed was said to be tending to family obligations in Riyadh. An associate said that he did not know the nature of the obligations. In any case, War Emblem stumbled as he came out of the starting gate and came in eighth. About six weeks later, on July 22, Prince Ahmed was dead. News reports said the forty-three-year-old nephew of King Fahd had died in his sleep due to a heart attack.” (Ibid.; p. 268.)

14. Within eight days of Ahmed’s death, the two other members of the royal family alleged by Zubaydah to have served as liaison agents between Al Qaeda and the house of Saud had died under odd circumstances. “ . . . Ahmed was not the only person named by Zubaydah to suffer ill. The next day, July 23, Ahmed’s cousin, Prince Sultan bin Faisal bin Turki al-Saud, was killed in a one-car crash while en route to Ahmed’s funeral. A week later, on July 30, Prince Fahd bin Turki bin Saud al-Kabir, a third member of the royal family who had been named by Zubaydah, was found in the desert having apparently died of thirst.” (Ibid.; pp. 268-269.)

15. In addition, the head of the Pakistani air force (also alleged by Zubaydah to be in the pay of Al Qaeda) died under strange circumstances, rounding out the pattern of timely deaths around those revealed by Zubaydah to have been associated with the terrorist group. The alleged relationship between Bin Laden and Air Marshal Mushaf Ali Mir is interesting to contemplate in connection with some of the anomalies about the performance of air units on 9/11. Certainly, the head of the Pakistani air force would have been an excellent consultant to provide the attackers with inside information about air defense technology. “In and of themselves, the three mysterious deaths do not conclusively confirm [the] assertion that Zubaydah was telling the truth about Osama bin Laden and his high-level links to the House of Saud. Nor was that the end of it. During his interrogation, Zubaydah had also said that Osama bin Laden had struck a deal with Pakistani air force chief Air Marshal Mushaf Ali Mir, and had told him that there would be unspecified attacks on American soil on 9/11. Seven months after the Saudi deaths, on February 20, 2003, Mir and sixteen others were killed when their plane crashed in a northwest province of Pakistan. Sabotage was widely speculated to be behind the crash but could not be proved.” (Ibid.; p. 269.)

16. “Now, of course, the three men cannot be interviewed—not that the FBI didn’t have its chance at one of them. On September 16, 2001, after Ahmed boarded the 727 in Lexington, Kentucky. He had been identified by FBI officials, but not seriously interrogated. It was an inauspicious start to the just-declared war on terror. ‘What happened on September 11 was a horrific crime,’ says John Martin, a former Justice Department official. ‘It was an act of war. And the answer is no, this is not any way to go about investigating it.’” (Idem.)

17. “As for the Saudis, they were not offering any answers. On September 4, 2003, roughly two years after 9/11, Saudi embassy spokesman Nail al-Jubeir appeared on CNN and was asked by newscaster Paula Zahn, ‘Can you tell us unequivocally tonight that no one on board [these planes] had anything to do with either the planning or the execution of the September 11 plot?’ ‘There are only two things that I’m sure about,’ al-Jubeir replied ‘That there is the existence of God and then we will die at the end of the world. Everything else, we don’t know.’” (Idem.)

FTR #459 Flying the Friendly Skies

Recorded May 10, 2004
REALAUDIO
NB: This stream contains both FTR #s 459 and 460 in sequence. Each is a 30 minute broadcast.

This program analyzes aspects of air U.S. traffic with regard to the 9/11 attacks, shedding light on some of the anomalies in the Bush administration’s official version of events of that tragic day. Beginning with discussion of exercises designed to counter attacks very much like those of 9/11, the program reveals that the administration appears to have known more than they have admitted to knowing, raising questions about the integrity of their actions on that day. The program concludes with an interesting contrast between George H.W. Bush’s presence on two fateful days in American history—11/22/63 and 9/11/2001.

Program Highlights Include: The Bush administration’s failure to warn airlines of intelligence reports that there was a strong possibility of hijackings on 9/11/2001; questions concerning the apparent delay in the launching of fighter aircraft to intercept the American Airlines flight that crashed into the Pentagon; the destruction of a tape made by air traffic controllers who had been in touch with the hijacked flights; Attorney General John Ashcroft’s decision in late July of 2001 to begin flying in chartered government planes rather than taking commercial flights; the elder George Bush’s flight out of Washington D.C. on 9/11/2001; the elder Bush’s presence in the air over Dallas on 11/22/63.

1. Indicating that, contrary to what Bush administration officials had maintained, some elements of government had anticipated attacks of the type that occurred on September 11, the program begins with discussion of government exercises designed to defend against terrorist attacks with hijacked airliners being used as weapons. (For more about warnings of the possibility of attacks of the 9/11 type, see—among other programs--FTR#454.) “In the two years before the Sept. 11 attacks, the North American Aerospace Defense Command conducted exercises simulating what the White House says was unimaginable at the time: hijacked airliners used as weapons to crash into targets and cause mass casualties. One of the imagined targets was the World Trade Center. In another exercise, jets performed a mock shootdown over the Atlantic Ocean of a jet supposedly laden with chemical poisons headed toward a target in the United States. In a third scenario, the target was the Pentagon—but that drill was not run after Defense officials said it was unrealistic, NORAD and Defense officials say.”
(“NORAD Had Drills Eerily Like Sept. 11” by Steven Komarow and Tom Squitieri; USA Today; 4/19/2004; p. 1A.)

2. “NORAD, in a written statement, confirmed that such hijacking exercises occurred. It said the scenarios outlined were regional drills, not regularly scheduled continent-wide exercises. ‘Numerous types of civilian and military aircraft were used as mock hijacked aircraft,’ the statement said. ‘These exercises tested track detection and identification; scramble and interception; hijack procedures; internal and external agency coordination and operational security and communications security procedures.’” (Idem.)

3. “A White House spokesman said Sunday that the Bush administration was not aware of the NORAD exercises. But the exercises using real aircraft show that at least one part of the government thought the possibility of such attacks, though unlikely, merited scrutiny. On April 8, the commission investigating the Sept. 11 attacks heard testimony from national security adviser Condoleezza Rice that the White House didn’t anticipate hijacked planes being used as weapons. . . .” (Idem.)

4. Next, the program focuses on the delay in launching fighter aircraft to intercept the plane that flew into the Pentagon. “The commission investigating the Sept. 11 attacks is expected to offer sharp criticism of the Pentagon’s domestic air-defense command in the panel’s final report and will suggest that quicker military action on that morning might have prevented a hijacked passenger jet from crashing into the Pentagon, according to commission officials. The performance of the North American Aerospace Defense Command, or NORAD, and its failure to protect Washington and New York City from attack on Sept. 11 will be a focus of the remaining public hearings of the 10-member commission, which is in the final weeks of its investigation.”
(“9-11 Panel Likely to Say Pentagon Attack Was Preventable” by Philip Shenon [New York Times]; The Salt Lake Tribune; 4/25/2004.)

5. “Commission officials said interim reports that were expected to be released at the hearings would suggest that NORAD had time on Sept. 11 to launch jet fighters that could have intercepted and possibly shot down American Airlines Flight 77, which crashed into the Pentagon at 9:37 a.m., more than 50 minutes after the first hijacked plane struck the World Trade Center in New York. A total of 184 people died in the Pentagon attack, including 59 aboard the hijacked plane. The commission is trying to establish a detailed timeline of how and when military pilots reporting to NORAD were informed on Sept. 11 that President Bush had given the extraordinary order allowing them to shoot down passenger planes. NORAD officers have said previously that they didn’t learn of the order until about 10:10 a.m., a few minutes after the last of the four hijacked jets crashed into a field in rural Pennsylvania. But White House officials have suggested that the order was made earlier in the morning and should have been communicated immediately to pilots. NORAD officers have said previously that they didn’t learn of the order until about 10:10a.m., a few minutes after the last of the four hijacked jets crashed into a field in rural Pennsylvania. But White House officials have suggested that the order was made earlier in the morning and should have been communicated immediately to pilots.” (Idem.)

6. Despite what the administration has claimed, it appears that it did not do everything possible to alert airlines about the threat of hijackings. The administration did have warnings that such attacks were possible. “Although Bush administration officials say they did everything possible to warn airlines about the threat of hijacking prior to Sept. 11, 2001, a persistent pattern of testimony before the Sept. 11 commission suggests the White House could have done more. The Federal Aviation Administration issued 15 information circulars regarding the threat of terrorist attacks on commercial airliners before the attacks that felled the World Trade Center and damaged the Pentagon, according to summaries of the circulars provided to The Chronicle by the FAA.”
(“9/11 Testimony Shows Flaws in Alerting Airlines” by David Armstrong; San Francisco Chronicle; 4/20/2004; p, A1.)

7. “But those information circulars were just general backgrounders—not security directives, which are higher alerts that direct airlines to take specific measures to protect themselves, Air Transport Association of American President James May has told the commission. The association is the airline industry’s leading trade organization and lobbying arm in Washington, D.C. . . .” (Idem.)

8. Next, the discussion highlights the destruction of a tape made by six air traffic controllers who had dealt with the hijacked airplanes. The destruction of the tape was not necessarily an indication of conspiratorial process. Nonetheless, it is possible that the information on the tape might have contained important information that would have shed light on the events of that day. Now we will never know. “At least six air traffic controllers who dealt with two of the hijacked airliners on Sept. 11, 2001, made a tape recording that day describing the events, but the tape was destroyed by a supervisor without anyone making a transcript or even listening to it, the Transportation Department said today. The taping began before noon on Sept. 11 at the New York Air Route Traffic Control Center, in Ronkonkoma, on Long Island, but it was later destroyed by an F.A.A. quality-assurance manager, who crushed the cassette in his hand, cut the tape into little pieces and dropped them in different trash cans around the building, according to a report made public today by the inspector general of the Transportation Department. The inspector general, Kenneth M. Mead, had been asked by Senator John McCain, chairman of the Senate Commerce Committee, to look into how well the Federal Aviation Administration had cooperated with the 9/11 Commission.”
(“F.A.A. Official Scrapped Tape of 9/11 Controllers’ Statements” by Matthew L. Wald [New York Times]; 5/6/2004.)

9. “The quality-assurance manager told investigators that he had destroyed the tape because he thought making it was contrary to F.A.A. policy, which calls for written statements, and because he felt that the controllers ‘were not in the correct frame of mind to have properly consented to the taping’ because of the stress of the day, Mr. Mead reported. Another official, the center’s manager, asked the controllers to make the tape because ‘he wanted a contemporaneous recordation of controller accounts to be immediately available for law enforcement,’ according to the Mead report, and was concerned that the controllers would take a leave of absence immediately, which is standard procedure after a crash.” (Idem.)

10. “On the tape, the controllers, some of whom had spoken by radio to people on the planes and some who had tracked the aircraft on radar, gave statements of 5 to 10 minutes each, according to the Mead report. The center manager had agreed with the president of the local union chapter that the tapes would be destroyed once the standard written statements were obtained, Mr. Mead reported. Neither the center manager nor the quality-assurance manager disclosed the tape’s existence to their superiors at the F.A.A. region that covers New York, or to the agency’s Washington headquarters, according to the report. None of the officials or controllers were identified in the inspector general’s report. . . .” (Idem.)

11. One of the most damning pieces of information in the broadcast concerns Attorney General John Ashcroft’s decision to begin flying in chartered government planes in late July of 2001. Previously, he had flown on regular commercial flights. Why did he change at that point in time? “Like most of the Bush cabinet, Attorney General John Ashcroft took commercial jets when he traveled. But on July 24, 2001, he changed that practice and began flying in chartered government jets. Asked by CBS News at the time about the change, the Justice Department cited a ‘threat assessment’ by the FBI and said Ashcroft had been advised to travel only by private jet for the remainder of his term. ‘There was a threat assessment, and there are guidelines. He is acting under the guidelines,’ an FBI spokesman said. But as CBS went on to report, ‘Neither the FBI nor the Justice Department, however, would identify what the threat was, when it was detected, or who made it.’ A ‘senior official’ at the CIA said he wasn’t aware of specific threats against any cabinet member, and Ashcroft himself declared, ‘I don’t do threat assessments myself, and I rely on those whose responsibility it is in the law enforcement community, particularly the FBI. And I try to stay within the guidelines that they’ve suggested I should stay within for those purposes.’ When asked if he knew details of the threat or who might have made it, Ashcroft said, ‘Frankly, I don’t. That’s the answer.’”
(“Fear of Flying” by James Ridgeway; The Village Voice; 4/13/2004.)

12. The program concludes with a look at the elder George Bush and some of the interesting times at which he was “flying the friendly skies.” On 9/11/2001, George H.W. Bush was in Washington D.C. at the annual investor conference of the Carlyle Group. (For more about that subject, see FTR#347.) George H.W. Bush was winging his way OUT of Washington D.C. on that fateful day, while the plane that hit the Pentagon was winging its way IN. “That same morning, in the plush setting of the Ritz-Carlton hotel in Washington D.C., the Carlyle Group was holding its annual international investor conference. Frank Carlucci, James Baker III, David Rubenstein, William Conway, and Dan d’Aniello were together, along with a host of former world leaders, former defense experts. Wealthy Arabs from the Middle East, and major international investors as the terror played out on television. There with them, looking after the investments of his family was Shafiq bin Laden, Osama bin Laden’s estranged half-brother. George Bush, Sr. was also at the conference, but Carlyle’s spokesperson says the former president left before the terror attacks, and was on an airplane over the Midwest when flights across the country were grounded on the morning of September 11.”
(The Iron Triangle: Inside the Secret World of the Carlyle Group; by Dan Briody; John Wiley & Sons; ISBN 0-471-28105-5; pp. 139-140.)

13. Wrapping up with an excerpt from FTR#236 (from 7/16/2000), the program notes that on November 22, 1963, George H.W. Bush was in the air over Dallas Texas. He was winging his way INTO Dallas, and his landing was delayed to that President Kennedy’s body could be flown OUT!
(W—The Revenge of the Bush Dynasty; by Elizabeth Mitchell; Copyright 2000; published by Hyperion; ISBN 0-7868-6630-6; p. 63.)

FTR #458 Interview with Lucy Komisar about Offshore Banking

Recorded May 2, 2004
REALAUDIO

Supplementing information presented in FTR#’s 356, 357, 387, this broadcast presents more information about the Clearstream network and the important (though little recognized) issue of offshore banking. Visiting once again with the remarkable Lucy Komisar, we are presented with information about Clearstream, how it works and how it affects the political and economic health of the world. (The use of Clearsteam by Al Qaeda and the Bank Al Taqwa was discussed in the programs cited above.) Note that excerpts from a very important article by Lucy on this subject are presented in the description, rather than attempts at paraphrasing her answers.

Program Highlights Include: The genesis of Clearstream; the origin of its notorious “unpublished accounts”; the invention of “eurodollars”; Ernest Backes’ dismissal from Clearstream because of the Banco Ambrosiano scandal; the probable murder of Gerard Soisson of Clearstream; discussion of “transfer pricing”, “mailbox companies”, and the “Bermuda Inversion”—three of the devices used in the offshore banking business; the Enron scandal; the Stanley Works imbroglio; the use of Clearstream by Colombian drug traffickers; a French/Taiwanese arms deal conducted through Clearstream; murders initiated as a result of that arms scandal; the Menatep/Khodorokovsky investigation in Russia; Robert Douglass—the Rockefeller-connected head of Clearstream; the effect of offshore banking on the economic health of both industrialized and Third World countries.

1. DAVE: Why do you call “Offshore Banking” a “Threat to America?”
LUCY: Because these offshore banking havens are the vehicle for terrorists and drug-traffickers to finance their operations, and they enable corporations to escape taxation, thereby damaging the economies of many countries. This takes place both in the industrialized and third world countries.

2. DAVE: Much of the article from Hound-Dogs focuses on Clearstream, an organization that is described as a “clearinghouse.” What is a clearinghouse, how does it work?
LUCY: “ . . . In these days of global markets, individuals and companies may be buying stocks, bonds or derivatives from a seller who is halfway across the world. Clearinghouses like Clearstream keep track of the ‘paperwork’ for the transactions. Banks with accounts in the clearinghouse use a debit and credit system and, at the end of the day, the accounts (minus handling fees, of course) are totaled up. The clearinghouse doesn’t actually send money anywhere, it just debits and credits its members’ accounts. The money involved is massive. Clearstream handles more than 100 million transactions a year, and claims to have securities on deposit valued at $10 trillion.”
(“Offshore Banking: The Secret Threat to America” by Lucy Komisar; Hound-Dogs; Vol. 1; p. 5.)

3. DAVE: What are eurodollars, and how did eurodollars lead to the genesis of Cedel/Clearstream?
LUCY: “ . . . Cedel and its main competitor, Brussels-based Euroclear, were started to manage transfers of ‘eurodollars,’ U.S. currency kept in banks outside the United States. The Chinese and the Soviets invented Eurodollars in the ‘50’s so they would not have to put their assets in banks where the U.S. government could seize them. But others saw value in eurodollars, and they began to be traded for other currencies. Some banks attracted eurodollars with higher interest than was being paid in America, and U.S. corporations and individuals began using the accounts to avoid laws on domestic banks. The euro money market was born. (By the ‘90’s, the Federal Reserve estimated that about two-thirds of U.S. currency was held abroad as eurodollars.)” (Idem.)

4. DAVE: Tell us about Clearstream’s published and unpublished accounts. What is the difference and what are the implications of an “unpublished account?”
LUCY: “ . . . A bank would send a transfer to the code of the headquarters bank, which would send it on to the non-published account of its subsidiary. The bank would regulate this operation internally. [Gerard] Soisson authorized each non-published account, which would be known only by some insiders, including the auditors and members of the council of administration. As Cedel’s literature to clients explained: ‘As a general rule, the principal account of each client is published: the existence of the account, as well as its name and number, are published. On demand, and at the discretion of Cedel, the client can open a non-published account. The non-published accounts don’t figure in any printed document and their name is not mentioned in any report.’ Requests for non-published accounts came from some banks that weren’t eligible, but Soisson turned them down. . .” (Idem.)

5. DAVE: Much of your article focuses on a genuinely heroic man named Ernest Backes. Tell us about Ernest Backes and his role in setting up Cedel.
LUCY: “ . . . Many of [the charges against Clearstream] were first made in a controversial book called Revelation$, written by Denis Robert, a French journalist, and Ernest Backes, a former top official at the clearinghouse who helped design and install the computer system that facilitated the undisclosed accounts. The book’s impact was explosive. Six European judges called it ‘the black box’ of illicit international financial flows. Top Clearstream officials were fired. The scandal made headlines in big European newspapers; TV network specials; the French National Assembly’s financial crimes committee held a hearing. Luxembourg authorities ordered an investigation and in October 2003, the examining magistrate brought charges against [Clearstream CEO Andre] Lussi for money-laundering, tax fraud, forgery, false balance-sheets and other infringements of the financial law. Yet Revelations remains unpublished and relatively unknown in the United States, and this issue is not yet on the agenda of America.” (Idem.)

6. DAVE: In 1975, some big German and Italian banks initiated steps to shield their transactions from scrutiny. Tell us how this led to the genesis of the unpublished accounts.
LUCY: “ . . . In 1975, several big Italian and German banks wanted to centralize their accounting and didn’t want other members of Cedel to send transfers through their numerous individual branches. The Cedel council of administration—its board of directors—authorized banks with multiple subsidiaries not to put all their accounts on the lists. Backes and Gerard Soisson, then Cedel’s general manager, set up a system of non-published accounts.” (Idem.)

7. DAVE: Ernest Backes rose to become the No. 3 man at Cedel and then experienced a sharp downturn in his professional fortunes, apparently as a result of the Banco Ambrosiano scandal. Describe the Ambrosiano scandal and how that affected the lives of Ernest Backes and Gerard Soisson.
LUCY: “ . . . By 1980, Backes had become Cedel’s No. 3 official, in charge of relations with clients. But he was fired in May 1983. Backes says the reason given for his sacking was an argument with an English banker, a friend of the CEO. ‘I think I was fired was because I knew too much about the Ambrosiano scandal,’ Backes says. Banco Ambrosiano was once the second most important private bank in Italy, with the Vatican as a principal shareholder and loan recipient. The bank laundered drug-and-arms-trafficking money for the Italian and American mafias and, in the ‘80’s, channeled Vatican money to the Contras in Nicaragua and Solidarity in Poland. The corrupt managers also siphoned off funds via fictitious banks to personal shell company accounts in Switzerland, the Bahamas, Panama and other offshore havens. Banco Ambrosiano collapsed in 1982 with a deficit of more than $1 billion. (Unknown to many moviegoers, Banco Ambrosiano inspired a subplot of “The Godfather Part III.) Several of those behind the swindle have met untimely ends. Bank chairman Roberto Calvi was found hanged under Blackfriars Bridge in London. Michele Sindona, convicted in 1980 on 65 counts of fraud in the United States, was extradited to Italy in 1984 and sentenced to life in prison; in 1986, he was found dead in his cell, poisoned by cyanide-laced coffee. (Another suspect, Archbishop Paul Marcinkus, the head of the Vatican Bank, now lives in Sun City, Arizona with a Vatican passport; U.S. authorities have ignored a Milan arrest for him.”
[For more about the Banco Ambrosiano scandal, see RFA#’s 17-21—available from Spitfire—as well as FTR#’s 2, 3, 103.] (Ibid.; pp. 5-6.)

8. “Just two months after Backes’ dismissal in 1983, Soisson, 48 and healthy, was found dead in Corsica, where he’d gone on vacation. Top Cedel officials had the body returned immediately and buried, with no autopsy, announcing that he had died of a heart attack. His family now suspects he was murdered. ‘If Soisson was murdered, it was also related to what he knew about Ambrosiano,’ Backes says. ‘When Soisson died, the Ambrosiano affair wasn’t yet known as a scandal. [After it was revealed] I realized that Soisson and I had been at the crossroads, We moved all those transactions known later in the scandal to Lima and other branches. Nobody even knew there was a Banco Ambrosiano branch in Lima and other South American countries.’ An Italian judge recently reopened the Calvi case, and Backes was asked to collaborate in the inquiry. He said, ‘ I was told that the questions around Soisson’s death would be a part of the new investigation.’’’ (Ibid.; p. 6.)

9. DAVE: Tell us how, after Backes and Soisson were gone from the organization, Clearstream accelerated the opening of unpublished accounts.
LUCY: “ . . . With Soisson out of the way, there was nothing to stop abuse of the system. Whereas Soisson had refused numerous requests (from such institutions as Chase Manhattan in New York, Chemical Bank of London and numerous subsidiaries of Citibank), Cedel opened hundreds of non-published accounts in total irregularity—especially after the arrival of CEO Andre Lussi in 1990. No longer were they just sub-accounts of officially listed accounts, Backes charges. Some were for banks that weren’t subsidiaries or even official members of Cedel. At the start of 1995, Cedel had more than 2,200 published accounts. But in reality, according to documents obtained by Backes, Cedel that year managed more than 4,200 accounts.” (Idem.)

10. DAVE: What are some of the organizations that have unpublished accounts with Clearstream?
LUCY: “ . . . Among the major companies with secret accounts, Backes discovered the Shell Petroleum Group and the Dutch agricultural multinational Unilever, one of whose accounts was associated with Goldman Sachs. On the French TV broadcast ‘Les Dissimulateurs’ (‘The Deceivers’) in March 2000, Clearstream President Lussi simply denied the accounts existed. ‘Only banks and brokers are eligible for membership,’ he said, ‘as it has always been the case. No private company accounts, no commercial or industrial companies.’ But his own spokesman contradicts this claim. ‘Customers of Clearstream can be banks or, exceptionally, corporate clients who have their own treasury departments the size of banks,’ Cope wrote in an e-mail to me, ‘We cannot accept CEO’s of multinationals or terrorists and have strict account-opening procedures to prevent such problems.’ Clearstream was formed in 1999 out of the merger of Cedel and the compensation company of Deutsche Borse (the German stock exchange). By 2000, according to Backes, Clearstream managed about 15,000 accounts (of which half were non-published) for 2,500 clients in 105 countries; most of the investment companies, banks and their subsidiaries are from Western Europe and the United States. Most of the new non-published accounts were in offshore tax havens. The banks with the most non-published accounts are Banque Internationale de Luxembourg (309), Citibank (271) and Barclays (200).” (Idem.)

11. DAVE: Tell us about some of the Colombian customers of Clearstream.
LUCY: “Backes found numerous discrepancies in the lists he obtained of the secret accounts. For example, code No. 70287 on the published list belongs to Citibank NA-Colombia AC in Nassau, and code No. 70292 is that of the Banco Internacional de Colombia Nassau Ltd. But on the non-published list, the numbers both belong to Banco Internacional de Colombia in Bogota. There’s no mention of Citibank. Based on the published list, members may think they are dealing with two banks in the Bahamas, one of which is a subsidiary of Citibank. Based on the published list, members may think they are dealing with two banks in the Bahamas, one of which is a subsidiary of Citibank, but anything sent to these establishments goes directly to the country of cocaine cartels. On the April 2000 Clearstream list, there are 37 Colombian accounts, of which only three are published. The spokesman for Citigroup in New York, declined repeated requests for comment. Cope declined to talk about any individual customers or accounts, citing Luxembourg banking secrecy laws.)” (Idem.)

12. DAVE: One of Russia’s wealthiest individuals and most successful businessmen, Mikhail Khodorkovsky, was recently arrested, generating many stories in the U.S. media about Russia’s returning to its old ways (i.e., repression). Khodorkovsky was one of Clearstream’s many customers. Detail the complex operations of Khodorkovsky.
LUCY: “ . . . Clearstream’s dealings with Russian banks are another area of concern. Menatep Bank, which had been bought in a rigged auction of Soviet assets and has been linked to numerous international scams, opened its Cedel account (No. 81738) on May 15, 1997, after Lussi visited the bank’s president in Moscow and invited him to use the system. It was a non-published account that didn’t correspond to any published account, a breach of Clearstream’s rules. Menatep further violated the rules because many transfers were of cash, not for settlement of securities. ‘For the three months in 1997 for which I hold microfiches,’ Backes says, ‘only cash transfers were channeled through the Menatep account.’” (Ibid.; p. 7.)

13. “ . . . Menatep bank was founded by Russian ‘oligarch’ Michail Khodorkovsky has been in a Russian jail since October on myriad charges of fraud and tax evasion. On Nov. 26,2003, Backes and another ex-banker, Swiss citizen Andre Stebel, filed a criminal complaint with the Swiss attorney general against Khodorkovsky and his colleagues Platon Lebedev, and Alexei Golubovich, accusing them of money laundering and supporting a criminal organization. . . The former bankers requested the Swiss officials to open an investigation into the charges and to search the records of the Swiss offices of Menatep SA, Menatep Finances SA and Valmet (which set up offshore companies and bank accounts) and of Bank Leu in Geneva related to investigate claims of fraud against the Russian company Avisma and money laundering by Menatep in Switzerland. . . .” (Idem.)

14. “ . . . The complaint alleges that Khodorkovsky, Lebedev, and Golubovich are or were owners in Switzerland of the Swiss companies Menatep SA, Freiburg, Menatep Finances SA, Geneva and Valmet SA, Geneva. It claims that since the creation, ‘the Bank Menatep SA has been mixed with the affairs of members of the Russian oligarchy and criminal organizations, such as Mikhail Khodorkovsky and Alexander Konanykhine. (Konanykhine got asylum in the U.S. in 1999, was ordered deported last fall to face charges in Russia, then had the order stayed and will have a new asylum hearing. American and Russian law enforcement officials believe he was in charge of moving billions of dollars out of Russia for the KGB; Konanykhin denies it.) It is also related to another mafia figure, Semyon Mogilvich, called the godfather of organized crime in Russia.’” (Idem.)

15. “The complaint cites the Avisma case which it says involved fraud and money laundering whereby tens of millions of dollars were diverted from the Russian company, a manufacturer of titanium, a substance used in airplanes. In the mid-90’s, Menatep was the majority owner of Avisma. The document says that the scheme involved selling titanium at a low price to TMC, a shell company set up by Valmet, which resold the product at a higher price on the international market. This practice, called transfer pricing, is widely used internationally to cheat tax authorities and minority shareholders. . . .” (Idem.)

16. DAVE: Tell us about Robert Douglass, of Cedel International.
LUCY: “ . . . Backes explained that a company called Cedel International had been inscribed in the Swiss register of commerce but not included in the Books of the mother company, Cedel International in Luxembourg. He commented, ‘This non-consolidated ‘branch,’ whose president is Robert Douglass of New York, the former private secretary of Governor Nelson Rockefeller and now vice chairman of the Chase Manhattan Corporation [now J.P. Morgan Chase], had apparently not raised too many questions for Swiss federal magistrates,’ Douglass is an attorney at the New York law firm Milbank, Tweed, Hadley & McCloy, with offices at 1 Chase Manhattan Plaza. Milbank, Tweed is the law firm for Chase, the bank founded by the Rockefellers. Douglass declined to comment. (The same Milbank Tweed, for its client Citibank, worked with the Cayman Islands agent Maples and Calder to set up the ‘Delta Corp’ to do phony commodity swaps and disguise Citibank loans to Enron as trades. Maples and Calder also set up the Cayman Islands shell company that helped the owners of the Italian conglomerate Parmalat embezzle billions of dollars and swindle investors.)” (Ibid.; p. 8.)

17. DAVE: Another murder connected to Clearstream’s machinations involved a French/Taiwanese arms deal. Describe that if you would.
LUCY: “ . . . In the early ‘90’s, [former deputy general director of the Taiwan branch of the bank Societe General Joel] Bucher contends, Cedel was used to launder $350 million in illegal ‘commissions’ on a contract for the sale by Thomson-CSF, a French government arms company, of six French frigates to Taiwan. He said that the money, handled by an SG subsidiary, was paid as a registered securities transfer to a ‘nominee’—a stand-in for the real beneficiary—and that Thomson (now known as Thales) didn’t appear in the transaction except in the Cedel archives. He said SG used two non-published Cedel accounts. The kickbacks were exposed after the 1993 murder of a naval captain named Yin Ching-feng, who had written a critical report on the purchase and its inflated $2.8 billion price. Bucher told Taipei authorities that a third of the kickbacks went to Taiwanese generals and politicians, while the rest was pocketed by French officials. Taiwan courts sentenced 13 military officers and 15 arms dealers to between eight months and life in prison for bribery and leaking military secrets.” (Idem.)

18. DAVE: You write of the genesis of Swiss banking secrecy in the pre WWII period. Tell us about France’s discovery of financial treachery by members of the French elite and how that led to Switzerland’s legendary bank secrecy. [NOTE: Lucy gave an eloquent summary of the information presented in the Hound-Dogs article. The information is identical to information presented by Lucy in FTR#412. Listeners/Readers are referred to that description for a detailed presentation of the information discussed in this program.]

19. DAVE: Let’s talk about some of the mechanisms used in the offshore banking operations. Tell us about “transfer pricing” and the use of mailbox companies. [For good discussion of “transfer pricing,” see discussion in paragraph #15, about the Menatep scandal.]
LUCY: “ . . . Shell companies—front companies, ‘mailbox’ companies, sometimes called International Business Corporations (IBCs) or Personal Investment Companies (PICs)—were set up to own bank accounts and effect phony transactions to hide or launder funds. They didn’t produce goods or services; they existed for book-keeping, to receive, hold, and transfer money so as to hide the real people involved. Banks and accounting firms marketed shell and even ready-made ‘off-the shelf companies,’ the latter already registered with local governments, picked up by clients like merchandise in a store. Offshore networks popularly come in series of three. It’s called layering, or laddering. ‘Throw in Cayman and Panama; sprinkle with Aruba or Curacao,’ said the Miami official of an international investigation firm that hunts fraudsters. Money launderers set up a British Virgin Islands corporation, open a bank account in Curacao, airfreight the money to Aruba, have it wire transferred. In days, it’s been through three jurisdictions, and there are no records, You can convert profits to losses, put money in phony loans, buy businesses without people knowing who you are, and evade all laws regulating money. If authorities looking into a loan to the company want to find out who owns it, lawyers say, ‘That’s protected by secrecy law.’ Sometimes, for greater obfuscation a shell company is owned by another shell from a second jurisdiction. At the end, there is ‘integration’: the individual buys a big hotel or invests in the stock market. . . .” (Ibid.; p. 10.)

20. DAVE: Well-publicized cases of American firms using some of these scams were the Enron case and the Stanley Works case. Tell us about those. [For discussion of Enron, see paragraph#16, above.]
LUCY: “ . . . Take the case of Stanley Works, which announced a ‘move’ of its headquarters-on paper-from New Britain, Connecticut, to Bermuda and of its imaginary management to Barbados. Though its building and staff would actually stay put, manufacturing hammers and wrenches, Stanley Works would no longer pay taxes on profits from international trade. The Securities and Exchange Commission accepts the pretense as legal. ‘The whole business is a sham,’ fumed New York District Attorney Robert Morgenthau, who more than any other U.S. law enforcer has attacked the off-shore system. ‘The headquarters will be in a country where that company is not permitted to do business. They’re saying a company is managed in Barbados when there’s one meeting there a year. In the prospectus, they say legally controlled and managed in Barbados. If they took out the word legally, it would be a fraud. But Barbadian law said it’s legal, so it’s legal.’ The conceit apparently also persuaded the SEC.” (Idem.)

21. DAVE: Of course the Bush administration is deeply involved with the Enron situation. Bush’s Democratic opponent John Kerry has been active in attempting to bring the offshore banking scams to heal. Tell us about Kerry’s efforts in that regard.
LUCY: “Some American political leaders have been pushing to reform the offshore system for years. Democratic Senator John Kerry of Massachusetts, who ran the Iran-Contra and BCCI hearings in the 1980’s and 1990’s, called for changes then: he even wrote a book about it. . . .” (Ibid.; p. 11.)