Taliban doles out Rs 150 million in funding

February 18, 2013

Freelance journalist Syed Shoaib Hasan reports that the Muraqaba shura, a council of regional Taliban and Al Qaeda faction leaders, routinely distributes millions of rupees to affiliated terrorist tribal organizations at two to six week intervals.  In an example from May of 2012, the shura disbursed 70 million to the Pakistani Taliban, Rs 50 million to another Taliban faction, between RS 30 and 40 to the Islamic Movement of Uzbekistan, and smaller amounts to Harkat ul-Mujahideen and Jaish Mohammad.

In his piece, Hasan also analyzes the history of financing militancy in Afghanistan and Pakistan since 9/11.  He argues that forcing front charities to register with the government actually worsened matters by giving terrorists the patina of legitimacy and access to the international financial system.

Complicating the fight against terrorist financing is the militants’ new tendency to steer donations to small trusts affiliated with mosques rather than madrassas, which is more difficult to track.  Hasan reveals that one in three mosques in Karachi admits to funding militants.

Hat tip to Sal and Colby Adams for sending this over via Twitter.  From Money Matters magazine:

The militant economy

The slush funds accumulated by the militants were fed into the global financial system and were fed into the global financial system and were used to buy legimate businesses involved in construction, shipping and transport. Revenues from these concerns are now fuelling the insurgency

By Syed Shoaib Hasan

On a bright May afternoon in 2012, five men with assault rifles strode into a two-storeyed building near the bazaar in Miramshah. All wore their hair long and oiled under their Chitrali hats but the rangy frame, the narrow, aquiline nose and deep-set eyes instantly betrayed Zulfiqar alias Hakimullah Mehsud, ameer of the Tehreek-e-Taliban Pakistan. An hour later the coterie emerged, with a staggering Rs70 million in cash.

The money was Mehsud’s share from a fund administered by the Taliban’s Shura-e-Muraqibat (Council of Common Interest), ostensibly an oversight committee that handles matters related to various militant groups headquartered in the tribal areas. (While some western news agencies have described it as an Al Qaeda-formed and managed entity, the shura is clearly of Taliban origin and character.) But managing and distributing funds from the Afghan Taliban structure – ‘the emirate’, as it is referred to in militant circles – is one of its primary functions.

Disbursed at two- to six-week intervals, these funds comprise the largest chunk of revenues for all militant groups in the tribal region – barring the Arab Al Qaeda – and, for some, are the only source. That May, other than the TTP, the Taliban factions headed by Hafiz Gul Bahadur and Mullah Nazir got Rs50 million each while the former Islamic Movement of Uzbekistan, now known as the Islamic Movement of Turkestan, got between Rs30 million and Rs40 million. Other recipients of these stipends from the emirate include the Taliban faction of Omar Khalid as well as splinter factions of the Harkatul Mujahideen and Jaish-e-Mohammad and the Takfeeri Group of the Lashkar-e-Taiba. (Some analysts believe that the TTP also funnels money from its share to the Punjabi Taliban.)

The money is to cover the operational costs of militancy. The bulk of it is, of course, spent on arms and ammo. The rest is distributed over transport costs; communications equipment (including satellite and cellular phones as well as walkie talkies) and – in an interesting sign of the times – media cells. (The Afghan Taliban themselves, for example, have a 100-plus dedicated media cell staff that operates a website available in five languages and manages high-tech studios with editing facilities.) Besides this, small amounts are also made available for the ‘shuhuda fund’, which enables payments between Rs5,000 to Rs10,000 for the families of the successful suicide bombers.

The 9/11 shift

The role of the emirate in funding is relatively new. Before 9/11, most militant groups operating in the Af-Pak region drew funds from two main sources: the Pakistani and Middle Eastern Islamic states and large and small private donors. From the times of the Afghan war till about the nineties, say militants, the size of this pie was around $6 billion. Historically, as much as two-thirds came from the states, with Saudi Arabia leading with contributions that went up to 50 percent of total funding. Close on the kingdom’s heels were Iraq and the Gulf Arab states.

Post 9/11, the situation changed. The US-led crackdown on militant groups began with the now-famous ‘follow the money’ directive and the US Patriot Act of 2001. As a result, funds from state sources all but dried up. As the world and Pakistan woke up to the abuse of hundi and hawala – the traditional trust-based system of money transfer in vogue for money transfer to militant organisations as well as conventional Islamic charities – private donations also disappeared.

Over the next 18 months, the flow of money to militant groups ebbed to an all-time low. The period coincided with the time militant operations were at decade-long nadir and many in Pakistan were quick to call it the ‘end of jihad’ in the region. That could well have happened – without funding, the militants could not have continued undermining the US-dubbed ‘War on Terror’. But a loophole emerged – inadvertently provided by the Pakistani authorities themselves, as they looked to close down all non-formal avenues for money transfer.

A better mousetrap

In their bid to screen all ‘suspicious’ transactions, the authorities hit many Islamic charities and some individuals suspected of transferring funds for militant operations. While a few were involved – the Al Akhtar Trust, for example – most were simply what they said they were: welfare organizations and people working primarily among the urban and rural poor. Accordingly, after a thorough examination of their sources of funding, these groups and individuals were allowed to continue their activities.

However, in order to distinguish them from the militant groups, the charities were required to register themselves and maintain bank accounts for financial transactions. This ensured that only those who had valid ID cards issued by the then newly instituted National Database Authority (Nadra) could open bank accounts. Further, the move also ensured that even where occasional hawala transactions were used, the monies did eventually cross banking lanes and were thus documented. The final salvo was the provision of a list of proscribed organizations – the Lashkar-e-Taiba, the Sipah-e-Sahaba Pakistan, Tehreek-e-Nifaz-e-Shariat-e-Muhammadi and Tehreek-e-Jafria Pakistan, among others – to the State Bank of Pakistan, which was to make sure their accounts were frozen.

At the time, this may have seemed a leak-proof system, especially to western observers. But in a corrupt third world bureaucracy, there were more holes in this ‘fool-proof’ mechanism than Swiss cheese.

Step up and identify yourself

For starters, the basis of the system – the newly introduced CNIC – could easily be subverted. The biggest advantage for most militants was that few people knew what they looked like. Additionally, many of the more notorious were arrested or killed immediately post 9/11 and their successors took a while to come into the limelight – many were identified as ‘significant’ as recently as 2006. Since the government of Pakistan has never mounted a ‘Most Wanted’ campaign, the possibility of being recognized was – and remains – very low.

As a result, though identity theft or misrepresentation of data, thousands of fake IDs were issued to every rank of militant, from foot soldiers to top leaders. While these documents were used for a number of nefarious purposes, one of their main uses was to enable the holder to maintain bank accounts and conduct financial transactions.

The Afghan Taliban benefitted the most from this scheme. Their biggest advantage was that there wasn’t – and still isn’t – any clear photographic identification of their top leaders who managed to escape the US-led onslaught in Afghanistan post 9/11. While many – like Mullah Omar – had to flee, others were able to make earlier and more sedate withdrawals. But the fact that has received little attention is that these fleeing Taliban physically transferred large amounts of foreign exchange.

Hundreds of millions of dollars were taken out of Afghanistan – insiders say, in trucks and jeeps – and initially held at a secure location in Pakistan. Similar amounts were also maintained at the Taliban embassies in the UAE and Saudi Arabia. The entire amount was then secured and kept at a secret location for about eight months. And then the Taliban started hitting back at the coalition forces in Afghanistan.

Money laundering, Taliban style

To fuel the insurgency, the slush funds were brought back into circulation: by simply depositing them into bank accounts in Pakistan. Over the course of the next six months, these monies were fed into the global financial system. Legitimate businesses ranging from construction, shipping and transport were set up in Pakistan and the UAE. With the funds thus laundered and easy access to financial systems ensured, these businesses started providing funds for the insurgency.

Since these were legitimate businesses based in a major global financial centre, their financial transactions slipped under the radar of nosy law enforcers. Dealing in assets, funneling money across borders, business expenses – all these were suddenly within the reach of the militants. Most significantly, their sympathetic patrons had legitimate accounts where to divert large wire transfers and ‘donations’ increased exponentially.

Cash-starved no longer, the Taliban insurgency first made its mark in 2004. As it acquired steam, the Gulf Arab states and Saudi Arabia began to turn a blind eye to donations by influential citizens.

This last fact became increasingly obvious to the US and its allies. In 2007, on a visit to the region, then Deputy Secretary of State John Negroponte mentioned that most of the monetary backing of the Taliban/Al Qaeda was coming from the Gulf Arab states. But whether he and others in the US-led coalition understood that most of the funds were rewards from businesses owned by the Taliban in those countries is unclear.

Significantly, the ‘system’ invented by the Afghan Taliban was quickly adopted by a host of others including the Jaish-e-Mohammad, Sipah-e-Sahaba and Harkatul Mujahideen, which were smarting from the Musharraf-imposed 2002 ban.

Now, at a mosque close to you

However, local groups – including the Punjabi Taliban, Hizbul Mujahideen, Jaish-e-Mohammad and Lashkar-e-Taiba – also introduced local variations. One such tactic was decentralization of authority and resources. Within Pakistan, all financial dealings related to a specific incident or attack began to be routed through a person usually attached to a mosque, rather than a madrassah. (The advantage of using the former was that as all mosques are registered under the law, they usually escape the kind of scrutiny madrassahs are subjected to.) As a result, investigators pursuing leads usually hit a mosque and the real masterminds were almost never arrested.

Initially, the mosque route created disputes within its members. This was because while many members of the clergy were extremists, very few actually advocated the use of arms within Pakistan. But the militants’ ideology grew fast post 9/11 and a sense of disempowerment and state repression forced even these reluctant extremists to take up arms.

Over time, the mosques evolved into collection units for funds from private donors and the people. The money is usually collected in the name of a trust attached to the mosque – although such funds are hardly ever used for the upkeep of premises. However, donors are not unaware of where their money is going – the larger ones are usually told exactly how it will be used and this only encourages them to add more. Today, one-third of mosques in Karachi admit themselves to serving as financial units for militants. Not everyone who’s connected to a mosque is involved but even those who aren’t, will not speak up against the practice.

Bad press

Ironically, however, views in the mainstream about militant funding operations are usually bad press. While the illicit trades – kidnapping, extortion and bank robbery – help feed what’s increasingly an insatiable appetite, these are generally the works of smaller and newer splinter groups hungry to fund operations. As such, the amounts involved are insignificant.

Interestingly enough, neither are the Taliban and other militants trafficking in drugs and arms to finance the Af-Pak insurgency. Taking their cues from the Afghan National Army and Pakistani security forces, the militants now just collect their cut of the trade and charge for the passage of such convoys through areas under their control. And the amounts here too comprise a pittance, when compared to the overall budget.

Apart from business, the only other growth sectors are private and – in the last two years – state donations. While the latter are routed primarily through the Afghan Taliban, other organizations are now establishing direct contact with foreign benefactors.

The Jamaat-ud-Dawa – for instance – is never short of funds because of its strong direct ties to the Saudi establishment. And just last year, Malik Ishaq, the most influential leader of the Sipah-e-Sahaba/ Lashkar-e-Jhangvi combine, made a trip across the Arab states, ostensibly to propagate the organization’s “increased international vision” but actually to raise funds. Not only is he said to have received substantial donations – especially from Saudi Arabia and Bahrain – the latter is now perhaps the first Arab country to have an official Sipah-e-Sahaba chapter.

While much of such donations are also used for legitimate political and charitable schemes, some do end up in militant cells. But the financial backbone for all militancy in the region remains the Afghan Taliban. As the saying goes in militant circles, ultimately, there’s always the emirate.

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