The Saudi Buck Stops Here

By | by Dr. Rachel Ehrenfeld
Thursday, March 3rd, 2005 @ 5:28AM

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[The State Department sharply criticized Saudi Arabia for its human rights abuses in its  annual report published last week. Nothing, however, is being said about Saudi Arabia’s continuous funding of the spread of Wahhabism around the world. Wahhabism remains the major source of Islamist ideology and Saudi Arabia has never stopped funding its expansion. The Saudis don’t like to hear about that, however, and so the Administration is keeping mum.

In an attempt to prevent exposure of how they fund terrorism, the Saudis have been suing those who attempt focus light on their crime in British courts. And they have been  successful. Current detailed information on the Saudis’ funding of international Islamist terrorism is extremely difficult to come by. Dr. Rachel Ehrenfeld, however, is making up for that deficit in her book, Funding Evil: How Terrorism is Financed and How to Stop It. The updated paperback has just been published in the midst of a legal battle to uphold the First Amendment, so that the US media can also report about the ongoing Saudi funds for terror, without fearing expensive libel lawsuits.  The following is an excerpt from Funding Evil  — The Editors]

Early on the morning of January 23, 2004, I received an e-mail from a law firm in London. This was no ordinary message. It was a letter threatening to sue me for libel in a British court, for statements made in the original edition of Funding Evil about their client, Saudi billionaire Khalid bin Mahfouz.

The letter said that, contrary to allegations reported in this book, bin Mahfouz does not have now and never had “any involvement or association with the sponsoring of al-Qaeda,” nor has he ever “knowingly financed terrorism of any description and vehemently den[ies] this.”  Khalid bin Mahfouz’s lawyers demanded:

•       “An undertaking to the High Court in England not to repeat the same (or similar) offending allegations”

•       “The withdrawal from circulation and destruction and/or delivery up of all unsold copies of the Book immediately”

•       A public letter of apology

•       A donation to a charity agreed upon by bin Mahfouz

•       Payment of the legal fees involved

I was not the first author that bin Mahfouz had threatened to sue, nor probably the last. At the time that this threat arrived, I was already aware that bin Mahfouz was engaged in “forum shopping,” the latest legal tactic employed by him and other rich Saudis apparently seeking to skirt American justice and its freedom-of-speech principles:

“Some Saudis appear to be using the U.K. as a back door to silence their critics and repress free speech by threatening litigation, persuading publishers to back down rather [than] face years of expensive litigation—even if what they’re publishing might in fact be true,” said Trevor Asserson, who specializes in defamation in the London law office of Morgan Lewis & Bockius.

Several wealthy Saudis are funding a cynical campaign to attack Americans’ First Amendment rights by suing reporters who expose them under British libel laws. These are the same Saudis named in a trillion-dollar lawsuit tied to the September 11 terrorist attacks, the same Saudis who laugh all the way to Riyadh banks each time we fill up at the pump, and the same Saudis who have been identified by official statements and hearings in Congress as funders of al-Qaeda and HAMAS.

Why British courts? In the U.K., a plaintiff can easily win a judgment because, among other things, he is not required to prove that the alleged libel was done with malice. Accordingly, Khalid bin Mahfouz, who is named in all the 9/11 lawsuits, has threatened twenty-nine authors and publishers with libel suits in U.K. courts. None apparently have gone to trial. Instead, the defendants settled at an early stage because they could not, or would not, endure a lengthy and costly lawsuit; they have capitulated, apologized, retracted, and paid fines. Since bin Mahfouz has a long track record of successful judgments by default, he clearly anticipates such a judgment against me too, relying upon his capability to pay for even the costliest legal proceedings—his lawyers seemed to assume that I would not have the financial means to defend myself. This is not surprising given that in 2004 Forbes magazine listed bin Mahfouz as having $3 billion.

Bin Mahfouz is the former owner of the largest Saudi bank, the National Commercial Bank (NCB), and he established and funded a charity called the Muwafaq Foundation.  According to government officials in the U.S. and elsewhere (as documented in chapter 2), the NCB served as the major pipeline for terror financing. However, it has not been put on the official U.S. terrorist list. Neither has the Muwafaq Foundation, despite having been identified by the U.S. Treasury Department as providing logistical and financial support to al-Qaeda, HAMAS, and the Abu Sayyaf organizations.

Bin Mahfouz himself has been accused of being involved in illegal activities in the past. A press release by New York District Attorney Robert Morgenthau on July 1, 1992, announced the indictment of “Sheik Khalid Bin Mahfouz, the chief operating officer of The National Commercial Bank of Saudi Arabia” for his involvement with BCCI, the Bank of Credit and Commerce International. Morgenthau pointed out that the significance of the indictment against bin Mahfouz is that “BCCI in 1986 needed additional capital to sustain and expand its operations. Mahfouz’s name and money gave BCCI that capital.”  As a result, “Mahfouz became a principal shareholder and director in the BCCI Group.”

However, Morgenthau noted that “Mafouz’s investment in BCCI later was secretly withdrawn, which resulted in a gross misstatement of the true financial picture of the bank. The scheme resulted in larger losses for depositors and others when BCCI’s worldwide Ponzi scheme finally collapsed.” Morgenthau actually described the BCCI scam as a “rent-a-sheikh” scheme. Bin Mahfouz denied all allegations but paid a fine of $225 million, and as part of the settlement with the government he was barred from any further activities in the American banking system. (Of course, just because he paid a $225 million fine does not necessarily mean that he actually did any of the things with BCCI of which he was—perhaps wrongly—accused.) In addition, his bank, the NCB, was forced to close its branches in New York and London as part of the same settlement.

The Board of Governors of the U.S. Federal Reserve, in a subsequent indictment on July 8, 1992, stated that “Mahfouz operated NCB with what he characterizes as an ‘absolute authority.’” This statement seems inconsistent with bin Mahfouz’s claim that he did not know what was going on at the National Commercial Bank, and therefore had no knowledge that the NCB was used to funnel money to terrorist organizations.

Although the U.S. government did not list bin Mahfouz’s Muwafaq Foundation on its terrorist list, in a press conference held on October 12, 2001, when Yasin al-Qadi was added to the Designated Terrorist List, he was described as “head of the Saudi-based Muwafaq Foundation, which transferred millions to Mr. bin Laden.” In addition, a letter dated November 2001 from the Department of the Treasury to the attorney general of Switzerland stated the following: “The Muwafaq Foundation provided logistical and financial support for a mujahidin battalion in Bosnia. The Foundation also operated in Sudan, Somalia, and Pakistan, among other places. A number of individuals employed by or otherwise associated with the Muwafaq Foundation have connections to various terrorist organizations. . . . The Muwafaq Foundation also provided support to Hamas and the Abu Sayyaf Organization in the Philippines.” The letter went on to say that “the Muwafaq Foundation also employed or served as cover for Islamic extremists connected with the military activities of Makhtab Al-Khidamat (MK) [which was absorbed in al-Qaeda and was designated as a terrorist organization]. . . . A number of NGO’s, formerly associated with the MK, including Muwafaq, also merged with al-Qaeda.”.

Khalid bin Mahfouz, who established the Muwafaq Foundation in 1991, claims on his Web site that the foundation “was wound up between 1996 and 1998.”  However, according to the Guardian, the Muwafaq was possibly still active in the offshore haven of Jersey in September 2001; as before, the foundation’s lawyers denied that it funded terrorism.  But, according to the Treasury Department’s letter, the pattern of activity displayed by Muwafaq fit the pattern of other “relief” organizations that worked in concert with terrorist groups “and give[s] rise to a reasonable basis to believe that they have facilitated terrorist activities.”

The 9/11 Commission Report, though it does not mention Khalid bin Mahfouz by name, refers to the “Golden Chain,” a “financial support network . . . put together mainly by financiers in Saudi Arabia and the Persian Gulf states,” which was responsible for Osama bin Laden’s “strong financial position in Afghanistan” from 1996 to 1998.  According to a court document cited as a source in commission’s report, a list of the members of the Golden Chain was found in the spring of 2002 in Bosnia during a raid on the offices of Benevolence International Foundation, a Saudi charity that funded terrorism.  According to the Wall Street Journal, “the Golden Chain list was confirmed by U.S. officials and translated from Arabic by the Justice Department, and among the names listed are “billionaire bankers Saleh Kamel and Khalid bin Mahfouz.”

No one has taken proceedings against bin Mahfouz all the way to a final hearing to prove his much-denied connections with terrorism. A lot of people, many with access to high-level intelligence, have made serious allegations, but due to national security concerns they are not making all the evidence generally available. Thus, bin Mahfouz continues to protect himself by threatening libel lawsuits. But, given the number of reports and investigations that point the finger at him, one wonders why he has not been placed on the U.S. list of terrorists. Will the U.S. government add all those mentioned on the Golden Chain list, including bin Mahfouz, to its terror list? Judging by the 9/11 Commission’s precedent—probably not. This leaves me and others who are trying to expose those that fund Islamist terror organizations to face the threat of costly legal action in British courts by Khalid bin Mahfouz and his associates.

On October 19, 2004, Khalid bin Mahfouz commenced legal proceedings against me for libel in a British court.  Despite the enormous cost involved, I have decided to take it upon myself to challenge Khalid bin Mahfouz and provide the UK court with evidence that Khalid bin Mahfouz, the Muwafaq Foundation, and the NCB have in fact supported al-Qaeda and HAMAS.

My challenge of bin Mahfouz carries even greater repercussions since Prince Turki, the Saudi ambassador to London, is alleged to have said recently that it’s important that bin Mahfouz win because he “represents all of us [Saudi Arabia and the Royal Family].”

So remember, this is a book the Saudis do not want you to read.

[Since this was written in October 2004, Khalid bin Mahfouz was handed a judgment by default against Dr. Ehrenfeld by the same British judge that awarded him many similar judgments. Advised by her lawyers, rather than litigate with KBM (who is a defendant in most of the 9/11 lawsuits) in an unfavorable forum with libel laws antithetical to the First Amendment, Dr. Ehrenfeld has counter-sued KBM in New York’s Federal Court, in what is an important legal precedent. She seeks, through innovative and novel legal procedure, to establish a precedent for all journalists and writers against libel forum shopping in British courts. The Saudi’s actions deprive us of our First Amendment right to publicize their activities in support of terrorism and, in fact, constitute a new form of terrorism in itself.

In addition to winning the freedom of the American press to investigate and report fairly and responsibly on one of the most important public issues of our time–the funding of international terrorism—Dr. Ehrenfeld’s lawsuit will make KBM’s support of Al-Qaeda and HAMAS a matter of public record and will help all the 9/11 victims’ families who are suing him. –The Editors]

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