Staff Report to the Commission

it claims was derived from or used to commit specific crimes or unlawful acts. In seeking forfeiture where

no crime is charged, the government must file a civil lawsuit and bear the burden of proof by a

preponderance of the evidence (the standard used in most civil cases) that the property in question is

forfeitable. The defendant gets the same type of discovery of the evidence available to any other litigant,

such as taking sworn depositions and obtaining documents. Moreover, the defendant has the right to avoid

forfeiture by demonstrating that he is an innocent owner, that is, he obtained or possessed the property in

question without knowing its illegal character or nature.

National Commission on Terrorist Attacks Upon the United States

114

Chapter 7

Al Haramain Case Study

The al Haramain Islamic Foundation (al Haramain or HIF) is one of the most important

and prominent Saudi charities.126 Al Haramain has been on the radar screen of the U.S.

government as a potential terrorist-financing problem since the mid- to late 1990s, when

the U.S. government started to develop evidence that certain employees and branch

offices might be supporting al Qaeda and related terrorist groups.127

The U.S. government, however, never moved against al Haramain or pushed the Saudi

government to do so until after 9/11. Terrorist financing simply was not a priority in its

bilateral relationship with the Saudis before 9/11. Even when discussing terrorist

financing with the Saudis, the U.S. government was more concerned about issues other

than Saudi charities and al Haramain.128 Meanwhile, the Saudis were content to leave the

issue unexplored.

After the 9/11 attacks, a more focused U.S. government sought to work with the Saudis to

stem the flow of funds from al Haramain to al Qaeda and related terrorist groups.

Progress was initially slow; though some U.S.-Saudi cooperation on al Haramain

occurred within the first six months after 9/11, it was not until the spring of 2003 that the

U.S. government and the Saudi government began to make real strides in working

together to thwart al Haramain.

Background

Al Haramain, a Saudi Arabia–based nonprofit organization established in the early 1990s,

has been described by several former U.S. government officials as the “United Way” of

Saudi Arabia. It exists to promote Wahhabi Islam by funding religious education,

mosques, and humanitarian projects around the world.129

At its peak, al Haramain had a presence in at least 50 countries. Al Haramain’s main

headquarters are in Riyadh, Saudi Arabia, but it maintains branch offices in a number of

126 See chapter 1 for the scope of this analysis.

127 This chapter is derived from a review of internal government document and interviews with government

policy makers. It was especially aided by the commission staff’s ability to access and review NSC

subgroup minutes of meetings, as well as internal memoranda from the NSC, State, Treasury and the

intelligence community.

128 Our investigation has focused on al Haramain in the context of al Qaeda financing. Although much of

our analysis may apply to the financing of other terrorist groups, we have made no systematic effort to

investigate any of those groups, and we recognize that the financing of other terrorist groups may present

the U.S. and Saudi governments with problems or opportunities not existing in the context of al Qaeda.

129 The Web site uses the term salafi, which is the preferred term of Saudi practitioners of Wahhabism.

Some argue that Wahhabism is a virulent form of religious extremism, while others have a more benign

view of it. See chapter 2 for more information.

Terrorist Financing Staff Monograph

115

countries to facilitate the distribution of charitable funds. Some of these offices are

staffed by Saudi citizens; others are managed by the nationals of the countries involved.

Estimates of its budget range from $30 to $80 million. It claims to have constructed more

than 1,299 mosques, it funds imams and others to work in the mosques, and it sponsors

more than 3,000 “callers to Islam” for tours of duty in different locations “to teach the

people good and to warn them from wrongs.”  HIF provides meals and assistance to

Muslims around the world, distributes books and pamphlets, pays for potable water

projects, sets up and equips medical facilities, and operates more than 20 orphanages.

Although both the Saudi government and al Haramain say that it is a private organization,

al Haramain has considerable ties to the Saudi government. Two government ministers

have supervisory roles (nominal or otherwise) over al Haramain, and there is some

evidence that low-level Saudi officials had substantial influence over various HIF offices

outside of Saudi Arabia. The Saudi government has also historically provided financial

support to al Haramain, although that may have diminished in recent years.

Charity and charitable organizations, like al Haramain, are extremely important to Saudi

society. As discussed in more detail in chapter 2, religious and civic duty and government

and religious functions in Saudi Arabia are intertwined. This dynamic creates

complications for the Saudi government as it seeks to stem the flow of funds from Saudi

Arabia to al Qaeda and related terrorist groups, and difficulties for the U.S. government

as it seeks to engage the Saudis on terrorist financing.

Before 9/11

After the East Africa bombings in the summer of 1998, the U.S. government began to

give more attention to terrorist financing. The National Security Council established a

subgroup of the Counterterrorism Security Group to focus the U.S. government’s efforts

on terrorist financing.130 As a result of this focus, and the consequent discovery that al

Qaeda was not financed from Bin Ladin’s personal wealth, the NSC became increasingly

interested in Saudi charities and Bin Ladin’s use of charities to fund terrorism.131

By no later than 1996, the U.S. intelligence community began to gather intelligence that

certain branches of HIF were involved in financing terrorism. Later, the U.S. intelligence

community began to draw links among HIF, the 1998 East Africa bombings, jihad

actions in the Balkans, Chechnya, and Azerbaijan, and support for al Qaeda generally.

The United States shared some of its information with the Saudis in an effort to spur

action, including evidence that al Haramain officials and employees in East Africa may

have been involved in the planning of the 1998 embassy bombings. The United States

sought information and reports from the Saudis on employees of al Haramain around the

globe and their connections to Bin Ladin, but received no substantive responses.

130 Terrorist financing was also a component of the larger strategic plan Richard Clarke developed after the

embassy bombings.

131 The U.S. government’s efforts to understand al Qaeda financing, and its engagement with Saudi Arabia,

are described in chapter 3.

National Commission on Terrorist Attacks Upon the United States

116

The Saudis took little initiative with respect to their charities. They did not make tough

decisions or undertake difficult investigations of Saudi institutions to ensure that they

were not being used by terrorists and their supporters. Although the Saudis did institute

“Guidelines for Preventing Money Laundering” in 1995 and “Regulations on Charitable

Organizations and Institutions” in 1990, these were very loose rules whose enforcement

was doubtful. Moreover, the regulations covered only domestic charities, through the

Ministry of Labor and Social Affairs, and exempted all charities set up by royal decree.

There may have been a number of reasons for Saudi inaction. Certainly, as we have

discussed elsewhere (see chapter 2), the prominence of religion-based charities in Saudi

culture may have made the Saudis reluctant to entertain the idea that charities might be

involved in clandestine activities. Some in the United States suspected that the Saudis

were complicit or at least turned a blind eye to the problem posed by charities during this

period, although others vehemently disagreed.

Ultimately, however, the U.S. government simply did not ask much of the Saudis on

terrorist financing, and the Saudis were content to do little. We did not provide sufficient

information for the Saudis to act against charities like al Haramain, did not push the

Saudis to undertake investigations of charities like al Haramain, and did not request real

cooperation from the Saudis on intelligence or law enforcement matters relating to

charities like al Haramain.

Other areas of U.S. policy involving the Saudis took precedence over terrorist-financing

issues such as those concerning al Haramain. The U.S. government wanted the Saudis to

support the Middle East peace process, ensure the steady flow of oil, cut off support to

the Taliban, continue various mutually beneficial economic arrangements, and assist in

the containment of Iraq. Given these other interests, stopping the money flow to terrorists

was not a top priority in the U.S.-Saudi relationship.

Saudi policy was formulated at a very high level in the U.S. government. During the late

1990s, the U.S.-Saudi relationship was handled primarily by the U.S. government’s most

senior officials, including the secretaries of key departments (collectively referred to as

the “Principals”), and often even by the President alone. This situation reflected the

significance of the U.S. interests involved, considerable Saudi ties to senior U.S. officials,

and U.S. willingness to accede to the strong Saudi preference for bypassing the U.S.

bureaucracy. One former NSC official noted that before 9/11, lower-level officials in

both governments generally handled terrorist financing, especially given the weakness of

the intelligence on terrorist financing and the issue’s low priority. The officials with

knowledge about it were not the ones interacting with the Saudis, and those who were

interacting with the Saudis did not push the issue of terrorist financing because their

concerns were different.

Moreover, the U.S. government had too little unilateral intelligence on HIF and on al

Qaeda’s funding mechanisms generally to press the Saudis. The Principals did not want

to confront the Saudis with suspicions; they wanted firm evidence. One NSC official

Terrorist Financing Staff Monograph

117

indicated that there was some intelligence regarding charities, but it did not rise to the

level of being actionable against any specific charity. As he said, “One individual could

be dirty, but it would be difficult to justify closing down a charity on that basis.”

Occasionally the U.S. government provided select pieces of information out of context,

but this method lessened the impact of the intelligence.

After 9/11

As we described in chapter 3, the 9/11 attacks generated a sudden and high-level interest

in terrorist financing. Attention invariably turned to Saudi Arabia. The U.S. and Saudi

governments initially agreed on a joint strategy, represented by the mutual U.S.-Saudi

action against two branches of al Haramain in March 2002 designating them as financiers

of terror.132 But it was not until the spring of 2003 that the U.S. government developed a

coherent strategy on engaging the Saudis on terrorist financing and specified a senior

White House official to deal with the Saudi government on these issues. These elements

enabled the U.S. government to capitalize on a new Saudi commitment to countering the

financing of terrorism after the Riyadh bombings on May 12, 2003.

From 9/11 to March 2002: The U.S. government’s initial efforts to

organize the interagency process and engage the Saudis

Two things occurred immediately after 9/11: first, the U.S. government formed what

turned out to be a generally effective interagency coordinating committee on terrorist

financing; second, this group began discussing possible action to take against al

Haramain.

Immediately after 9/11, the U.S. government, for the first time, developed a generally

effective mechanism to coordinate agencies’  approach to terrorist finance. Initially, an ad

hoc gathering of agency representatives met under the auspices of the NSC to discuss and

coordinate terrorist-financing issues. In March 2002, this ad hoc group was formalized

by the NSC as the Policy Coordinating Committee (PCC), chaired by the Treasury

Department with representatives from eight agencies with relevant subagencies. The PCC

was designed to recommend to the President policy initiatives and actions aimed at

destroying the financial infrastructure of terrorism.

After 9/11, there was constant discussion at the PCC about how to engage the Saudi

government on terrorist financing. The U.S. government had new, aggressive legal

authorities under Executive Order 13224 and UN Security Council Resolution 1373 (see

chapter 5). The major issue was whether to use these coercive tools unilaterally or take a

more diplomatic approach in engaging Saudi Arabia and their charities. On the one hand,

using these tools against al Haramain, one of the most important Saudi charities, could be

132 For an explanation of the IEEPA and UNSC process, see chapter 5, concerning al-Barakaat.

National Commission on Terrorist Attacks Upon the United States

118

counterproductive without Saudi support.133 On the other hand, using these strong tools

could send an unequivocal message that the U.S. government and the international

community were serious about fighting terrorist financing.

After considering the options for designating al Haramain, the PCC decided to try to

engage the Saudis constructively on this charity. The United States wanted many things

from the Saudis: information about the hijackers, action against al Qaeda cells training

and operating in Saudi Arabia, intelligence sharing, and access to detained individuals.

Terrorist financing was not the only element of the U.S.-Saudi counterterrorism

relationship, nor the only objective of U.S. counterterrorism policy. The concern was that

if the U.S. government pressed the Saudis on al Haramain, the Saudis’ cooperation with

the United States on counterterrorism issues or other issues would be jeopardized.

Moreover, as was the case before 9/11, the intelligence was simply not strong enough

against the HIF headquarters to push the Saudi government to take aggressive action

against the whole organization. As an early 2002 strategy paper emphasized, the United

States needed to gather more solid, credible evidence on al Haramain, which could be

released to the Saudi government as a way to ensure continued Saudi cooperation.

Although the intelligence community expressed repeated concerns that al Haramain was

deeply corrupted, others argued that there was little actionable intelligence on the charity.

The intelligence presented to the policymakers was either dated, spoke to fund-raising for

“extremism” or “fundamentalism” and not for terrorism, or lacked specificity. Indeed,

because of the lack of specific intelligence, the U.S. government was in “asking mode”

on al Haramain when interacting with the Saudis.

There was also the sense that the Saudi government would prefer to cooperate quietly

with the U.S. government for internal political reasons. Perhaps they did not want to

create the impression that charities were under attack. U.S. officials agreed to pursue

quiet cooperation as long as the U.S. government saw concrete results. Although the

United States saw no concrete results until 2003, it stuck with its plan to engage the

Saudis quietly on terrorist-financing matters.

This cooperative approach was in evidence in the first interactions between U.S. and

Saudi officials on al Haramain. In late November 2001, Assistant Secretary of State

William Burns traveled to the Kingdom and shared U.S. concerns about terrorist

financing with his Saudi interlocutors.134 Al Haramain was not a subject of the questions

but was listed in the talking points for the trip as an entity of concern.

Then, on January 17, 2002, Assistant Secretary Burns and Ambassador Robert Jordan

provided the Saudi Crown Prince Abdullah and Foreign Minister Prince Saud al Faisal

with a proposal for a joint U.S.-Saudi freeze of the accounts of eight Saudi entities and

133 Within weeks after 9/11, the United States used its new powers of designation to freeze the assets of a

prominent Saudi citizen, Yasin al Qadi. Apparently this unilateral action had created backlash in the Saudi

government.

134 An OFAC team received a one page response in Arabic from Saudi Arabia to these concerns in January

2002. This response was never supplemented by the Saudi government.

Terrorist Financing Staff Monograph

119

individuals, including the al Haramain offices in Bosnia and Somalia. In their

discussions, the governments focused their attention on the U.S. proposal relating to the

two al Haramain branch offices.

In Saudi Arabia at the end of January, Richard Newcomb, the director of Treasury’s

Office of Foreign Assets Control (OFAC), also raised the possibility with his Saudi

interlocutors of joint designations. His talking points included two pages of classified

intelligence on al Haramain (and other charities) to provide the Saudis. The Saudis agreed

to “look into” the U.S. concerns on al Haramain. In addition to proposing joint

designations, the U.S. delegation expressed “concern”  over several other HIF branches,

including those in Pakistan and Kenya (both designated in January 2004), and requested

information from the Saudis.

On February 5, 2002, the Saudi government issued an official statement acknowledging

“reports” of abuses by individuals affiliated with foreign offices of HIF and committed

publicly to take actions to prevent such abuse. However, the Saudis were slow to

respond to the U.S. proposal on the two al Haramain offices. The issue was taken up by

senior levels in the U.S. government. For example, Treasury Secretary Paul O’Neill

raised the proposal on his March 2002 trip to Saudi Arabia.

Eventually, the Saudi government agreed to the joint designation of the two al Haramain

offices, although it did not agree to designate the other six entities or individuals

originally proposed. On March 11, 2002, the U.S. and Saudi governments designated the

Somali and Bosnian offices of al Haramain, freezing their assets and prohibiting

transactions with them. Two days later the United Nations added the two branch offices

to its list of sanctioned entities under UNSCR 1267 and subsequent related resolutions.

From March 2002 to January 2003: The U.S. loses traction

In early 2002, senior-level government officials started developing a new U.S. strategy

toward Saudi Arabia on counterterrorism generally; terrorist financing would necessarily

play a part. Because the strategy was so politically sensitive, the task of developing it was

given to a small group within the NSC. As a result, PCC efforts to deal with the Saudis

on terrorist financing were placed on hold for most of 2002, while the NSC drafted the

strategy with a small team of agency representatives.

During that time, the U.S. government engaged the Saudis only sporadically on HIF.

Although in the spring of 2002 the U.S. government requested specific information from

Saudi Arabia on HIF associates, no action was to take place until the larger Saudi strategy

on counterterrorism had been finalized.

During the summer and fall of 2002, the U.S. government received information that the

Bosnian and Somali offices of al Haramain, whose assets were supposed to have been

frozen and offices shut down, had reopened or were still active in some fashion. In

September 2002, the U.S. government decided to approach the Saudi government about

National Commission on Terrorist Attacks Upon the United States

120

the reopenings of the Bosnian and Somali branches of HIF. The topic was raised at a

senior level by U.S. government officials in Washington and through official visits to the

region in the fall of 2002. The Saudis indicated they were unaware of the reopenings but

said they would work with the U.S. government on the issue.

During 2002, the Saudis repeatedly said they would be prepared to act against al

Haramain if the U.S. government provided them with more information, especially about

specific branch offices and individuals. Some thought that this was perhaps simply lip

service. For instance, in October 2002 Under Secretary of State Alan Larson raised with

the Crown Prince strong concerns about the activities of several al Haramain offices. The

Crown Prince responded that he was ready to act on any specific information the United

States could provide. Some viewed Saudi requests for information from the United

States as somewhat disingenuous given Saudi Arabia’s ability to gather information on

HIF and its supporters. Others were not so sure the Saudis had that ability. Perhaps even

a tit-for-tat dynamic was at work: the U.S. government did not share intelligence that the

Saudis thought we had, and which in many cases we did have, so the Saudi government

feigned ignorance in order not to share its intelligence with the United States.

In December 2002, the Deputies Committee (DC), which consists of deputy secretaries of

key departments and generally oversaw the activities of the PCC, approved the 12-step

program for reinvigorating U.S. policy toward Saudi Arabia on counterterrorism overall.

Much of the Saudi strategy dealt with terrorist financing. The steps included naming a

senior interlocutor on terrorist finance, sharing more concrete and actionable intelligence

with the Saudis, providing expertise in money laundering and investigative techniques,

encouraging more public discussion of the business risks generated by opaque financial

structures, pressuring Saudi nongovernmental organizations (NGOs) to adopt better

oversight practices, and encouraging better use of the media to combat terrorist financing.

Concurrently with the approval of the Saudi strategy, the DC formally pushed forward a

“nonpaper”135 on al Haramain. Its goal was to compile U.S. government information on

HIF, urge the Saudis to take specific actions, and set time frames for such actions.

Agencies were tasked and the nonpaper was finalized by January 2003. Attention from

the DC gave the nonpaper sufficient strategic importance for agencies to devote resources

to developing it and motivated the approval of the release of information.

Two relatively new appointees, State Department Coordinator for Combating Terrorism

Cofer Black and Special Assistant to the President and Senior Director on Combating

Terrorism at the NSC Rand Beers, presented the nonpaper on al Haramain to Saudi

officials during a previously planned trip on counterterrorism at the end of January 2003.

At last, the U.S. government was providing the Saudis with the information that they had

long requested and that the U.S. government had previously failed to supply. The mood