Douglas Farah

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Douglas
Farah

In 1998, following the al Qaeda attacks on the U.S. Embassies in Nairobi, Kenya and Dar-es-Salaam, Tanzania, the Clinton administration froze some $240 million in assets belonging to Afghanistan's Taliban government and Osama bin Laden, the rogue regime's guest. That caught both the Taliban and al Qaeda by surprise because they apparently did not realize the money, mostly held as gold reserves in the United States, could be targeted. Because it was so costly a miscalculation and because al Qaeda constantly reviews both successful and failed operations to find and correct their own vulnerabilities, a far-reaching review of the terrorist financial structure was undertaken.

Adapting to the U.S. response and determined not to be caught in the same position again, al Qaeda began a systematic withdrawal of its funds from the formal banking sector, where its assets were vulnerable and traceable. Instead, the decision was made to begin shifting money into commodities that would hold their value over time. Chief among these were diamonds and tanzanite.

Diamonds and tanzanite offered an additional advantage for terrorists. The infrastructure needed to acquire and trade in the gemstones was easy to set up because the commodities were available in states that exercise little control over much of their national territory. Tanzanite is only found in a small corner of Tanzania, where the government has virtually no presence. And the diamond trade al Qaeda tapped into in West Africa was centered in Liberia, where the corrupt regime of Charles Taylor also controlled diamonds mined by his allies in neighboring Sierra Leone. In Sierra Leone the diamond fields were under the control of the notoriously brutal rebels of the Revolutionary United Front (RUF). The RUF earned international notoriety for its signature atrocities of hacking off the arms, legs and ears of civilians, including children as young as 2 years old; mass rape; and the abduction of thousands of children who were forced to become fighters.

Al Qaeda already had long-standing ties to the gemstone trade. Documents and testimony presented during 2000 the trials of Wadih el Hage and Mohammed Sadeek Odeh show that al Qaeda, even before the U.S. embassy bombings, was dealing extensively in diamonds, tanzanite, amethyst, rubies and sapphires, mostly as money making ventures. According the trial transcripts, senior al Qaeda leaders were deeply concerned about the possibility that an al Qaeda operative was carrying a large quantity of stones when he drowned while crossing a lake.

After the Embassy bombings, the use of gemstones accelerated rapidly, but with an added purpose. Rather than being viewed solely as a business venture, gemstones, and diamonds in particular, were used as a way to store the value of al Qaeda's financial resources outside the formal financial sector. A premium was no longer placed on turning a profit, but rather acquiring as many stones a possible with money that was being siphoned out of banks and businesses.

The al Qaeda leadership, through Mohammed Ahmed Mohammed, one of its senior financial operators, contacted an old al Qaeda friend who had fought with the mujahaddeen and now ran most of the illicit or "blood diamond" trade for West Africa, Ibrahim Bah. Bah is a Senegalese who trained in Libya under Moamar Gaddafi, then went to fight in Afghanistan in early 1980s. After about two years there, he briefly returned to Libya before joining Hezbollah fighters combating Israeli forces. Finally, he returned to Libya in the late 1980s, just in time to train and become friends with the long list of Libyan-backed leaders who would wreak havoc on West Africa: Charles Taylor of Liberia; Foday Sankoh, founder of the RUF in neighboring Sierra Leone; Blaise Compaore, now president of Burkina Faso, who assassinated his best friend, Thomas Sankara, in order to assume the presidency.

The contacts between Bah and al Qaeda began in 1998, just weeks after the Embassy bombing and continued until after 9/11.

But what is important and instructive are the conditions, ideal for terrorists, that allowed the relationship to prosper. Bah had access to diamonds mined by the RUF, among the most prized in the world. He was also a key player in Liberia, a corrupt state that, while retaining the valuable trappings of nationhood, was, in fact, a functioning criminal enterprise. Among the benefits accrued to the Taylor regime despite its criminal status were the right to issue internationally-recognized diplomatic passports, the ability to register aircraft and ships, control of the formal entry points, and access to a central bank. Bah's close relationship with Taylor and the Liberian security apparatus guaranteed that his guests, while wanted as terrorists elsewhere in the world, could come and go unmolested to Monrovia. Armed thugs from the presidential guard escorted Mohammed and later al Qaeda visitors to and from the airport, allowing them to circumvent immigration formalities and lessening the paper trail. As long as Taylor was apprised of the situation and was able to take his percentage of each deal, neither Bah nor his guests had anything to fear.

Bah also had access to the official state apparatus of neighboring Burkina Faso, due to his long-standing personal and business relationships with president Blaise Compaore. Compaore also had close ties to Taylor. Compaore and Burkina Faso offered a valuable asset that Liberia, under an U.N.-mandated arms embargo, could not: the ability to produce internationally-recognized end-user certificates for the purchase of large quantities of weapons from around the world. For many years Bah, with Compaore's knowledge and blessing, coordinated arms shipments for Taylor and the RUF through Burkina Faso's capital, Ouagadougou.

Al Qaeda was not the only terrorist or criminal group to operate under the protection of Taylor, Compaore and Bah. Victor Bout, one of the world's largest illicit weapons dealers, registered his fleet of aircraft in Liberia because he could do so with no questions asked and no inspections required. With those aircraft, he shipped tons of weapons-including combat helicopters, surface-to-air missiles and anti-aircraft guns--to Taylor and the RUF through Burkina Faso. At the same time, Bout was supplying UNITA rebels in Angola and several sides of the civil war that was shattering the Democratic Republic of Congo. He often accepted diamonds as payment for his weapons.

There is an intriguing link between Bout and al Qaeda. U.S. and U.N. investigators found that, while supplying African wars with weapons, Bout was also providing goods and services to the Taliban and al Qaeda. From his base in the United Arab Emirates, Bout and a partner, a member of the royal family, flew weapons, medicines and other commodities to the outlaw regime and its supporters.

Another world-class criminal, Lenoid Menin of an important Russian organized crime family, also set up shop in Monrovia, buying diamonds and exploiting timber. Protected by the Taylor's son Chuckie, Menin also delivered weapons in exchange for the chance to reap millions of dollars in illegal profits. Despite an international arrest warrant, Bout lives peacefully in Moscow. Menin also remains free.

Terrorists and criminals chose their commodity well. Diamonds, like tanzanite and other gemstones, carry a high value in small bulk, yet are easily convertible to cash in an industry that is largely willing to ignore the origin of the stone. The stones cannot be detected by dogs and set off no metal detectors at airports, making them easy to transport. Sales of small amounts are impossible to detect on the world market. They cause no undue fluctuations. For years, Bah and others had made extensive use of grey market networks in Antwerp and elsewhere to sell millions of dollars worth of diamonds, with part of the proceeds going to personal enrichment and part going to keep the RUF and Taylor armed and at war.

By early 2001, al Qaeda was moving more aggressively into the diamond trade with the clear intent of putting their assets beyond the reach of international investigators. Two top al Qaeda operatives who were believed to have been heavily involved in the U.S. embassy bombings and other high profile attacks--Ahmed Khalfan Ghailani and Fazul Abdullah Mohammed--were dispatched to Monrovia to set up greatly expedited mining operations, offering to buy all the diamonds the RUF could produce. They lived in a safe house tucked between buildings housing Libyan diplomats and security forces in downtown Monrovia.

In this effort, al Qaeda leaders, while devoutly Sunni Muslims, showed their willingness and ability to work across religious divides. In order to move the diamonds quickly, the al Qaeda operatives turned to Aziz Nassour, a Lebanese diamond merchant with decades of experience in the blood diamond trade. Nassour is a devout Shi'ite Muslim and a supporter of Lebanon's Amal militia.

Nassour, who was a close business associate of Mobuto Sese Seko in the former Zaire and owner of a host of diamond companies in Antwerp with overlapping directorates, met with the RUF high command in Monrovia in July 2001, promising to buy all the diamonds they could produce. The rebels promised to step up production to the maximum.

Several factors contributed to the RUF being able to dig out the stones at unprecedented levels. Since the RUF had driven most of the civilians out of the diamond mining areas after taking over the region in 1997, production was limited to what the rebels themselves could mine. But things were changing at the same time al Qaeda was scrambling to acquire the stones.

Because a fragile U.N.-backed peace process was taking hold and the RUF was gradually disarming, the rebels were able to move their cadres directly from the demobilization camps to mining. And, because the war was winding down, miners who had stayed out of the diamond-mining region for fear of the RUF poured into the area as U.N. peacekeepers offered a modicum of security for their labor.

Nassour's monopoly also created a shortage among traditional RUF clients, one of the tip-offs that something unusual was happening. Diamond buyers who normally bought stones from the RUF were unable to buy diamonds during the summer of 2001 because some unknown buyers were paying 10 percent to 15 percent more than the market rate. They said that premium, being paid by their competitor, made it virtually impossible for them to buy high quality stones. The lack of diamonds was severe enough to prompt U.S. Ambassador Joseph Melrose to write a cable to Washington about it, although he did not have an explanation for the unusual market happenings. The cable received no response from headquarters.

At the same time, according to Belgian diamond experts, despite the fact that in the summer of 2001 more diamonds were being mined than at any time in the past decade, the stones didn't show up in Antwerp or any of the other world markets. That showed, one investigator said, that "someone bought and is hoarding a large stock of diamonds, worth many millions of dollars."

The paradigm shift in terrorist financing, although similar methods have been used for decades by Hezbollah and other Middle Eastern groups, was missed entirely by Western intelligence agencies. The CIA lost almost all of its operatives in West Africa after the Cold War, leaving the agency with virtually no resources on the ground. French and Belgian intelligence, active in their former colonies in West Africa, knew of the Middle Eastern connection to diamond sales over the past two decades--principally to Hezbollah and Amal militia supporters--but viewed them as relatively harmless. In the 1980s, the Israelis, aware of the financial boon diamonds provided to its enemies, sent in a large number of its own diamond dealers in an attempt to cut into the trade. Remarkably, by the end of the 1990s, Israeli and known Hezbollah and Amal dealers were doing business with each other across Africa.

Because of the lack of understanding of the terrorists' use of commodities, the U.S. government, in the immediate aftermath of 9/11, did not look for terrorist funds where they were hidden. The initial hunt for al Qaeda funds focused almost exclusively on trying to freeze the few assets that remained in Western banks and were traceable to terrorist funding. The initial reporting on terrorist ties to gemstones, by me on diamonds and Bobby Block of the Wall Street Journal on tanzanite in particular, were met initially with deep skepticism in the U.S. intelligence community.

This largely continues today. Because it had such a limited understanding of al Qaeda's financial structure before the Sept. 11 attacks, the government was slow to recognize and begin to act on the host of non-traditional financial methods used by terrorists. These include the use of charities, the hawala system of transferring assets and the vital role that gold plays for these groups. Some U.S. intelligence agencies remain reluctant to acknowledge even the possibility that al Qaeda moved significant assets into commodities, especially gem stones, despite the growing evidence, beyond anecdotal evidence and eyewitness testimony to support the veracity of the reporting. Much of the evidence has been uncovered by European law enforcement and intelligence officials who have followed leads the U.S. has chosen not to. The Swiss attorney general, in a recent interview, said it was now accepted, conventional wisdom among European investigators and intelligence agencies that al Qaeda had put most of its wealth, estimated by U.N. experts to be between $30 million and $300 million, into commodities for safekeeping.

The Belgians in particular have uncovered a wealth of information on the diamond nexus to al Qaeda, flowing through Antwerp. Other eye witnesses, unavailable when I did my initial reporting, have come forward to confirm the presence of the al Qaeda operatives in Liberia and Sierra Leone. Most significantly, the United Nations-backed Special Court for Sierra Leone has uncovered witnesses and other evidence that not only corroborated my initial findings, but placed other senior al Qaeda operatives in Monrovia at the same time. For reasons that remain unclear, U.S. officials have given little importance to the findings.

The terrorist ties to the diamond and tanzanite trade were uncovered by reporters on the ground in Africa. Given the lack of human resources the CIA and other intelligence-gathering agencies have on the ground in West and Central Africa particularly it is not at all surprising the activities were undetected. Perhaps more than any other region, Africa was abandoned by U.S. intelligence services following the Cold War, often leaving a single station chief to cover two or even three countries with almost no support personnel.

Given the dearth of assets on the ground and the fact that so little of the illicit trade is detectable through electronic intercepts or other high-tech tools, it seems to me highly probable that similar transactions, by al Qaeda and other terrorist groups have transpired in other countries. Countries across Africa, from the Central African Republic to the Congo and Chad offer many of the same conditions that Liberia and Sierra Leone have offered: the trappings of a state but in reality states rife with corruption, coupled with an almost complete lack of investigative capabilities and no tradition of confronting criminal elements.

There is strong anecdotal evidence that al Qaeda bought gems in Congo-Kinshasa and Angola as well as Sierra Leone and Liberia. The DRC, with its host of different armies dividing up the country for the purpose of looting, coupled with a long history of a rapacious state and corruption, is long known to be a major financial center for Hezbollah and other armed groups. Private armies control vast swaths of the extensive nation, and neither the central government nor intelligence agencies have any clear idea of what transpires outside of the capital. For example, there are direct, twice-weekly flights from the diamond-mining center of Mbujy-Mayi in southern DRC to Dubai. The flights pass through no customs regimen, file no flight manifests and are uninspected on both ends of the flight. In Angola, Jonas Savimbi maintained strong ties to Compaore in Burkina Faso and the corrupt dictatorship in Togo, often using diamonds as a medium of exchange for weapons. The only serious investigations into the activities and their possible ties to terrorist organizations have been carried out by the United Nations panels of experts and a handful of private, nongovernmental organizations. Neither the host states nor counter-terrorism bodies from other countries have dedicated significant resources to unraveling the diamond trade there. Until resources and attention are brought to bear in this area, al Qaeda and other terrorist organizations will continue to use diamonds and other commodities to finance their actions.