Christian Action Network

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Muslim financiers fight suspicion in U.S.

(Herald Tribune) NEW YORK: Before the attacks of Sept. 11, Prince Mohamed al Faisal al Saud felt welcome in America.

A member of the Saudi royal family and a pioneer of Islamic finance, he was a pillar of a Saudi business establishment that had long relished its ties with the United States.

Since then he has kept his distance. The company he founded in 1981, Dar al-Maal al-Islami Trust, or DMI – a holding company based in the Bahamas with a portfolio of Islamic banks in Bahrain, Niger, Egypt and Pakistan – is a defendant in a consolidated $1 trillion lawsuit brought by the families of those who died on Sept. 11, 2001, and his lawyers have advised him not to set foot in the United States as the case winds its sluggish way through federal courts in New York.

The lawsuits naming Mohamed personally were dismissed in 2005. But as chairman of DMI, he is the public face of the sprawling financial conglomerate that has been accused of aiding terrorism.

More than that, the prince, and by extension DMI, are a distillation of the discordant views that surround Islam and money since Sept. 11. Some see him as the leader of Islamic finance, a thriving piece of the global economy that approaches $800 billion in assets. Others have accused the prince, a follower of the conservative Sunni branch of Wahhabi Islam, as being involved in funneling money to Al Qaeda.

Fueled by rising oil prices and an increasingly open investment climate, capital is flowing to the Middle East, often steered to institutions like DMI and its subsidiaries that, to comply with Islamic law, eschew interest and speculation in favor of investments in which the borrower and lender share in the risk and reward.

Yet, in the wake of the attacks on Sept. 11, the tendency to connect the businesses of established Muslim financiers to Islamic extremism continues. That point became clear last year during the outcry over whether DP World, a port operator based in Dubai, should run terminals in the United States.

Even now, such suspicions show no sign of abating.

Many other Muslim institutions have been named in the suit, and last month Mariane Pearl, the wife of the slain Wall Street Journal reporter Daniel Pearl, sued Habib Bank, the largest bank in Pakistan, accusing it of providing banking services to charities that supported terrorist organizations.

For Mohamed, his legal difficulties, combined with a growing resentment of U.S. policies in the Middle East, have put a strain on what had been a robust business relationship. “There has been a cloud on relations,” said Richard Debs, an advisory director at Morgan Stanley and vice chairman of the United States-Saudi Arabian Business Council. “There is disaffection. People think Prince Mohamed has been unfairly persecuted and attacked. I just don’t see the connection between Islamic finance and Islamic extremism.”

In the case of DMI, others are not so sure. This year, the U.S. Justice Department’s counterterrorism division disclosed that it was investigating whether clients of a DMI subsidiary, via a private equity fund once owned by DMI, avoided paying their share of taxes.

In their complaint, lawyers for Sept. 11 relatives say that the early alliances formed by Mohamed with conservative political and religious figures in Sudan and Egypt, as well as the banking services DMI has provided to people and organizations who would be declared terrorists after Sept. 11, serve as proof that the prince and the trust have “conspired with Al Qaeda and the other defendants to carry out terrorist attacks.”

A lawyer representing DMI, James McGuire, denies any such intent. “The fact that DMI unknowingly had an account with someone who was later deemed a terrorist is hardly evidence that the bank is involved in terrorism,” McGuire said.

Investigators for the plaintiffs have gathered documents showing that Wael Jelaidan, an alleged founder of Al Qaeda who was designated a terrorist by the U.S. government in September 2002, maintained an account at Faisal Finance, the Swiss banking unit of DMI, from January 1997 to July 2003. That account grew to as large as $405,000. Jelaidan, through his lawyer, Martin McMahon, has denied links to terrorist organizations.

An even more significant client of Faisal Finance, now called Faisal Private Bank, was Yassin Abdullah Kadi, a prominent Saudi businessman and a past shareholder of DMI who was designated a terrorist in October 2001 for his ties to Islamic charities accused of providing financial support to terrorists. Bank records from Faisal Finance show transactions by Kadi as late as February 2003, more than a year after his designation. Kadi has denied that he has ever supported terrorist organizations and he is contesting his designation.

Other documents collected by plaintiffs show that two extremist groups in Pakistan that have been designated by the United States as supporting terrorism maintained deposit accounts at Faysal Bank, DMI’s banking affiliate there. One is Lashkar e-Tayyiba, an armed group fighting India in the disputed region of Kashmir, and another, Lajnat al-Dawa, is a Kuwait-based foundation that has links to Al Qaeda, according to the U.S. Treasury Web site.

McGuire, DMI’s lawyer, said the accounts were frozen as soon as the clients had been either put on a designated list or banned in Pakistan.

The accounts of Kadi and Jelaidan are active only to the extent that investment payouts are recorded and fees are paid to Faisal, he said.

The complaint also focuses on the ties Mohamed had with controversial religious personalities like Hassan al-Turabi from Sudan, who was a supervisory director of the trust from 1982 to 1992, and Yusuf al-Qaradawi, who was an early religious adviser to the trust until he left in 1994.

Turabi was once a powerful political figure in Sudan, who welcomed Osama bin Laden to the country in 1991. Faisal Islamic Bank in Sudan, a past affiliate of the trust, was a major financial sponsor of Turabi, the complaint says. And Qaradawi, a prominent Islamic scholar from Egypt, has been linked to the Muslim Brotherhood, although he did condemn the Sept. 11 attacks soon after they occurred.

Finally, the complaint highlights a phrase used by Mohamed in a 1984 letter to shareholders in which he says, “May Allah bless your jihad and all your efforts.”

Lawyers for the plaintiffs say that it is the mix of these pieces of evidence that underpins their case. They maintain that even if DMI has now cut ties and frozen accounts, the fact that these people were on the board and that DMI provided financial services to them was a sign of sympathy toward Islamic extremism.

“All this creates a picture that DMI provided material support to Al Qaeda,” said Michael Elsner, a lawyer representing the Sept. 11 relatives. “And if the accounts are frozen, why are they accepting investment payouts?”

But Khalid Abdulla Janahi, the chief executive of DMI since 1998, who has overseen a period of substantial growth for the company as the market for Islamic finance has boomed, sees something more insidious at work: the latent prejudice of his legal opponent, compounded by a broader bias he has encountered since Sept. 11. “Suddenly the hatred of the petrodollar days is back,” he said.

Janahi, who was a partner at Price Waterhouse before coming to DMI, explained that jihad could also mean a nonviolent struggle for a pure, legitimate end. He added: “Rarely in the Western media do I read anything about our food, our culture, our painting, or our poetry. I just read how bad we are as Muslims.”

At DMI’s administrative headquarters in a gleaming glass building on the outskirts of Geneva, the only evidence of the trust’s religious orientation is a painting of a pensive King Faisal, the father of Mohamed, which hangs in its main conference room.

Janahi is dressed in a conservative suit and he takes pains to explain that Islamic finance is a global business that has attracted the likes of Goldman Sachs and HSBC to compete with DMI.

Technically a trust, DMI functions as a holding company, with ownership stakes in Islamic banks in Pakistan and Egypt and Africa, investment banks in Bahrain and the Faisal private bank in Geneva. It also manages $1.5 billion for largely Muslim clients, invested exclusively in businesses and funds that are in tune with Islamic law, like real estate and private equity.

Since recording a loss in 2000, its fortunes have soared as capital has flowed to the region and the trust recorded a record profit of $52 million last year.

Yet the specter of the lawsuit hangs over the company, and it has spent millions of dollars on legal fees. “We will take this case to the Supreme Court if need be,” Janahi said.

DMI’s motion to dismiss, along with 107 similar motions from other defendants in the case, awaits a decision from a U.S. District Court in New York.

While he will not discuss specific accusations, the very thought that an established entrepreneur like the prince – before DMI, he ran a venture in Jidda that aimed, unsuccessfully, to bring icebergs to Saudi Arabia – would knowingly fund terror offends Janahi’s pragmatic sensibilities.

“These people are all part of the system,” he said, referring to many established Middle Eastern businessmen named in the suit. “There is no way they are going to pay people to hang themselves.”

Ibrahim Warde, an expert on Islamic finance at the Fletcher School at Tufts University in Massachusetts, has written a book, out this summer, called “The Price of Fear.” In it, he says that, contrary to popular perception, there is no monolithic financial pool sustaining Al Qaeda – a view that is supported by Sept. 11 commission report’s monograph on terrorism financing. “There is this idea that it is money that makes terror possible,” he said. “So DMI, as an Islamic bank, has a few strikes against it.”

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August 9, 2007 - Posted by | Blogroll, Homeland security, news, personal, politics, random, religion, Terrorism, Terrorism In The U.S., Terrorism News, Uncategorized, War-On-Terror

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