Financial war on terrorism suffers from agency rivalry

Effort to cut cash flow stymied by lack of cooperation and evidence, turf battles

LOS ANGELES TIMES

Originally published Sunday, April 7, 2002

WASHINGTON -- The U.S. government's much-touted financial war on terrorism has been hamstrung by bitter turf battles among federal agencies, questionable evidence against targeted Middle Eastern groups and a lack of cooperation by foreign allies, senior government officials said.

In recent months, President Bush and his top Cabinet members have hailed the U.S. government's effort to "shut down the money pipeline" as a vital component of United States counterterrorism strategy.

But privately, some administration officials are saying the strategy isn't working as advertised.

"You read the papers and it seems like everything is going great," said one senior law enforcement official. "But this is no way to run an investigation. And the worst part is that this is the biggest case in existence. And so much is at stake."

Range of woes

Debate over the problems has occurred at the highest levels, according to interviews with more than dozen law enforcement, intelligence and counterterrorism officials familiar with the financial crackdown.

Many of them say a number of financial crackdowns on groups with suspected terrorist ties were launched prematurely or lacked evidence. They add that the United States is receiving far less cooperation than it needs from many allied nations, which have pledged to help choke off the terrorist money supply but lack the political will, technical know-how and legal framework to make that happen.

Some officials involved in implementing the Patriot Act, which granted authorities broader powers to track suspected terrorist money, are now saying it is too unwieldy and unrealistic.

The law subjects an array of businesses, such as currency transfer and exchange companies, pawnbrokers and even car dealerships to new auditing requirements to help authorities detect potential terrorist activity. The legislation places an April 24 deadline for the new regulations, but many businesses say they have no system in place for taking on their expanded role as money cops, and authorities complain that they will be overloaded by information.

Measure of success

Leaders of the financial war on terrorism acknowledge the investigations' shortcomings, but they stress that success has been achieved in some areas.

It has been instrumental, for instance, in determining who was behind the Sept. 11 attacks and in establishing connections among the 19 hijackers and other co-conspirators around the world. It also has provided a clearer picture of how Osama bin Laden's al-Qaida network and other terrorist organizations operate, officials said, adding that the financial component of the war on terrorism ultimately could prove to be instrumental in U.S. efforts to avert another attack.

So far, authorities have frozen more than $100 million in alleged terrorist money, about $70 million of it overseas. Several major charities have been targeted for allegedly helping terrorist organizations.

But others involved in the investigation say they couldn't name any cases in which criminal charges have been brought in the United States directly relating to the funding of terrorism.

And some said that al-Qaida's operations are too shrouded in secrecy to gauge the effectiveness of the crackdown to date, particularly since terrorists frequently use gold, diamonds and other noncurrency-based transactions to fund terrorist activity.

Difficult to gauge

"I would have no idea (how successful the effort has been), and I have no idea how they would know," one senior law enforcement official said of those who claim al-Qaida has been financially crippled. Like many others involved in the money-tracking effort, the official declined to be identified by name or even by agency, citing political sensitivities and interagency conflicts.

That official and others said the financial counterterrorism effort has been faltering on operational and policy levels. Many fear that the problems will only grow worse unless something is done to streamline and de-politicize the entire initiative.

An array of law enforcement squads are involved in the financial investigations. There are an equal number of committees set up to oversee them, including a high-level panel so secretive that no one will disclose its name.

The FBI set up its money-tracking Financial Review Group within days of the attacks and invited other agencies, including Treasury, the CIA and the National Security Council, to join.

Within weeks, however, the Treasury Department created Green Quest, headed by Customs Commissioner Robert Bonner, a former U.S. attorney in Los Angeles. It said the multi-agency panel would lead the effort to track terrorist financing.

Bonner and Treasury officials say they were following President Bush's Sept. 23 executive order that sought to freeze the U.S.-based assets of individuals and organizations involved with terrorism.

Justice officials counter that the Treasury Department has interpreted its role too broadly, and that Justice agents are supposed to be leading the global effort to stop the flow of terrorist funds.

Things have degenerated to the point where the two FBI positions on the Customs panel are vacant, and the two Customs agents in the FBI unit left and did not come back, according to people close to the investigations.

Trouble abroad

Several senior law enforcement officials complained that the tug-of-war between government departments extends overseas as well.

As evidence that U.S. allies are receiving mixed messages about the U.S. operation, they cited the separate trips to Europe and Asia by Attorney General John Ashcroft, FBI Director Robert Mueller, Treasury Secretary Paul O'Neill and other top-level officials to talk up the financial war on terrorism.

The Treasury and Justice departments also have been quietly sending employees overseas to press U.S. allies into doing more to help in the financial crackdown. Those include legal experts who are trying to help the countries establish legal frameworks needed to follow through on any seizures. And technical consultants are working with those governments and private banks to set up the appropriate computer systems, officials said.

Other nations are asking for additional "proof of wrongdoing by suspected terrorists, charities and other businesses before acting, Dam and Treasury General Counsel David Aufhauser said.

Amid all the logistical problems, an even more troubling question has begun to emerge: How much good can tracking terrorist money really do?

Much of the current focus appears to be on examining the entire universe of financial transactions for signs of terrorist activity, which many investigators liken to searching for a needle in a haystack the size of Nebraska.

Authorities note that the 19 hijackers were able to carry out the Sept. 11 attacks on a budget of about $500,000, without any of their financial transactions triggering red flags.

"This was the Super Bowl of terrorist acts, and even in retrospect, knowing what we do now, we would never have caught that," one law enforcement official said.

At a Feb. 12 congressional hearing, Rep. Doug Bereuter, R-Neb., questioned the "behind-the-scenes tug of war" between Treasury and Justice.

"I am concerned that if parallel financial intelligence databases are set up, the U.S. government will both spend money unnecessarily and decrease investigative and enforcement efficiency," Bereuter said.

The Olympian Copyright 2002

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