The Terror Finance Blog

Are you still funding Gaza’s skyrocketing economy?

I have burned many  electrons over the years highlighting reports about the abuse of financial aid to the Palestinians. The Funding for Peace Coalition probably did the most comprehensive job back in late 2004 with their report Managing European Taxpayers' Money: Supporting The Palestinian Arabs - A Study In Transparency. Not much seems to have changed since then. 

 The Palestinian Authority continues to be led by the same corrupt cronies, and continues to provide “terrorist insurance” payments to imprisoned murderers and their families. The Abbas led PA continues to incite violence against Israel through its public statements, television shows and hate education. And the JCPA reports that the internationally funded PA still has Hamas and other terrorists on the payroll.

 In Gaza, the criminal Hamas government has been caught red handed time and again stealing international aid – either selling it back to the people to fund their war crimes, or diverting it directly to their guerilla terrorist forces. And Hamas keeps firing rockets into Israeli towns using their own human shields every day. And the smuggling tunnels bring in more weapons all the time.

James Lindsay, former legal counsel for UNRWA, issued a report Fixing UNRWA: Repairing the UN's Troubled System of Aid to Palestinian Refugees, where the recommendations are more than telling. He argues that implementing them would return Palestinians “to what most of them so desperately seek: normal lives.” Lindsay directly and indirectly argues that much of the UNRWA budgets are spent providing services to people who simply don’t need the charity, and many are not refugees, and some are not even Palestinians. In summary, Lindsay says:

No justification exists for millions of dollars in humanitarian aid going to those who can afford to pay for UNRWA services. In addition, UNRWA should make the following operational changes: halt its one-sided political statements and limit itself to comments on humanitarian issues; take additional steps to ensure the agency is not employing or providing benefits to terrorists and criminals; and allow the UN Educational, Scientific and Cultural Organization (UNESCO), or some other neutral entity, to provide balanced and discrimination-free textbooks for UNRWA schools.

Gunnar Heinsohn of the Raphael Lemkin Institute at the University of Bremen, an institute devoted to comparative genocide research, argues quite cogently that UNRWA and other international aid exacerbate the problems of the Middle East, providing unlimited indiscriminate welfare which encourages a high birth rate, but no useful employment. The result is a “youth bulge” of young men who provide “cannon fodder” for their unscrupulous leadership to indoctrinate and send into battle against their fellow Palestinians or Israel. Heinsohn compares Gaza to other areas of conflict, where “The warring stopped because no more warriors were being born.” His recommendations parallel those of James Lindsay.

 Heinsohn also points out, as have many before him, that the Arab world is well aware of the issues. “UNRWA is benevolently funded by the U.S. (31%) and the European Union (nearly 50%) -- only 7% of the funds come from Muslim sources.” They allow the West to develop the cannon fodder, while Iran, Syria and others provide the cannons.

 US president Obama’s most recent proposal to provide $900 million for Gaza restoration via the Palestinian Authority flies in the face of all this evidence and professional advice that international funding feeds the conflict.

I can only wonder. During the current world economic crisis, why do Western governments continue to pour so much money into UNRWA, the PA and other Palestinian causes, knowing full well that it will never achieve its stated objectives?

Why don’t you write to your local representative and ask how much of your tax money is being handed over to the Palestinians?  I am sure that you could suggest some more effective uses for your money right now!

First posted at: http://dfrankfurter.livejournal.com/116744.html 

Stop Afghani Narco-Terrorism

By Rachel Ehrenfeld

"The fight against drugs is actually the fight for Afghanistan," said Afghan President Hamid Karzai when he took office in 2002. Judging by the current situation, Afghanistan is losing.

To win, the link between narcotics and terrorism must be severed. That is the necessary condition for a successful strategy to undermine the growing influence of al-Qaida, the Taliban and radical Muslim groups in Afghanistan and Pakistan.

It is all about money--more precisely, drug money. The huge revenues from the heroin trade fill the coffers of the terrorists and thwart any attempt to stabilize the region.

Though not traded on any stock exchange, heroin is one of the most valuable commodities in the world today. While a ton of crude oil costs less than $290, a ton of heroin costs $67 million in Europe and between $360 million and $900 million in New York, according to estimates based on recent Drug Enforcement Administration figures.

Since its liberation from Taliban rule, Afghanistan's opium production has gone from 640 tons in 2001 to 8,200 tons in 2007. Afghanistan now supplies over 93% of the global opiate market.

"This is a source of income for the warlords and regional factions to pay their soldiers," warned former Afghan Interior Minister Ali Ahmad Jalili in a May 2005 interview with Reuters. "The terrorists are funding their operations through illicit drug trade, so they are all interlinked."

In 2004, the G-8 designated Britain to lead counter-narcotics efforts in Afghanistan. Its three-year eradication policy was designed specifically not to alienate the local population. It dictated the crop eradication be done "by hand." Moreover, the British entrusted the provincial governors with the eradication process, even though Afghan provincial governors, many of whom are powerful warlords, have been engaged in the drug trade for decades. Not surprisingly, the eradication effort failed miserably.

The exponential growth in narcoterrorism in Afghanistan led to a well-entrenched narco-economy, strengthening the power of tribal warlords, the Taliban and al-Qaida. The growing violence led NATO leaders, who met in Budapest in October 2008, to agree to allow their military forces to strike the drug traffickers. However, NATO troops were not ordered to attack; in fact, NATO's European allies are "averse" to drug eradication programs for fear of alienating the local population and because of the risks associated with such operations.

Though Afghan opium production shrank a little to 7,200 tons in 2008, it still accounts for 97% of the country's per-capita annual GDP, or $303 of $310. Yet Afghan heroin is worth $3.6 billion to $6.4 billion on the streets of most Western nations.

According to the latest report of the International Narcotics Control Board, the Taliban's income for 2007 from morphine base and heroin production is estimated between $259 million and $518 million, up from just $28 million in 2005. This provides more than enough to fund the most sophisticated weapons, training camps, operational and even public relations funds, and plenty of bribes to local tribes' chieftains and politicians.

While no one expects Afghanistan to become a peaceful, self-sustaining democracy overnight, there is a better solution for stabilizing the country than adding 17,000 American soldiers to the 38,000 already there. Without an effective strategy to turn the situation around, the surge is likely to result in the unnecessary loss of human lives and billions of dollars, while failing to remove the major reason for the instability in the region--the heroin trade.

There is, however, a strategy that could reduce the cost of fighting terrorists and drug traffickers alike, while helping to establish a self-sustaining economy in Afghanistan and defusing the tensions in the region. It would also cut down on the social and economic cost of heroin use in the U.S.

The Obama Administration should implement an innovative and safe poppy eradication method that previous U.S. governments spent billions of dollars developing. Mycoherbicides are naturally occurring fungi that are used to control such illicit pest plants as the opium poppy and other noxious weeds. Unlike chemical controls now in use, mycoherbicides assail only the targeted plant, rendering its cultivation uneconomical. These fungi continue to live in the soil, preventing the future growth of the opium poppy plant, but are harmless to other crops, to humans and to the environment.

On Dec. 29, 2006, then-President George W. Bush signed Public Law 109/469, of which section 1111requires National Drug Control Policy (the drug czar's office) to conduct an efficacy study of mycoherbicides on the opium poppy and the coca shrub. Yet the White House Office of National Drug Control Policy failed to conduct the one-year study, apparently because it prefers to use pesticides for eradication. Concluding these studies should become a priority for the Obama administration. 


The use of mycoherbicides in Afghanistan, combined with adequate enforcement by the military, will mitigate the production of heroin and cut off the terrorists' major money supply. This would free up the $150 to $200 billion now used to fight the drug trade and its byproducts--crime, addiction, diseases, accidents, etc.--in the U.S., and make these funds available to help fight terrorism directly.

Implementing this new strategy, while subsidizing the Afghan economy until other crops and industries can replace the illegal heroin trade, which leaves most Afghans poor, seems a better way for America to succeed in fighting terrorism and endemic corruption. It would also free up resources for an array of social and governmental reforms, which should be clearly defined and strictly supervised. With no heroin to fund terrorism and subvert the economies and political systems of Afghanistan and Pakistan, the American agenda could take a huge leap forward.

Dr. Rachel Ehrenfeld is director of the American Center for Democracy and author of Funding Evil: How Terrorism is Financed and How to Stop It.

Libel Tourism - Dr. Rachel Ehrenfeld's Oral Statement and Written Testinomy

Hearing on Libel Tourism

before 

 The Subcommittee on Commercial and Administrative Law Committee on the Judiciary

 U.S. House of Representatives

 Thursday, February 12, 2009

 

Dr. Rachel Ehrenfeld 

  Oral statement

 Thank you Mr. Chairman and members of the Committee, for holding this hearing on libel tourism, which affects me personally. Special thanks to Mr. Cohen for inviting me.
 
 Sitting at my desk on January 23rd, 2004, I was interrupted by an email 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 my book Funding Evil; How Terrorism is Financed – and How to Stop It, about their client, Saudi billionaire Khalid bin Mahfouz.
 
 The letter said that Mahfouz denied allegations in my book that he funded al-Qaeda and other Muslim terrorist organizations.
 
 Mahfouz’s lawyers demanded my public apology, retraction, removing my book from circulation, legal fees, and a donation to a charity of Mahfouz’s choice. This was followed by further messages, faxes, mail, and legal paper served.
 
 I am a scholar dedicated to exposing the enemies of freedom and Western Democracies, through publications in books and articles. The psychological emotional, and financial effects of the threat of this libel lawsuit against me in London, will stay with me as long as I live.
 
 I refused to recognize the English court’s jurisdiction over me. I did not believe that I should have to defend myself in a country where my book was not published or even marketed. Nevertheless, I was sued for libel in London, because 23 copies of Funding Evil, found their way to Britain, mostly through the Internet, which also carried a chapter of my book.
 
 In 2005 the British court granted Mahfouz a judgment by default, awarding him hundreds of thousands of dollars, and other sanctions.
 
 Until the New York legislature passed the Libel Terrorism Protection Act last May, I spent many sleepless nights worried that Mahfouz will try to enforce the English judgment against me in New York. His deliberate non-enforcement left it hanging over my head like a sword of Damocles, which aggravated the chilling effects.  Mahfouz, also uses a dedicated website to advertise my judgment, with more than 40 other names of those he threatened and sued in London.
 
 Mahfouz’s suit has never been tried on the merit. Yet the British judgment affected my ability to publish. The threat he wields over me, and over others, chilled American publishers, especially those with assets overseas, from publishing books containing information on terror financiers.
 
 Mahfouz also chilled my ability to travel to the U.K., lest I be arrested to enforce the British judgment against me. I run the same risk in Europe and in most Commonwealth states due to the reciprocal enforcement of judgments.
 
 The Free Speech Protection Act includes provisions to counter sue and damages. These are essential to remove the chilling effects of foreign libel suits because they will serve as a deterrent to people contemplating to sue American writers and publishers in England or other foreign jurisdictions.
 
 Do you think Mahfouz would have sued me had he known I could counter sue him and ask for damages? And wouldn’t that be true for others who sued Americans in London or elsewhere?
 
 Today is a special day to have this hearing. We all know the significance of the man whose birthday we celebrate today. Lincoln was, among other things, a wonderful writer who held this nation together with his words that were published and which we revere to this day.
 
 Imagine if he was intimidated, threatened, and chilled from publishing those words by threat of foreign libel lawsuits.  
 
 It is therefore “fitting and proper” that this Committee held this hearing about freedom of expression on Lincoln’s birthday. I urge Congress to pass the Free Speech Protection Act “because it is fitting and proper” that it should do so.

Written Statement: 

We are confronted by libel tourism -- a pernicious and growing phenomenon, especially

after the 9/11 attacks on America -- whereby wealthy and corrupt terror financiers exploit

plaintiff-friendly foreign libel laws and expansive Internet jurisdiction to silence

American authors and publishers. Foreign libel laws have become a potent weapon used

by the forces of tyranny who seek to undermine our freedom. The Free Speech

Protection Act can stop this.

In New York Times v. Sullivan, the Supreme Court struck a critical balance between libel

actions and a free press guaranteed by the First Amendment. The high court raised the

bar for libel plaintiffs to insure our “profound national commitment to the principle that

debate on public issues should be uninhibited, robust, and wide-open.” Based on that

principle, the court declared: “libel can claim no talismanic immunity from constitutional

limitations.”

Outside the United States, there are no such “constitutional limitations.” The House of

Lords explicitly rejected the Sullivan standard. So did the Canadian Supreme Court.

Although all forty-one-member states of the Council of Europe submit to the European

Court of Human Rights, Article 10 of its charter also rejects the Sullivan standard.

In many countries, journalists can be jailed for criminal libel; truth is often not a defense;

high office holders enjoy extra protection against criticism; publications can be

confiscated; newspapers and broadcast stations can be shuttered; and writers can be

forced to publish adverse court orders, and repudiate as false what they know to be true.

Congress must protect American writers and publishers to guarantee the "uninhibited,

robust and wide-open" debate the First Amendment was designed to protect. Scholars

like me seek Congress’s help to stop libel tourism from limiting our ability to write freely

about important matters of public policy vital to our national security.

I can attest that libel tourism is costly, financially and emotionally. I do not command an

army - or control an industry - or have vast wealth - or hold political office. In other

words, I do not possess any traditional sources of power in society. Instead, I write. I am

a scholar dedicated to expose the enemies of freedom and Western democracy. I expend

great time and effort tracking down information across the globe. My books and articles

are based in large part on evidence presented to Congress, parliaments and courts. Like

most responsible scholars, I publish only material that can be verified. My credibility and

livelihood depend on it.

In 1992, I published Narcoterrorism: How Governments Around the World Have Used

the Drug Trade to Finance and Further Terrorist Activities, and first called attention to

the intimate relationship between drug trafficking and terrorism.

Terrorism is not cheap. To the contrary, it is a capital-intensive activity. It requires lots

of cash for training, weapons, vehicles, salaries, cell phones, airline travel, food and

lodging; etc. I showed how the drug trade, not just oil profits, fuels terrorist

organizations. While policy makers were romanticizing the Palestine Liberation

Organization as a group of so-called “freedom fighters,” I showed how the PLO filled its

coffers with billions of dollars from heroin, hashish, airplane highjacking, extortion and

illegal arms sales. Until my book, neither the American government nor international

agencies for drug control publicly linked narcotics and terrorism.

When asked why he robbed banks, Willy Sutton famously replied: “Because that’s where

the money is.” I followed his lead and followed the money. This led to my second book,

Evil Money: The Inside Story of Money Laundering and Corruption in Government,

Banks and Business, in which I connected the dots between drug profits, money

laundering, political corruption, Islamic banking and how illicit funds are used to

undermine democracies.

The Committee undoubtedly remembers BCCI, the Bank of Credit and Commerce

International, the cash till for Hezbollah, the PLO, HAMAS, Abu Nidal and other

terrorist organizations. BCCI’s chief operating officer was Saudi billionaire, Khalid bin

Mahfouz, banker to the Saudi royal family and at that time, owner of the National

Commercial Bank of Saudi Arabia. In 1992, Mahfouz paid $225 million to settle criminal

charges against him in New York arising from his control of BCCI.

In 2003, I published my third book, Funding Evil, How Terrorism is Financed and How

to Stop It. In that book, I showed the true face of terrorism. It is not the stereotype of

underprivileged Islamic youth yearning to be religious martyrs, but instead, an

international network of corrupt dictators, drug kingpins, and villains like Mahfouz who

transferred some $74 million to at least two front charities for terrorism: the International

Islamic Relief Organization and his Muwafaq or “blessed relief” Foundation, which then

gave the funds directly to al Qaeda, Hamas and other radical Muslim organizations.

In response, Mahfouz sued me for libel. What happened to me did not occur in a dark

backwater of totalitarian repression like Syria, Saudi Arabia, or North Korea, but in

England. Mahfouz does not live there. I do not live there. My book was not published

or marketed there. Nonetheless, the English court accepted jurisdiction because twentythree

copies of Funding Evil arrived in England via Internet purchases.

English law does not distinguish between private persons and public figures. Allegedly,

offensive statements are presumed defamatory and the libel defendant bears the burden to

prove they are true. Official documents from non-English sources are typically

inadmissible in court, and Arab dictatorships refuse to help Western writers and

publishers prove allegations about terrorism.

Protection of opinion is limited and multiple suits are allowed for a single act of

publication. Libel defendants have limited pre-trial discovery and no right to depose

plaintiffs under oath, as in American courts. Thus, libel plaintiffs usually win, verdicts

are substantial, and defendants must pay the plaintiff’s legal fees. It is no wonder then,

the Times of London called London the “libel capital of the Western world.”

Mahfouz’s threats conveyed by E-mails, faxes, and legal papers were unsettling, and on

one occasion, I was warned to do as he demanded if I “knew what was good for me”

because he has friends in high places who wield great influence in the U.S.

I refused to recognize the English court’s jurisdiction because I should not have to defend

myself abroad. 

The British court granted Mahfouz a default judgment and awarded him

hundreds of thousands of dollars; required me to prevent copies of Funding Evil from

reaching Britain; and ordered me to publish retractions drafted by his solicitors.

Libel tourism by Mahfouz and others like him made me realize something more was at

stake than my book and the particulars involving him. In response, I sued Mahfouz in

New York to declare his English judgment violated my rights under the First

Amendment. That litigation led the New York Legislature last May to enact New York’s

version of the Free Speech Protection Act. Illinois followed suit last August.

Until the new statute protected me -- dubbed by the media as “Rachel’s Law” --

Mahfouz’s English judgment hung over my head like a sword of Damocles and kept me

up at night.

The United States has a tradition of almost automatic enforcement of foreign judgments

under the doctrine of comity enshrined in the Uniform Foreign Money-Judgments

Recognition Act adopted by a majority of states. Although writers can assert a First

Amendment defense to enforcement actions, few have the economic resources to do so.

Hence, libel tourism forces them to engage in self-censorship. Mahfouz’s libel tourism in

London led American publishers with assets abroad to cancel several books under

contract or consideration. Those who once willingly courted my work now refuse to

publish me. In nearly forty cases, Mahfouz obtained settlements against his victims, all

with forced apologies, by the mere threat of libel litigation. His boasts about this on his

website to effectively silence and intimidate his critics in the media and academia.

Case law speaks of the “chilling effect” on free speech threatened by unrestrained libel

actions. My case demonstrates the chilling effect is no mere abstraction. I cannot travel

to the U.K., lest I be arrested to enforce Mahfouz’s extant judgment, and I run the same

risk in Europe, due to the European Community’s reciprocal enforcement of member

states’ judgments. Similar laws apply in most Commonwealth states, too.

I close with the immortal words of Justice Brandeis in Whitney v. California:

Those who won our independence believed that the final
end of the state was to make men free to develop their
facilities, and that in its government the deliberative forces
should prevail over the arbitrary .... They believed that
freedom to think as you will and to speak as you think are
means indispensable to the discovery and spread of
political truth .... Believing in the power of reason as
applied through public discussion, they eschewed silence
coerced by law – the argument of force in its worst form.
Recognizing the occasional tyrannies of governing
majorities, they amended the Constitution so that free
speech and assembly should be guaranteed.

A free press is vital not only to our lifestyles, but also, to our national security to protect

writers like me who expose those who do us evil. New York and Illinois have enacted

laws to protect their citizens from the scourge of libel tourism which threatens press

freedom and scholars, writers and publishers everywhere. The federal Free Speech

Protection Act insures all American citizens will enjoy such protection. Congress should

pass it without delay.

Investing in Jihad: The perils of shari'a finance

By Alyssa A. Lappen

FrontPageMagazine.com | 2/4/2009

Indonesian sukuk buyers may sink in the same ship with the dupes heeding Western headlines and Islamic gurus since the Bernard Madoff scandal broke last December. These financial product pushers have increasingly exaggerated the “safety” of Islamic finance securities to offset “the cancer of interest-bearing debt.” Investors are now snapping up three-year Indonesian bonds that will supposedly hold their full value and make money---an astronomical 12%---while paradoxically avoiding speculation, alcohol, gambling, interest, and other “haram” activities forbidden under shari'a law.

Granted, Bernie Madoff's “hedge fund” investors did not expect to be robbed blind. But they knowingly exchanged high risk for high returns. Indeed, alternative funds are so risky that U.S. securities laws limit their sale to investors with at least $2 million in financial assets---in other words, enough to protect them against being totally wiped out.

But even folks who should know better don't grasp the risks of Islamic finance. London's Financial Times, for example, touted the Amana Trust “Islamic” Income fund, based in Washington state, for “losing only 25.8 per cent” in 2008---“half [sic] the average 44% loss for US stock funds.” Likewise, an SEI Investments company analyst recommended Islamic mutual funds as protection from the stock and bond markets' “extreme ups and downs,” despite their substantial losses in the last quarter of 2008.

Odds are, the average Muslim “Mohammed Sixpack” doesn't understand the financial risks of 12% Indonesian sukuk bonds either. High yields---for example 12%, when the U.S. Federal Reserve lends “overnight” to banks at rates close to zero---are usually called “junk.”

Unfortunately, these bonds are also backed by “assets” carved up like pie and “securitized.” Meaning: they can head south in a hurry, just like the sub-prime mortgages that sank the U.S. economy, which were also also backed by assets and securitized, not to mention the mortgage-backed issues that unraveled dozens of huge bond, pension and public institutional funds in 1994. In 1637, Dutch tulip bulb contracts sold for over 20 times the annual wages of a skilled craftsman---until their “solid” value withered overnight in the first financial crash in recorded history. [1]

Islamic finance carries many other risks besides.

The Thomas More Law Center in Ann Arbor, Mich. in December sued former Treasury Secretary Henry Paulson and the Federal Reserve Board to stop $40 billion in U.S. bail out aid from reaching American International Group (AIG). The insurance giant devotes an entire division to shari'a finance products, which Thomas More considers unsafe, unconstitutional and anti-American.

The suit zeros in on statutes fundamental to shari'a law, such as funding jihad warfare. It also focuses on AIG's “supervisory committee” members---Bahraini Sheikh Nizam Yaquby, Saudi Mohammed Ali Elgari and Pakistani Muhammed Imran Ashraf Usmani, a “devoted disciple” of his father Mufti Taqi Usmani. The latter Shari'a-compliant finance authority directs Western Muslims to aggressively pursue violent jihad against the their governments.

AIG is not alone.

As I've often previously noted, the shari'a finance boards setting “Islamic banking” standards themselves employ highly objectionable “authorities.” Both the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and Islamic Financial Services Board (IFSB), for example, include many representatives of nations, banks, and organizations implicated in terror-funding.

Atlas Shrugs recently comprised a more inclusive list of hot shot shari'a personalities. Apart from Taqi Usmani---a Pakistani shari'a court justice since 1982, shari'a director of the Saudi Al Baraka Investment Corp. implicated in 9/11 financing and until recently an advisor to Dow Jones Islamic Indexes---shari'a boards include other graduates of the most radical Saudi and Pakistani Islamic universities and madrassas that duplicate Usmani's wish to impose shari'a law globally.

Shari'a finance still retains Western adherents. A Jan. 16, 2009 Hedge Funds Review article for example advises forlorn, out-of-work money managers, “Don't forget Islamic finance.”

Several readers disagree. “Forget Islamic finance.... It won't make it through the crisis,” a private equity venture capitalist comments. Islamic finance itself is “flawed in principle,” since “charging more than you loaned is called 'interest',” adds an investor relations man. As these Hedge Funds Review subscribers avow, the industry cannot possibly elude the financial risks that now face every other bank and investment house in the world.

Notably, Stern School economics professor and former Treasury Department and White House advisor Nouriel Roubini, the publisher of Roubini Global Economics Monitor (RGE Monitor), also considers Islamic finance to be risky. The Islamic finance reliance on debt issues backed by assets exposes the business and investors both to “devaluation” of underlying assets (hyperbolically speaking, like wilting tulips) and the overall freeze in normal capital flows, or liquidity. The level of new Islamic bond issues worldwide fell 60% from January through October 2008, to only $15.2 billion, against that of the first 10 months in 2007. Low oil prices and Middle East liquidity troubles could also hurt demand for shari'a finance instruments throughout 2009, Roubini posits, according to the Asian Energy blog.

Yet the greatest, albeit hidden, risks of shari'a finance are unseen by even the most astute economists. By investing alone, non-Muslims actively participate in what former Malaysian Prime Minister Mahathir Mohamed calls “a jihad worth supporting,” namely an effort to impose “universal Islamic banking.” Islamic banking is not an ancient religious tradition, but a 20^th century invention of the Muslim Brotherhood and their spiritual chief Yusuf Qaradawi. It was developed to subsume capitalism with Islamic finance---a prospect neither safe nor mere fantasy.

Furthermore, shari'a investors may also inadvertently support economic jihad, as mandated by Qur’an 49:15: “Strive with their wealth and their lives for the cause of Allah,” and reiterated in 61:10-11: “Shall I show you a commerce that will save you from a painful doom? ...strive for the cause of Allah with your wealth and your lives.”

Shari'a funds collect at least 2.5% of income, wealth and profits, plus arbitrarily determined “purification” levies on profits derived from those Islamically forbidden, or “haram,” activities. The Standard & Poor's Islamic indexes do list some companies that get revenues from “non-compliant activities” totaling under 5% of their gross corporate sales. In those instances, S&P applies what it calls a “dividend purification ratio,” dividing “non-compliant” revenues by the total revenues of the index. The thing is, S&P doesn't specify exactly what activities or other attributes constitute “non-compliant,” much less how or to whom it distributes zakat and purification levies. [2]

Flemming's Luxembourg-registered Oasis Fund, perhaps the only Islamic fund that has publicly divulged collection ratios, extracts roughly 2.3% annually from assets to cover its shari'a board, custody and audit charges, as well as an annual “purification allowance” to “purify” any inadvertent riba (interest) exposure. That astronomical tax, however, does not include additional unspecified weekly sums deducted for unspecified “un-Islamic activities,”---or portions of the 5% Oasis fee collected upon purchase or the and 0.5% fee collected on redemption. Overall, Oasis extracts an exorbitant 6% annually in “purification” costs from investors.

In addition to the potent above-noted risks, the Islamic banking industry incorporates a rigid 7^th century philosophy, that remains intent upon depriving all non-Muslims of their wealth and worldly stature. Possessions confiscated from non-believers are “a way of exacting revenge,” writes 11th century jurist Abul Hasan al Mawardi (d.1058). As Qur'an 57:2 argues, “To Him belongs all dominions of the heavens and earth.” Echoes Qur’an 59:7: “That which Allah giveth as spoil [war booty] unto his Messenger...it is for Allah and His Messenger and for the near of kin.…”

Allah authorized the 2nd Islamic Caliph, Umar Ibn Khattab, to confiscate property in three ways, Mawardi writes---by fulfilling a trust to Islam, by force, or by ruling under Allah's law. Mawardi therefore concludes it is “just” to take anything from nonbelievers (The Laws of Islamic Governance, 1996 Ta-Ha edition, pp. 207-251).

Shari'a banking is but another effort to reclaim all territories that Islam ever controlled. Here's the Muslim Brotherhood view: Hamas seeks to conquer Rome, “the capital of the Catholics, or Crusader capital,” as Constantinople was once conquered, a Gaza “legislator” preached on Al-Aqsa TV on April 11, 2008.

NOTES:

[1] Robert J. Shiller, Irrational Exuberance (2005, 2^nd ed., Princeton University Press). pp. 85, pp. 247-48.

[2] “S&P Shariah Indices: Index Methodology,” Standard and Poor's, November 2007.

---

Alyssa A. Lappen is a former Senior Fellow of the American Center for Democracy, former Senior Editor of Institutional Investor, Working Woman and Corporate Finance, and former Associate Editor of Forbes. Her website is www.AlyssaaLappen.org.

Arab Bank, Fined $ 24 m For CTF Offences, Will Sponsor Australian Govt AML/CTF Conference

by Ganesh Sahathevan

A CTF/AML conference will be held in Australia from 1-2  April  2009.

It will be co-hosted by the Australian Government's  Australian Transaction Reports and Analysis Centre (AUSTRAC), the Australian Federal  Attorney-General’s Department (AGD) and its subsidiary department  the  Australian Institute of Criminology (AIC),   and the Australian Bankers’ Association (ABA).

(http://www.aic.gov.au/conferences/2009-anti-money_laundering/about.html)

The sole  sponsor of the conference, this far , is Arab Bank .

(www.aic.gov.au/conferences/2009-anti-money_laundering/sponsorship.html)

In August 2005  Arab Bank  was fined   $24 million  by FinCEN and OCC for violations of the Bank Secrecy Act. The details of this penalty as well as examples of the Bank's complicity in terrorist financing has been written about previously by John Wood-see http://www.terrorfinance.org/the_terror_finance_blog/2007/06/arab_banks_bloo.html

The AIC has been queried about Arab Bank's sponsorship. Its response is as follows:

"...Arab Bank Australia is a conference supporter.  This is consistent with the general partnership approach between government and industry towards raising broader awareness of anti-money laundering and counter-terrorism financing (AML/CTF) matters in Australia. 
As with all reporting entities, Arab Bank Australia must comply with Australian AML/CTF laws.  The Australian Government authorities involved in the AML/CTF Conference 2009, including the industry regulator AUSTRAC, are comfortable with Arab Bank Australia's sponsorship of the conference".

How to Fix UNRWA

By Ilan Weinglass

James G. Lindsay, former General Counsel of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), has written a very detailed study of UNRWA's activities and of its purported complicity in terrorism. The study examines many of the allegations lodged against UNRWA and offers some policy reccommendations, made from a pro-U.S. angle.  As Lindsay notes, there really has not been a comprehensive study of UNRWA made in quite some time, let alone by a former insider. I think the study will serve as a reference document for those debating the issue.

From the conclusion:

UNRWA has gradually adopted a distinctive political viewpoint that favors the Palestinian and Arab narrative of events in the Middle East. In particular, it seems to favor the strain of Palestinian political thought espoused by those who are intent on a “return” to the land that is now Israel UNRWA’s adoption of any political viewpoint is undesirable, but the one it has chosen to emphasize is especially regrettable. In addition to clashing with the objectives of the United States, this view has detracted from UNRWA’s humanitarian assistance, encouraged Palestinians who favor refighting long-lost wars, discouraged those who favor moving toward peace, and contributed to the scourge of conflicts that have been visited upon Palestinian refugees for decades. To a considerable extent,
UNRWA’s donors—particularly the United States, its main source of funding for many years—share responsibility for the agency’s gradual adoption of such views. The United States could have put a stop to UNRWA’s politicization, but chose not to. As with most mistakes, the longer this one remains uncorrected, the more difficult it will be to remedy.

Update February 11, 2009:

An interesting view on the role of UNRWA is here: Ending the West's Proxy War Against Israel.The article basically says that much of the terrorism stemming from Gaza is due to a youth bulge, 

subsidized by UNRWA