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Saudi Arabia is prime source of terror funds, U.S. says

Trea­sury offi­cial express­es frus­tra­tions with the admin­is­tra­tion’s efforts to force action by the king­dom. A Sen­ate pan­el orders a review.

by Josh Mey­er


WASHINGTON — Sau­di Ara­bia remains the world’s lead­ing source of mon­ey for Al Qae­da and oth­er extrem­ist net­works and has failed to take key steps request­ed by U.S. offi­cials to stem the flow, the Bush admin­is­tra­tion’s top finan­cial counter-ter­ror­ism offi­cial said Tues­day.

Stu­art A. Lev­ey, a Trea­sury under­sec­re­tary, told a Sen­ate com­mit­tee that the Sau­di gov­ern­ment had not tak­en impor­tant steps to go after those who finance ter­ror­ist orga­ni­za­tions or to pre­vent wealthy donors from bankrolling extrem­ism through char­i­ta­ble con­tri­bu­tions, some­times unwit­ting­ly.

“Sau­di Ara­bia today remains the loca­tion where more mon­ey is going to ter­ror­ism, to Sun­ni ter­ror groups and to the Tal­iban than any oth­er place in the world,” Lev­ey said under ques­tion­ing.

U.S. offi­cials have pre­vi­ous­ly iden­ti­fied Sau­di Ara­bia as a major source of fund­ing for extrem­ism. But Lev­ey’s com­ments were notable because, although reluc­tant to direct­ly crit­i­cize a close U.S. ally, he acknowl­edged frus­tra­tion with admin­is­tra­tion efforts to per­suade the Saud­is and oth­ers to act.

“We con­tin­ue to face sig­nif­i­cant chal­lenges as we move for­ward with these efforts, includ­ing fos­ter­ing and main­tain­ing the polit­i­cal will among oth­er gov­ern­ments to take effec­tive and con­sis­tent action,” Lev­ey said, lat­er adding: “Our work is not near­ly com­plete.”

Lev­ey was the sole wit­ness before the Sen­ate Finance Com­mit­tee, which Tues­day ordered an inde­pen­dent review of the efforts to choke off financ­ing used by Al Qae­da and oth­er extrem­ist groups.

Sen. Max Bau­cus (D‑Mont.), the com­mit­tee chair­man, announced the review at the end of the hear­ing held to assess the mon­ey-track­ing cam­paign by Trea­sury’s Office of Ter­ror­ism and Finan­cial Intel­li­gence, head­ed by Lev­ey.

The Bush admin­is­tra­tion cre­at­ed the office in 2004 to spear­head efforts to dis­rupt the flow of mon­ey to extrem­ist caus­es, pri­mar­i­ly from wealthy donors in Sau­di Ara­bia and else­where in the Per­sian Gulf.

How­ev­er, U.S. offi­cials and counter-ter­ror­ism experts have said that inter­na­tion­al sup­port for the effort has waned while ter­ror­ist groups have found ways around the finan­cial restric­tions. At the same time, there have been turf bat­tles among the 19 fed­er­al agen­cies that work on the prob­lem.

Sen­a­tors praised work done by Lev­ey but expressed con­cerns about the over­all U.S. effort. The com­mit­tee’s Demo­c­ra­t­ic and Repub­li­can lead­ers cit­ed a Los Ange­les Times report last week detail­ing prob­lems under­min­ing the effort.

Sen. Charles E. Grass­ley of Iowa, the rank­ing Repub­li­can, said extrem­ist groups had adapt­ed to chang­ing U.S. inves­tiga­tive meth­ods: “We are sim­ply not pre­pared right now to keep up with them and put them out of busi­ness once and for all.”

Lev­ey said the cam­paign has suc­ceed­ed in dis­rupt­ing ter­ror­ist financ­ing by freez­ing sus­pi­cious assets and in gath­er­ing intel­li­gence that could be used to iden­ti­fy extrem­ists and dis­rupt their activ­i­ties.

But under ques­tion­ing by sen­a­tors, Lev­ey also spoke of dif­fi­cul­ty in get­ting Sau­di Ara­bia to take the steps U.S. offi­cials con­sid­er nec­es­sary.

Lev­ey said the Saud­is had been aggres­sive in going after ter­ror­ist cells. But he said they had not lived up to promis­es to estab­lish the kind of finan­cial intel­li­gence unit need­ed to trace the mon­ey trails of ter­ror­ists. Anoth­er prob­lem is that the Sau­di gov­ern­ment has not set up a char­i­ty over­sight com­mis­sion to track whether dona­tions end up in the hands of extrem­ists.

Lev­ey said the Sau­di gov­ern­ment has not moved to pub­licly hold account­able those with­in the king­dom who have been the sub­ject of enforce­ment actions by the U.S. and oth­er author­i­ties.

Sen. Ron Wyden (D‑Ore.) said the Sau­di fail­ures mean that Amer­i­cans who pay more than $100 a bar­rel for oil are in effect bankrolling extrem­ism because wealthy Saud­is “back-door” their prof­its into char­i­ties that fund extrem­ist caus­es.

Nail Jubeir, press attache for the Sau­di embassy in Wash­ing­ton, dis­missed those con­cerns, say­ing the Bush admin­is­tra­tion has repeat­ed­ly praised Sau­di Ara­bia for its efforts to com­bat ter­ror­ism.

“We have been very vig­i­lant in our cam­paign against ter­ror­ism financ­ing,” Jubeir said. “We have come a long way since 9/11 on this issue.”

Jubeir con­firmed that Sau­di Ara­bia has not set up the finan­cial intel­li­gence unit or char­i­ty com­mis­sion, but said it was crack­ing down on the financiers of ter­ror­ism in oth­er ways, such as mak­ing it ille­gal for any­one to send mon­ey out­side the king­dom “with­out going through offi­cial gov­ern­ment chan­nels.”

Alleged financiers of ter­ror­ism iden­ti­fied by the Unit­ed States are being inves­ti­gat­ed, and their assets have been frozen, Jubeir said. “But unless we have evi­dence to try them . . . we don’t parade them in pub­lic,” he said. “What if it turns out they are inno­cent?”

At the hear­ing, sen­a­tors also expressed con­cern about dis­putes among U.S. agen­cies and oth­er admin­is­tra­tive and inves­tiga­tive func­tions of Lev­ey’s office. Bau­cus and Grass­ley asked that the Gov­ern­ment Account­abil­i­ty Office review its inter­nal effi­cien­cy and effec­tive­ness as well as its coop­er­a­tion with for­eign gov­ern­ments.

Lev­ey said he had not seen the request from Bau­cus and Grass­ley, but added: “We wel­come any source of advice as to how we can improve.”