June 14, 2002
Prosecutors See Possible Link Between U.S.-Based Charity and Al Qaeda
By DOUGLAS FRANTZ
ARAJEVO, Bosnia and Herzegovina — Benevolence International Foundation, an Illinois-based charity with broad activities in Bosnia, has emerged as a central focus of the investigation into the finances of Osama bin Laden and his Qaeda terrorist network.
Enaam M. Arnaout, the head of the charity, is being held without bond on the basis of growing evidence that seems to link him with Mr. bin Laden, and the charity's possible role in moving money and people for Al Qaeda has come under increasing scrutiny from American investigators.
Bosnian officials said in interviews that whenever Mr. Arnaout came to Sarajevo in recent years, he would withdraw up to $100,000 in cash from a bank account of the charity. How the money was used is unclear.
Among the evidence discovered in police raids on March 19 of eight offices and homes associated with Benevolence International in Bosnia was a computer disk with its contents deleted, investigators said.
When technicians retrieved the information, they found copies of communications between Mr. Arnaout and Mr. bin Laden dating to the 1980's, including a letter in which Mr. bin Laden sought help in arranging a visit to Saudi Arabia for an unidentified associate.
The new evidence, and recent interviews in Bosnia, also revealed links between the charity and another founder of Al Qaeda.
Records from the charity showed that two months before the 1998 bombing of two American embassies in Africa that killed 224 people, Benevolence International made all the arrangements for a visit to Bosnia by the other Al Qaeda founder, Mamdouh Mahmud Salim.
According to a 35-page F.B.I. affidavit, filed when Mr. Arnaout was arrested on April 30, the charity sponsored Mr. Salim's visa, reserved his apartment in Bosnia and identified him as one of its directors.
In early 2000, a Bosnian police inspector questioned Mr. Arnaout about the trip. Mr. Arnaout said he knew nothing about Mr. Salim or the visit, but Mr. Arnaout later confided to a Bosnian intelligence agent that he knew Mr. Salim and wanted it concealed from the Americans, according to a previously undisclosed Bosnian intelligence report.
Lawyers for Mr. Arnaout and the charity said he and the organization engaged only in humanitarian activities and had no connection with Al Qaeda or Mr. bin Laden.
"It is absolutely untrue that either Benevolence International Foundation or Mr. Arnaout knowingly provided support to Al Qaeda, including the transfer of money on Al Qaeda's behalf," the lawyers, Joseph J. Duffy and Matthew J. Piers, said in response to written questions from The New York Times.
American and Bosnian officials said investigators were also examining cash withdrawals totaling $500,000 or more by Mr. Arnaout from the charity's account in Bosnia. The charity's lawyers acknowledged that Mr. Arnaout made large cash withdrawals, but said the money was used to meet charitable expenses.
Mr. Arnaout has been held as a flight risk since he was arrested at his home outside Chicago on federal perjury charges. He is accused of lying in telling an American court that the charity's funds were never used for terrorism or violence.
Mr. Salim, arrested a month after the bombings in 1998, awaits trial in New York on terrorism conspiracy charges in the embassy attacks. He has pleaded not guilty, but the trial was delayed after he stabbed a New York jail guard in the eye with a sharpened comb.
American prosecutors have said that Mr. Salim, a Sudanese native, helped create Al Qaeda in the late 1980's, ran businesses to raise money for Al Qaeda and provided Mr. bin Laden with interpretations of the Koran that supported terrorism. They said Mr. Salim also approved Al Qaeda's efforts to buy nuclear and chemical weapons in 1993.
Investigators say that Mohamed Bayazid, another Al Qaeda associate suspected of trying to acquire uranium for Mr. Salim, used Benevolence International's office in a Chicago suburb as the address on his driver's license.
"We have enough reasons to believe they were involved in very nasty activities," Ivica Misic, Bosnia's deputy foreign minister and chairman of its antiterrorism commission, said of Benevolence International.
The effort to uncover and disrupt Al Qaeda's financial networks is one of the biggest challenges for American counterterrorism investigators and their allies. Among the targets is a web of organizations, often financed by wealthy Saudi Arabians, suspected of operating under the guise of charities to conceal assistance to Islamic extremists.
Records and interviews with investigators and intelligence officials in the United States, Europe and the Middle East portrayed Benevolence International as a charity that also had contact with people who apparently had nothing to do with humanitarian work.
Some of the material seized in the March 19 raids in Bosnia was described in the F.B.I. statement, which formed the basis for the perjury charges filed in April against Mr. Arnaout and the charity in federal court in Chicago. The Bosnian raids were monitored by American agents.
Former Al Qaeda members have told the F.B.I. that Mr. Arnaout was so trusted by Mr. bin Laden that Mr. Arnaout cared for one of Mr. bin Laden's wives for a week in 1989, the F.B.I. statement said. One convicted terrorist said that Al Qaeda members held positions in the charity and that it was used by Mr. bin Laden to transfer money to network members and associates.
Mr. Arnaout, 39, a Syrian who also holds American and Bosnian citizenship, has families in the United States and Bosnia. He has worked for Benevolence International since at least 1993 and became executive director in 1997.
The group said it spent tens of millions of dollars on relief projects in the past decade, and tax filings showed donations of $3.3 million in 2000. Its programs include an orphanage in Azerbaijan and a tuberculosis hospital in Tajikistan.
Defense lawyers argued that the government was pandering to post-Sept. 11 emotions to close a legitimate Islamic charity. "I do believe that the government has engaged in a massive smoke screen with regard to injecting Mr. bin Laden's name in this proceeding as much as possible," Mr. Piers, the charity's lawyer, said at a hearing in May.
It also is clear that the investigation extends beyond perjury.
"The reality is that this is not a simple perjury case," Magistrate Ian H. Levin said in refusing bail for Mr. Arnaout. "It is a perjury charge in the context of a terrorism financing investigation."
Material seized in the Bosnian raids is still being evaluated, but officials in Bosnia and court records in Chicago indicated that it opened a window on the charity's inner workings and Mr. Arnaout's activities.
The disk contained photographs of Mr. bin Laden and of Mr. Arnaout in a wooded area. Mr. Arnaout was photographed holding rifles and a shoulder-fired rocket. The retrieval operation restored the disk's title, "Al Masada," the name of Mr. bin Laden's first Afghan training camp and the place where the F.B.I. believes the photos were taken.
Mr. Arnaout was in Pakistan and Afghanistan in the late 1980's and early 1990's, and two former Al Qaeda members said he disbursed funds for Mr. bin Laden and directed weapons shipments, the F.B.I. said.
Mr. Piers and Mr. Duffy said that Mr. Arnaout recalls only driving Mr. bin Laden's wife from an airport to Peshawar, Pakistan, in the late 1980's. The lawyers said Mr. Arnaout had contact with Mr. bin Laden in that period, but that he did not have a personal relationship with him.
They also said that they did not believe Mr. Arnaout was at Al Masada and that it was unclear whether the man in the photos is Mr. Arnaout.
Much of the worldwide investigation into suspicious charities focuses on Bosnia, a battle-scarred country where dozens of Islamic groups set up shop from 1992 to 1995 during ethnic warfare with Serbs and Croats. The groups provided aid to Bosnian Muslims and to Arabs who came to fight with them.
Hundreds of Arab charity workers and fighters stayed, and many were granted citizenship. Three employees of Islamic charities were among six naturalized Arabs arrested by Bosnians last October on vague charges related to terrorism.
Western officials said some charities had another mission: serving as gateways for extremists to infiltrate Europe and receive money.
Bosnia's Muslim-dominated government ignored these activities until a change of regime 18 months ago. Hard-line Muslim politicians still oppose any crackdown.
"The government is more or less on board," said an international official in Sarajevo. "But the vast majority of suspicious organizations are still operating."
Eight charities are under investigation, Bosnian police said. Among them are Benevolence International and the Saudi High Commission for Relief, a charitable foundation of the Saudi Arabian government that has spent $561 million in Bosnia.
NATO-led troops raided the Saudi commission's offices in Sarajevo last October and seized computer files on crop dusting and making fake State Department badges and with photographs of American military installations and government buildings.
Sefik Halilovic, chief of the Bosnian criminal police, confirmed that the commission's finances were under review. A Saudi Embassy spokesman said the organization conducts only legitimate activities.
Concealing terrorist activities behind charities is not new. In 1995, a defendant in a plot to blow up New York landmarks admitted smuggling money for military training into the United States for a Vienna-based charity. Two Al Qaeda members ran a charity in Kenya while plotting the 1998 embassy bombings.
"Charities are the best cover," an American official said. "They do good works with one hand and provide money and cover for terrorists with the other hand."
Last Dec. 14, the Treasury Department ordered banks to freeze the accounts of Benevolence International. The group then sued the government, and Mr. Arnaout submitted two sworn statements saying the charity's funds had never been used for terrorism or violence.
New details about Mr. Salim's trip to Bosnia on May 7, 1998, were discovered in foundation offices in the March raids, the F.B.I. said, including the sponsoring of his visa by Mr. Arnaout.
Mr. Salim was one of several Al Qaeda associates accused of conspiracy in the embassy attacks in August 1998. Four men were convicted of conspiring with Mr. bin Laden. Mr. Salim pleaded not guilty, and his trial was delayed after he stabbed the jail guard.
The reason for Mr. Salim's trip to Bosnia remains a mystery, intelligence officials said.
In January 2000, when the F.B.I. was trying to reconstruct Mr. Salim's travels, Mr. Arnaout told a Bosnian intelligence agent, Munib Zahiragic, that he had withheld information about Mr. Salim from the Bosnian police, according to a report written by Mr. Zahiragic. Mr. Arnaout said he knew Mr. Salim and was aware he had been arrested for links to Mr. bin Laden, the report said.
"That's why Enaam would not like his name mentioned in the context of giving eventual access to the information to the Americans," the agent wrote, according to a copy of the report provided by a Bosnian official.
After the new regime was elected in November 2000, Mr. Zahiragic was dismissed from his intelligence post and went to work as head of Benevolence International in Sarajevo. He was arrested on espionage and terrorism charges after police found guns, ski masks and classified dossiers on Islamic extremists at his home in the March 19 raids.
Two days later, Mr. Arnaout telephoned from Chicago and urged Mr. Zahiragic to say he had done nothing wrong, according the F.B.I. When Mr. Zahiragic replied that he was already in jail, Mr. Arnaout told him not to provide information.
The defense lawyers said Mr. Arnaout had no recollection of asking Mr. Zahiragic to withhold information. They also said neither Mr. Arnaout nor anyone else affiliated with the charity knew Mr. Salim was involved with Al Qaeda or any terrorist activities at the time of his visit.
The authorities are also examining the charity's finances. Mr. Misic, Bosnia's antiterrorism chief, said Mr. Arnaout routinely withdrew up to $100,000 from the group's bank account when he came to Bosnia.
One former Al Qaeda member told the F.B.I. that the pattern for relief organizations linked to Al Qaeda was to withdraw cash so that it would be untraceable, according to the F.B.I. statement. The informer said that some money typically went to legitimate projects and the remainder to Al Qaeda members.
Mr. Arnaout's lawyers said that risky business conditions in Bosnia required paying the charity's monthly payroll and bills in cash and that withdrawals regularly exceeded $60,000. They said Mr. Arnaout was one of several people who withdrew cash, but that the money was accounted for in business records. They said Mr. Arnaout never used the hawala system.
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