Archive for July, 2013


Carter seeks waiver so charities can deal with terrorists

July 3, 2013

Jimmy Carter has signed a petition developed by the Charity & Security Network to “exempt peacebuilding activities” from the U.S. prohibition against providing material support to terrorist organizations.

The problem with the proposal is that it would open up too much wiggle room for charities to interact with terrorist groups.  Which charities would be eligible for such an exemption?  Islamic Relief USA?  Under the exemption, charities like IR-USA could partner with Hamas charities or even directly with Hamas, and justify the joint venture on the grounds that they are pursuing peace-building efforts.

The limits on engagement with terrorist groups have been a longstanding grievance among left-leaning philanthropic and charitable organizations.  While many of those seeking a relaxation of the rules have their hearts in the right place with a genuine desire to seek world peace, the harsh reality is that some charitable entities (or some of their employees) would exploit the exemption to support, rather than to pacify, terrorist groups.  Even financial aid toward projects such as schools, orphanages, or food aid while working with a group such as Hamas or al-Shabaab would be problematic because aid is fungible, and such aid would generally serve to strengthen the terrorist group and its reputation among the populations they “serve.”

The Hill ran this article with a striking but misleading headline “Ex-President Carter wants sanctions weakened on terrorist groups.”  Not exactly—but what’s being proposed is equally alarming.  Read it all:

By Julian Pecquet – 06/20/13

Former President Jimmy Carter is spearheading an effort to convince the U.S. to weaken sanctions on terrorist groups so peace organizations can legally work with them.

In a petition to Secretary of State John Kerry delivered Thursday, Carter and other foreign policy experts ask Kerry to exempt peace groups from policies that make it a crime to offer negotiation training and humanitarian law classes to terror groups.

“The Secretary of State can, and should, exempt peacebuilding activities from this counterproductive application of the law,” says the petition. “Doing so would open the door for professional peacebuilders to fully engage in helping to end armed conflicts and suffering around the world, while making the U.S. safer.”

The Charity and Security Network, which is spearheading the petition, declined for legal reasons to provide examples of current programs impacted by anti-terrorism sanctions. The organization told The Hill that in the past, efforts to build bridges with the Taliban in Afghanistan, Hamas in the Palestinian territories and leftist guerillas in Colombia have all been stymied.

A 2011 report by the UK-based Overseas Development Institute said anti-terrorism laws passed in the decade since the Sept. 11, 2001, attacks have created bureaucratic red tape and fostered an atmosphere of “fear” and “confusion” that has endangered the lives of aid workers and made it impossible for them to work in many of the world’s hot spots.

“Rigid and over-zealous application of counter-terrorism laws to humanitarian action in conflict not only limits its reach in that context,” the report concluded, “but undermines the independence and neutrality of humanitarian organisations in general, and could become an additional factor in the unravelling of the legitimacy and acceptance of humanitarian response in many of the world’s worst humanitarian crises.”

The roadblocks have only gotten worse since the Supreme Court ruled in 2010 that such aid fit the Patriot Act’s definition of “material support” for terrorism. The high court in Holder vs. Humanitarian Law Project determined that such aid could free up terror groups’ resources for terrorist activities and legitimize them…


Former spooks question financial surveillance

July 2, 2013

Sanctions, asset freezes, and financial surveillance have produced the opposite result from what policy makers intended by driving Al Qaeda deeper underground and creating a more diffuse system of financial transactions by the terrorist group.  This is the analysis from LIGNET, a group of ex-CIA and intelligence officials.

There is a lot of truth to what these analysts are saying.  The regulatory regime has cost banks and our overall economy billions of dollars in compliance costs while producing thousands of meaningless currency transaction reports and foiling few plots.  This analysis is also consistent with what Jean Charles Brisard has written about counterterror finance bureaucracy, which he considers “basically useless.”  And recent revelations about the federal government’s domestic monitoring policies only cast financial data mining programs such as SWIFT in further doubt.

An excerpt from LIGNET’s analysis follows.  Reading their full piece requires registration.

With New Ways to Fund Attacks, Al-Qaeda Now a Bigger Threat

Posted on June 18, 2013

The overreliance by the United States on sanctions and surveillance in the war on terror has allowed al-Qaeda to adapt its methods of financing to avoid detection, and resulted in a decentralized al-Qaeda structure — and a much greater threat.

Al-Qaeda has transitioned from a hierarchical cell structure to a franchise organization that is now responsible for four times as many terrorist attacks a year as it was before 9/11. Al-Qaeda training camps are now being established on the Arabian Peninsula, in Africa, countries of the former Soviet Union, and Southeast Asia.


The current counterterrorism strategy is to rely on economic sanctions and financial surveillance to identify and then stop terrorist financing. Examples of this are the U.S. PATRIOT Act, UN Resolution 1617, and the EU’s Third Money Laundering Directive.

The success of counterterrorism efforts in freezing the assets of terrorists has diminished over time. The UN found that while $112 million was seized in the three months after 9/11, only $24 million was seized in the two years that followed.

The continued targeting of al-Qaeda’s financial assets has had the unintended consequence of transforming al-Qaeda into a loose coalition of localized, autonomous, and self-sufficient terrorist “franchise” cells. These cells, held together by a world view rather than by a hierarchical structure, have been enormously effective. The number of terrorist attacks quadrupled in five years from 208 in 2003 to 864 in 2008.

In terms of financing, al-Qaeda’s shuria or high command council, no longer plays a central role in allocating expenditures or soliciting funds. Instead, terrorist financing has moved further into the ‘grey’ economy. Cells raise funds from a combination of charities, independent criminal ventures, and licit businesses. In fact, crime is now regarded as the main source of funds for al-Qaeda. Criminal ventures generally include extortion, hijacking, theft, blackmail, the drug trade, and kidnapping for ransom (KFR). LIGNET has previously covered al-Qaeda’s use of KFR on the Arabian Peninsula.

Even the transferring of funds between franchise cells has evolved to get around U.S. counterterrorism strategy. Originally, al-Qaeda moved funds through the financial sector, using banks such as France’s Credit Lyonnais, Germany’s Commerzbank, and the Standard Bank of South Africa. However, counterterrorism measures have driven al-Qaeda’s transferring of funds under ground, forcing it to rely on hawaladars and couriers. These provide untraceable methods of securely moving funds. Al-Qaeda recently used Pakistani-based hawaladars to move $1 million from the UAE into Pakistan, at which point the money was couriered to Afghanistan. Al-Qaeda’s pushing of its finances into illicit activities and localized funds have made it difficult for counterterrorism strategies that rely on economic sanctions to be effective. The results can be seen in Table 1, which shows the trend of cheaper – yet more frequent – terrorist attacks.

Operational expenses of jihadist attacks over timeExperts previously believed that the financial war had been a success. This presumption was based, in large part, on the success the United States had in closing down al-Qaeda’s traditional source of funding. But al-Qaeda has evolved and adapted. New al-Qaeda cells, recruiting centers and finance operations have appeared in remote areas of the world, with key affiliates on the Arabian Peninsula and in North Africa.


The measures that have been taken in the war on terror since 9/11 to intercept al-Qaeda’s funding have seen diminishing returns. And while financial sanctions certainly weakened al-Qaeda’s ability to launch attacks, at least for a few years, they undercut the ability of intelligence agencies to “follow the money.” The importance of money trails is highlighted by the fact that al-Qaeda spends around 10 percent of its income on operational costs: The other 90 percent goes toward maintaining an international network of cells…


Islamic Relief’s financial rating tumbles

July 1, 2013

The financial health of the largest Islamic charity in the U.S. has been downgraded by Charity Navigator from four to two stars.  The financial rating lowered Islamic Relief USA’s overall rating down to three stars—IR-USA’s lowest rating since fiscal year 2001.  The following chart is a portion of Charity Navigator’s ratings from the present going back to 2008:

Charity Navigator gives IR-USA low marks

The rating was published in May and reflects data from 2011.  Charity Navigator is widely regarded as the nation’s top evaluator of nonprofits.

A decline in IR-USA’s stated revenues and soaring administrative costs contributed to the downgrade.  IR-USA reported $160 million in donations in 2010 but only $63 million in 2011.  At face value, the plummeting revenues suggest fewer donations, but a more accurate valuation and decrease of in-kind donations of medicine has more to do with the apparent financial nosedive.

In 2011, Forbes reported that Diana Sufian, an independent contractor, was terminated by IR-USA after hyper-inflating the charity’s assets over a five year period.  Sufian used grossly inaccurate valuations of deworming drugs.  The overstatement was no minor bookkeeping technicality—IR-USA’s drug stockpiles represented 75 percent of their stated assets.

Sufian was paid $510,000 for the year in which she was fired for services she performed.  One wonders why Ms. Sufian has never been charged with financial statement fraud.

Rather than being fired by the board of IR-USA over the Sufian drug value catastrophe, the charity’s CEO Adeb Ayoub is paid $168K a year, and has been reappointed by the Obama administration as an adviser to the State Department for the next two years.

IR-USA donates millions of dollars each year to Islamic Relief Worldwide, a UK-based organization that has aided Hamas and whose leadership is linked to the Muslim Brotherhood.  A Department of Justice official has implicated IR-USA for being a conduit for the flow of money from America to terrorist groups abroad.  Russian intelligence indicates that IR-USA funds militants in the North Caucasus—the region where the family of the Boston marathon bombers originate.