Acknowledging that some of the billions of dollars that annually flow through Saudi Arabian charitable organizations may have ended up in terrorist hands, the Saudi government has launched a new public relations counteroffensive to demonstrate that it is pulling its weight in the financial war against terrorism.
In a report to be released today in Washington, the Saudis detail a number of steps they have taken since Sept. 11, 2001, to keep better track of charities that the Bush administration, members of Congress and outside analysts believe have been a major source of financing for al Qaeda and other terrorist groups.
The steps include ordering Saudi-based charitable organizations to establish -- many for the first time -- financial control and audit mechanisms; imposing rules and regulations for the charities and creating a government agency to oversee their operations; setting up a new financial intelligence unit to coordinate among banking, law enforcement and intelligence officials; and establishing strict new rules for sending money outside the country. The report, which will be presented at a news conference at Saudi Arabia's embassy, will also detail the number of bank accounts and amount of money potentially tied to terrorists that the Saudi government has frozen since Sept. 11 -- 33 accounts worth $5.6 million.
The total amount of assets frozen by all countries worldwide since the attacks is $113 million, according to the Treasury Department.
"Where we were weak was in terms of controls of oversight of charities," said Adel al-Jubeir, senior foreign policy adviser to the de facto Saudi ruler, Crown Prince Abdullah. "It's very simple. We don't have taxes. Nobody pays taxes, so . . . you don't have to file returns as you do in the U.S. and they don't do audits."
Of a total of about 300 nongovernmental Saudi charities, only a small percentage send money outside the country, totaling about $300 million out of $3 billion to $4 billion a year in overall charitable contributions, al-Jubeir said. Although he said that the government has found no evidence that money is flowing directly from Saudi individuals or organizations to terrorists, he acknowledged some of the contributions might have indirectly or "inadvertently" ended up in terrorist coffers. "That may be the case," he said. "I cannot prove the opposite."
Beginning with revelations that 15 of the 19 hijackers involved in the Sept. 11 attacks were Saudi citizens, Saudi Arabia has come under public and congressional suspicion as a breeding ground for terrorism, even as the Saudi monarchy has argued that it is at least as much a target of Osama bin Laden and al Qaeda as the United States. Several recent reports by prominent U.S. think tanks have described Saudi efforts to stem the terrorist money flow as insufficient and insincere, and hampered by the government's desire not to offend religious conservatives whose support is considered crucial to its continuance in power.
The Bush administration is divided between those who believe Saudi Arabia is cooperating as best it can, and those who charge it has resisted every substantive effort to assist on the financial front.
Saudi officials say they have made major strides in bringing under control a system of charitable giving that is an integral part of their culture. "What we discovered," al-Jubeir said of the charities, "is that . . . sometimes they can't account for how they raise the money because people give them cash" as part of the tithing that Islam requires. Many are equally vague on where the money is spent.
"You ask a charity, where did this money go," al-Jubeir said, "and they say it went, for example, to an orphanage. Then you say, did you see the orphanage . . . the construction documents . . . the payment schedule? They just assume, well, it was a nice religious man" who asked for the money. "We say, well, that's fine and dandy, but that's not how the world operates. So we're helping them put in procedures to make sure they know . . . what steps they can take to make sure that nobody takes advantage of their naivete."
"It's an area that our central bank was trying to get a handle on for some time, but in particular after Sept. 11," al-Jubeir said.
The new report was compiled following the latest round of allegations that the government in Riyadh, the capital, has been less than diligent in seeking out and closing down terrorist funding pipelines. Reports emerged late last month that charitable contributions by Princess Haifa al-Faisal, the wife of the Saudi ambassador to the United States, may have indirectly benefited two of the men who participated in the Sept. 11 terrorist attacks.
At the same time, other governments have criticized the Bush administration for its unwillingness to press Saudi Arabia for more action out of fear of alienating a key Arab ally during a time of high tension in the Middle East, including possible war against Iraq. An interagency group within the administration, the Policy Coordinating Committee on Terrorist Financing, that includes representatives of the Treasury, State, Defense and Justice departments, along with the CIA and FBI, recently decided to recommend that the White House issue an ultimatum to the Saudi government to move against alleged terrorist financiers and charities or face unilateral U.S. action against them. The recommendation has not yet arrived on President Bush's desk.
In public comments, the administration has consistently praised Saudi cooperation. Although officials declined to comment on the new Saudi report, provided to them in advance, a statement released through a Treasury spokesman noted that "as President Bush has said, the U.S. is pleased with and appreciates the actions taken by the Saudis to date and is confident that they will continue to take the appropriate actions in the future. Saudi government cooperation in the war against terrorism has been substantial."
Examples of such cooperation, the statement said, include the joint U.S.-Saudi designation as terrorist funders of branches of the Saudi-based charity Al-Haramain Islamic Foundation in Bosnia and Somalia, and freezing the assets of Wa'el Jalaidan, an al Qaeda co-founder.
The Saudis themselves attribute what al-Jubeir called "a bum rap" on the terrorism financing front to several factors. "We were not opening up publicly in terms of what we were doing" to combat the flow of funds, he said. The compilation and release of the report reflects a victory for those within the Riyadh government who have long advocated more openness, arguing that an obsession with secrecy led to unjust criticism from the outside.
Saudi officials also have repeatedly complained over the past year that many of the problems they have had with the administration are the fault of the U.S. government itself.
Anti-terrorism efforts among many U.S. agencies and departments are so decentralized and uncoordinated, these officials say, that one office frequently doesn't know of discussions another office has had with Saudi officials. The Saudis complain that a U.S. agency will often request information that had already been provided to another office, leading one official to publicly criticize them while another is patting them on the back for their cooperation. Saudi officials have also charged that administration demands to freeze funds and label prominent individuals as terrorist financiers more often than not come without any evidence to substantiate the charges.