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Allan Gerson
Accountability: From Nazis to Facilitators of 9/11 The Banality of Evil Writ Large |
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l0:20-12:00 am Sunday,
January l6, 2005 - Congregation Beth Israel |
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article from Forbes.com And so it is that Citigroup, the world's largest financial institution, finds itself confronting the fact that a bank it partly owned and managed in Saudi Arabia may have funneled thousands of dollars to terror groups and to the families of Palestinian suicide bombers--at the behest of the Saudi royal family. The allegations involve Saudi American Bank, also known as Samba, the Riyadh-based affiliate in which Citi had a 20% stake. In late 2002 Samba was added as a defendant in a federal lawsuit filed by relatives of Sept. 11 victims against prominent Saudis and charities to which they appeared to be connected. The suit, prosecuted by Washington, D.C. lawyer Allan Gerson, among others, alleges that Samba "participated in the fundraising campaign in Saudi Arabia for collecting donations to the heroes" of the Palestinian uprising. Samba has filed a motion to dismiss. Now Gerson is eyeing an additional suit against Citigroup and has lined up as possible plaintiffs 450 people who have lost relatives or themselves been injured in terror attacks in Israel. Similar allegations could end up being made against a few other Western banks that own stakes in Saudi institutions, including HSBC of London, Crédit Agricole of France and ABN-Amro of the Netherlands. A weak point in the plaintiffs' case is that there may be no evidence that any money went directly from their Saudi affiliates to terrorists. Yet another issue is that, given Saudi banking laws, any foreign bank could not have easily uncovered or thwarted such funding. It appears that Citi didn't learn of the possible problem at Samba until that bank was named in the lawsuit in late 2002. Citigroup tried to investigate but was unable to learn any details, even after appealing to colleagues at Samba and seeking help from the Saudi government, the U.S. State Department and the U.S. Treasury. In May Citigroup set plans to sell its 20% stake in Samba and end its presence in a market it had served since 1955. Citigroup had run Samba under a management contract since 1980. At one point Citigroup had 30 people at Samba, including the managing director, the treasurer and chiefs of a few departments. Samba was treated as a Citi outpost, with access to all parts of Citi's network, auditing teams, new technology and marketing expertise. Samba, the second-largest bank in Saudi Arabia, with a 12% share of bank profits in the kingdom, earned $383 million in 2003. It was the linchpin of Citi's close ties to the Saudi elite. The royal family's Prince Alwaleed Bin Talal Alsaud, the world's fourth-richest man, owns $9.4 billion in Citigroup stock and a 7%-plus stake in Samba. Samba's chairman was billionaire Abdulaziz Bin Hamad Algosaibi, who died last year; his family, too, owns 7% or more of Samba. Citigroup's problems began in 2000, when Saudi Arabia's royal family issued an edict requiring large banks in the country to create a charitable account that would channel donations to "martyrs" of the Palestinian uprising. The Saudis billed this as a "humanitarian" effort and decreed that each new account would be known as Account 98. (HSBC and ABN decline to comment on Account 98; Crédit Agricole denies its Saudi affiliate has one.) The effort was managed by the Saudi Committee for the Support of the Intifada Al Quds, says a U.S. government official. The committee is run by Prince Naif Bin Abdul Aziz, the interior minister, an official in the Israel Defense Forces says. In October 2000 another royal, Prince Salman Bin Abdul Aziz, governor of Riyadh, encouraged citizens to deposit money in Account 98. In still another lawsuit, the Saudi committee is alleged to have funded--through Arab Bank--suicide bombers and Hamas, the Palestinian group that has claimed responsibility for dozens of suicide bombings in Israel in recent years. That suit, filed in July in U.S. district court in Brooklyn on behalf of eight families of terror victims, alleges that $42 million was distributed to "terrorists and/or their beneficiaries." The payments were aimed at funding terror groups and giving a "meaningful incentive" to recruits, the suit alleges. Arab Bank, publicly traded on the Amman Stock Exchange, denies it. The Saudi government's role in paying death benefits to relatives of suicide bombers didn't spark much concern in the U.S.--until after the terror attacks of Sept. 11, 2001. Undaunted, Saudi officials renewed their call for Account 98 donations in December 2001, making an appeal on a government-backed Web site. Along the way, Israeli officials were gathering evidence about the Saudi-Hamas connection. One lead grew out of a bombing in Tel Aviv on July 1, 2001. Twenty-three people were killed outside a beachfront disco when a man detonated a bomb hidden in a bag he was carrying. Israel fingered a Hamas operative, Abdel Rahman Hamad, as directing the disco blast. Three months later Israeli snipers killed him as he sat reading the Koran on his roof at home in the West Bank. Hamad's name surfaced a few months later, as Israeli troops stormed the West Bank offices of the Tulkarm Charity Committee, which the U.S. government calls a Hamas-controlled front. Stored in a Tulkarm computer was an Arabic spreadsheet carrying the official logo of the "Kingdom of Saudi Arabia, the Saudi Committee for Support of the Intifada Al Quds." The spreadsheet lists Hamad and indicates his family had received 20,000 Saudi riyals ($5,300). Seized documents show that the Tulkarm group received $545,000 from the Saudi committee and that it funneled funds to 102 families, including eight of suicide bombers. In late 2002 Citigroup officials asked Samba about Account 98 but got nowhere. Saudi secrecy laws forbid Samba from revealing account records to anyone outside the kingdom. Yet U.S. law prohibits U.S. banks from doing business with Hamas or any other terror group. In early 2003 Citi contacted U.S. Treasury and State Department officials, who spent the ensuing months in talks with the Saudis, worried that Account 98 cash might be going to terrorist activity. Citigroup, unable to crack open Account 98, ditched the Samba contract last fall, saying Samba would "complete the transition to local management as originally contemplated." In May Citigroup sold its 20% stake to the Saudi government for a $760 million aftertax gain. Now the Saudis, at U.S. urging, are phasing out Account 98, folding
it and other charity accounts into a single new entity. This move
may, or may not, do anything to stop the flow of money to bombers'
families.
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| article taken from The
New York Sun Citi and the Saudis New York Sun Staff Editorial October 5, 2004 News that Citigroup is being eyed as a possible target in civil litigation by persons who have lost family in terrorist bombings caught our attention yesterday. We read of it in a dispatch by Robert Lenzner and Nathan Vardi in the October 18 number of Forbes magazine. They report that a Washington lawyer, Allan Gerson, "is eyeing" a suit against Citigroup and "has lined up as possible plaintiffs 450 people who have lost relatives or themselves been injured in terror attacks in Israel." These columns have tended to sympathize with big corporations facing the hazards, so common in America today, of getting sued for things that are other people's fault. WorldCom goes under because of its own fraud, and New York State's comptroller sues Citigroup and more than a dozen other New York banks - not because Worldcom's failure was primarily their fault, but because the banks have deep pockets. And we're no fans of fighting the war on terror with lawsuits rather than military action. But we have learned to respect the sagacious Mr. Gerson, who has served in American government as a Nazi-hunter and as an aide to Ambassador Jeane Kirkpatrick. We first encountered him in Washington in 1995, when he was representing the husband of a woman killed in the Pan Am 103 bombing over Lockerbie, Scotland, in 1988. He was not with the band that sued Pan Am. His contribution was finding a way to pierce the sovereign immunity of Libya by working with Congress to make it easier for such suits to proceed. Mr. Gerson won't talk about the case he is reportedly contemplating against Citigroup, which also declined to comment, citing the threat of pending litigation. And it's easy to imagine a defense argument for the New York banking company. After all, it was only months ago that the offices of Citigroup itself were being mentioned as among potential terrorist targets in News York. The company has a long-standing presence in Israel. When, in 2002, allegations surfaced in court that Saudi American Bank, in which Citi held a 20% stake, participated in fund-raising for the families of terrorist "martyrs," Citi immediately moved to investigate and, when it couldn't get answers, sold its stake. But it's also possible to imagine a line of attack by plaintiffs' lawyers that would be something to reckon with. If Citi knew, or had reason to know, that the Saudis were entangled in terrorist activities, did the bank's executives at some point face a choice between walking away from profitable business or looking the other way at the unsavory side of Saudi institutions and individuals? It is not difficult to imagine the litigation reportedly under consideration opening up a fruitful line of inquiry. And illuminating the seriousness of war, in which, after all, America is now engaged. Our own thoughts go all the way back to Ex Parte Bollman, the great treason case in which the first chief justice of the United States, John Marshall, acquitted two of Aaron Burr's confederates - characters named Bollman and Swartwout - of treason. For treason to have been committed, Marshall wrote, war had to have been levied. It wasn't, so they were innocent. But then he wrote words that ring down through the centuries: "It is not the intention of the court to say that no individual can be guilty of this crime who has not appeared in arms against his country," Marshall wrote. "On the contrary, if war be actually levied, that is, if a body of men be actually assembled for the purpose of effecting by force a treasonable purpose, all those who perform any part, however minute, or however remote from the scene of action, and who are actually leagued in the general conspiracy, are to be considered as traitors." No one is talking about Citigroup having committed treason, and Bollman was a case involving a federal prosecution, not a civil action. But we can't imagine that those who treated with the Saudis will be able to take much comfort from Marshall's language about "all those who perform any part, however minute, however remote from the scene of action." No doubt the coddling of Saudi Arabia by the Clinton administration and both Bush administrations would lead families of victims of terror to feel frustrated. If a lawsuit against Citi had any point, it would be to discourage American companies from doing business in realms such as Saudi Arabia, where support for terrorism is widespread. And it might have a political effect, as well. If the suit proceeds and Citi is found liable in this case, the company might under similar logic turn around and sue the American government for having failed to impose on Saudi Arabia the sanctions that it had imposed on other terror-sponsoring regimes like Iran and Iraq. Our own sense of this situation is that the thousands of patriotic and terror abhorring shareholders and employees of Citigroup would be better off were American policy toward the Saudis set more sensibly in Washington, rather than by time-consuming and costly civil litigation. But it is not surprising that, in the absence of such sense from Washington, the privatization of counterterrorism policy proceeds apace. |
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