Dry Up the Money Trail

By Jim Hoagland

Sunday, September 30, 2001; Page B07

NEW YORK -- Money sets Osama bin Laden apart from other Middle Eastern fanatics and murderers. A fortune derived from Saudi Arabia's vast oil revenues buys his organization survival and "success."

Finding and destroying the money trails to bin Laden is essential to finding and destroying his group. The Bush administration must penetrate and take apart the nexus of terror that surrounds bin Laden and his Afghan and Arab allies. The nexus is geographical, ideological and religious as well as financial. But without the money, the rest would not be enough to enable these mass murderers to hatch and conceal their plots for years and then spring them on a sunny Tuesday morning of their choosing.

That agents suspected of working for this son of a Saudi billionaire struck at the World Trade Center and brought down a visible symbol of international capitalism was certainly no accident. Revenge against easy money, money that has undermined the traditional way of life in the Arabian peninsula, had a place along with revenge against America on the terrorists' twisted agenda.

It is enough to make you think that Lenin got the general idea right but the details wrong. The first Soviet leader predicted that the merchants of America and Britain would gladly sell communists the rope with which to hang the world's capitalists. But the West's symbolic weak link turns out to be oil -- and the floods of money it has poured on economically primitive lands -- not rope.

It was jet fuel that caused the Trade Center's twin towers to burn and implode on Sept. 11. And it was oil money that enabled bin Laden to buy sanctuary first in Sudan and then Afghanistan, to assemble a small army to protect him and to field well-equipped and trained agents around the world.

The White House fired a modest first shot at bin Laden's enablers last week by freezing the U.S. assets of individuals and organizations with financial links to him. Probably more important, the Treasury Department turned on a dime from fighting significant international cooperation on dirty money havens to threatening retribution against foreign banks that did not follow the U.S. lead on bin Laden.

The Bank of International Settlements is now said to be coordinating a daily listing of suspect institutions and persons operating in the world's 10 richest countries and encouraging banking centers to sort for transactions involving them.

The U.S. list included Islamic foundations, such as the Al Rashid Trust of Pakistan and the Wafa Humanitarian Organization of Saudi Arabia. They are only the tip of an iceberg of other Islamic charity fronts that wittingly and unwittingly provide cover for bin Laden's activities in desolate, starving places such as Afghanistan and Yemen.

But going after the regional fronts is only part of the financial task. This crisis offers Washington the need and the opportunity to force American and international banks to clean up money concealment and laundering practices they now tolerate or encourage, and which terrorism can exploit.

"It is a major security problem to have the huge amount of money we know is being hidden in this system and not know who controls it," says Robert Morgenthau, New York's district attorney and a man who has thought deeply and consistently over the years about the damage the international banking system inflicts on capitalism in the pursuit of short-term profit.

In the past three years, bank deposits in the tiny and unregulated Cayman Islands have grown from $500 billion to $800 billion, says Morgenthau, who notes that "47 of the world's largest banks are licensed to operate" in a setting where banks are used to hide assets, launder proceeds of crimes and pay out bribes to foreign officials.

Morgenthau has tenaciously pursued difficult and time-consuming investigations into banking crimes that other prosecutors have avoided. He has found "terrorist accounts" offshore in the past -- and also found little interest in Washington in pressing the banking industry to curb the secrecy and excesses that enable those accounts to be established.

"Congress is putting $40 billion into the national recovery effort," Morgenthau says. "They could recover that and more by preventing these tax havens and banks from hiding assets. We have to do our part to make taxpayers see the system is fair."

The Bush administration has put a toe into the offshore water where banks help bad guys manipulate them for evil and for mutual profit. The feds should wade in vigorously and prepare for a long struggle against all the enablers, even those in bankers' pinstripes.