The Israeli Researcher Versus The Saudi Billionaire

By public-integrity.org | by Haim Handwerker @ Haartez
Monday, July 25th, 2005 @ 8:19PM

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In a book published in the United States, Dr. Rachel Ehrenfeld accused Khalid bin Mahfouz of participating in funding of al Qaeda. He sued her in London, and won. Now she is seeking the protection of a U.S. court from the “intolerable ease” of presenting a libel suit in Britain. New York Rachel Ehrenfeld, an American-Israeli researcher in the field of terrorism financing who lives in New York, finds herself these days in the middle of a lengthy legal quarrel with the Saudi billionaire Khalid bin Mahfouz, one of the subjects of her book “Funding Evil – How Terrorism is Financed. The book the Saudis don’t want you to read.”

Bin Mahfouz, 56, holds place number 210 on the list of the World’s Richest People published by the economics magazine “Forbes,” with a fortune estimated at $2.8 billion dollars. He was the chairman and owner of the largest bank in Saudi Arabia, “National Commercial Bank,” and today he and his family are involved in a number of investments around the world. His name hit the headlines during the collapse of the “B.C.C.I.” bank, with which he was connected as an investor and an external director. When the bank collapsed it was revealed that the bank was involved, among other things, in a series of money laundering cases, financing weapon deals, and illegal bank purchases. As part of the settlement with the authorities Mahfouz paid a total of $235 million, but no indictment was issued against him and he did not have to admit any wrongdoing whatsoever. Bin Mahfouz is also one of the defendants in the trillion dollar lawsuit posted by victims of the World Trade Center disaster. He was sued as part of a long list of Saudi government officials and businessmen.

Ehrenfeld, a native Jerusalemite, holds a doctorate in criminology from the law faculty of the Hebrew University, under the supervision of Haim Cohen. As part of her post-doctoral work, which she performed in the United States and published as a book in 1990, she coined the term “narco-terrorism” – the political use of narcotics by governments and organizations in order to destabilize other governments. In 1992 she published a second book, “Evil Money,” which dealt with money laundering and corruption that threatens democratic governments. Ehrenfeld has a one-woman center named “The American Center for Democracy” that specializes in the uncovering of the forces which prevent democracy in the world and those that fund terror, as she puts it. She relates to us that she has been advising the Pentagon since September 11 on a non-permanent basis on everything connected to terror financing and economic terrorism. She also occasionally works with the State Department. She is close with James Woolsey, who was head of the CIA and who wrote the introduction to her latest book, and Richard Perle, who is close to the Bush administration and one of the advocates of the Iraq war. She is considered to a large degree as a political conservative, but does not like the fact that this label has been placed on her. As she says, “My thrust is pro-American, pro-Israeli, against radical Islam, and against the haters of Israel. In the War on Terror there are no liberals or conservatives. You can call me a freedom fighter.” Do you also advise Israeli groups? “You think that someone in Israel is ready to listen to advice? They know everything.”

When the Information is on the Internet In her book “Funding Evil,” which was published in 2003, Ehrenfeld claimed that among others, the royal family, businessmen and bankers from Saudi Arabia are involved in financing international terrorism. Among these she counted bin Mahfouz, who she accused of funneling money to terror groups, among them al Qaeda in the years before the attacks on the Twin Towers. Bin Mahfouz decided not to let this pass. Similar claims were made against him before. He issued libel suits and received apologies from a good number of media outlets. According to him, there was no basis for Ehrenfeld’s claims against him and she damaged his reputation.

He presented the libel suit in London. He in fact lives in Saudi Arabia and is not a British citizen, and the book was published entirely in the United States. And yet, according to his lawyer Michael Gordock, he maintains a house in Britain, and he has a business and a reputation there, which he needs to defend. According to Ehrenfeld, he had an additional good reason to sue in London. Libel laws in Britain are favorable to the plaintiff. The burden of proof is on the person making the claim. She must prove that she wrote the truth and it is not enough that she made a claim in good faith. In the U.S. the situation is the opposite. The plaintiff must prove that that what was written about him was false and written with malicious intent and that substantial damage was done to him by the publication. Therefore, it is much easier to win a libel suit in Britain than in the U.S. And therefore, “legal tourism” has developed in Britain for those wishing to bring suits like this.

There are very few issues that both sides agree about. For example, take the question of whether the book was even published in Britain. A total of 23 copies of the book were purchased in Britain, through the Internet, and sent by mail from the United States. Bin Mahfouz’ lawyers claim that a summary of the book also was publicized on an internet site which was visited by many people from Britain. Herein lies a fundamental question: If someone publishes information in a certain country, is it possible to present a libel suit in another country, only because people acquired the information through the internet? The question has already been debated and decided in different ways in various countries.

Somehow or another, a London judge accepted bin Mahfouz’ claim and the suit went forward. Ehrenfeld stood behind her claims that she spoke the truth, but she chose to take an unconventional path and did not defend herself. She says that she refuses to recognize the authority of the English court: “I am an American citizen. I live in the U.S. The book was written and published in the United States according to the laws of the country and was not sold in England. Therefore, a case like this needs to take place in the U.S.” She admits that the British legal approach would make her defense difficult. “In the United States, for example, it is sufficient that I quoted Madeline Albright, who said something which in my mind is important to publish. In a British libel suit, this is not enough to prove what I wrote. I need to bring Albright to the courthouse, and she needs to bring the primary intelligence material which she relied upon, and that will not happen.”

Ehrenfeld also had a practical reason to take a pass on the battle in London. From a financial standpoint, in her words, she would not be able to allow herself the huge expense of a trial in England. The Publishers Support Her The trial, which took place in late 2004, was therefore carried out in a one-sided fashion. In December the court decided against Ehrenfeld and her publisher, demanded an apology from her, and ordered her to pay a sum of 60 thousand pounds as an initial sum. At a later stage the court will be able to increase the size of the damages.

Ehrenfeld claimed that bin Mahfouz is using scare tactics against her with the suit in Britain, in order to prevent herself and others from publishing what they know. Bin Mahfouz or one of his men refused over the internet to respond to this article and referred us to his lawyers. On his internet site he strongly denies the claims against him expresses opposition to all forms of terror. He also expresses shock at the 9/11 attacks, denies any connection to al Qaeda and protests against false accusations, as he puts it, which were made against himself and his family. Among these, for example are those that claim that his sister is married to Osama bin Laden. Despite his victory in the legal battle in London, the media has not always stood by him. The London Times, for example, criticized the court’s decision and expressed concern that London is becoming the libel capital of the western world and is attracting innumerable foreign suits.

Ehrenfeld, for her part, decided not to give up. She requested a declarative judgment from a New York court, which will determine that what she wrote in the book is precise and in accordance with U.S. legal norms. As she puts it, “The United States is a country that defends free speech and as an American citizen I want to defend my right to free speech.” In addition, she wants the court to determine that it is not possible to enforce the decision of the London court. There is a good reason for this: Bin Mahfouz’s lawyers are able to approach a local court and try to seize her assets in the United States. For their part, they have not yet approached the U.S. legal system to take the money. Ehrenfeld’s legal suit is indeed precedential. It is no wonder that organizations of publishers, journalists and writers in the U.S., Britain, and Australia, as well as Amazon, the internet book distributor, are trying to stop the phenomenon of “libel tourism” to Britain. In a document presented to the court they claimed that when a wealthy businessman succeeds in a libel suit in a foreign country, which was carefully chosen and in which the laws of freedom of speech are different than those in the U.S., this sends a frightening message to writers and publishers. American writers, they claim, need to receive tools to deal with this sort of threat.

Regarding Ehrenfeld, the document notes that following the suit in Britain, there is a fear that publishers will hesitate to publish her writings. The U.S. court needs, in their opinion, to intervene to protect freedom of speech in the United States. The proper place for a suit from bin Mahfouz, they maintain, is the United States and no place else. Bin Mahfouz’ lawyers turned to the New York court with a request to cancel the proceedings undertaken by Ehrenfeld. They claim that the London court was legitimate because he has activities in London and not in the United States and because the case has no relevance in the United States. Further, they note that bin Mahfouz has not begun the process of receiving damages in the United States. Similarly, American law does not give credence to the granting of hypothetical declarative opinions, as Ehrenfeld requests. They also note that the London judge rejected Ehrenfeld’s contention that bin Mahfouz is exploiting the English legal system and is hiding behind British libel laws.

Now the New York court must make a critical decision whether to continue the discussions or not. The lawyer Floyd Abrams, an expert in the field of freedom of speech in the United States, says that it will be very important that the American court agree to discuss the issue. “There is a real problem here,” he says, “Americans are used to the freedom of speech customary in the United States. When they say something in their country according to American laws, and are brought to stand trial in a different country, they are in a weak position because they appear before a legal system unfriendly to journalistic freedom, as we understand it in the U.S.” Does she have a chance? Abrams: I think so. But it is hard to convince a court to hear a case under circumstances like these, where the plaintiff in Britain is not actively claiming from her the damages decided by the British court. On the other hand, the case raises very meaningful issues on the subject of freedom of speech in the United States and its limitations due to the laws of foreign countries, so I think that the American court needs to intervene and make its opinion known.”


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