As authorities around the world rush to freeze bank accounts and financially squeeze Osama bin Laden and his organization, a troubling fact is obscured: Terrorism can be a low-budget enterprise.
Despite repeated reports that Mr. bin Laden commands a personal fortune of $300 million or more -- estimates that people who know him suggest are wildly exaggerated -- his far-flung network has shown itself over the years to be a primitive and cheap force, one often self-financed by start-up businesses, petty crime or low-wage jobs.
In fact, an extensive review of court documents and interviews shows that many of his followers who carry out his orders appear to receive little if any contribution from Mr. bin Laden himself. Links between Mr. bin Laden and last week's attacks haven't been firmly established; still, the hijackers followed a similar pattern. They stayed in cheap hotels and haggled over bills, and at least one lived off money from his parents.
"This costs a lot less than people think, and the truth is, bin Laden doesn't have to have any money to be able to do things like this," says Milton Bearden, who spent 30 years with the Central Intelligence Agency.
Attempts to throttle Mr. bin Laden's finances by scouring bank records and monitoring international transfers may miss their target. Mr. bin Laden's al Qaeda group, which U.S. authorities believe was responsible for last week's attacks, has in the past often moved money by hiding $100 bills in suitcases or shuffling funds through an informal and almost entirely unregulated system of remittances, not by issuing transfer orders to big banks. He and other Islamic militants have been doing this since the 1980s, when, with arms provided in part by the U.S., they fought to drive Soviet troops from Afghanistan.
Mr. bin Laden's group hasn't entirely skirted conventional channels. He or his close associates have had accounts in London, Vienna, Dubai, Malaysia, Hong Kong, the Sudanese capital of Khartoum and several other locations, according to a former financial aide. Nor does the basic infrastructure of his organization -- training camps stocked with weapons -- come cheap.
Before moving in 1996 to Afghanistan, where he is believed to be now, Mr. bin Laden ran his operation from Sudan and splashed out $430,000 to buy chunks of land, the first of many investments there, according to testimony in the African bombings trial in New York federal court. He sent the money to a bank in Khartoum. He spent a further $230,000 to buy a used American C-130 cargo carrier. (It later crashed into a sand dune.)
Already in Place
But the division between the high cost of setting up and running a terror organization for the long haul and the relatively modest costs of launching specific operations confronts the U.S. government with a thorny problem:
Strangling Mr. bin Laden's finances could help limit the threat he and like-minded militants pose down the road, but it may be too late to stop attacks by thousands he has already helped train and imbue with an implacable hatred for the West.
Authorities have been hunting for and trying to block Mr. bin Laden's assets for years. The Treasury Department Office of Foreign Assets Control in 1998 added him and al Qaeda to a list that made it illegal for any U.S. bank or company to do business with them. The following year it did the same to the Taliban government that harbors him in Afghanistan. The U.S. government also put pressure on foreign countries whose banks were suspected of moving his funds, sending emissaries to Pakistan, Saudi Arabia and elsewhere to plead for help in the fight against terrorism.
Last week's attacks have made the financial battle a crucial front in America's "new war." America, said Treasury Secretary Paul O'Neill, is "not just waging a usual war against these people but waging a financial war and enlisting the leaders of civilized world countries and their financial institutions in helping us identify who these people are, where their money is and taking it away from them."
But Saad al-Fagih, a Saudi dissident in London, says, "The Americans just don't understand Muslim society. They don't understand the money story." He says they underestimate the dominant role of cash -- nearly always U.S. dollars, despite hostility towards the U.S. -- and exaggerate the cost of launching even a calamitous terrorist attack. "To accomplish an operation [like the one last week], these people don't need billions of dollars, or even millions of dollars. They need a few thousand," says Dr. al-Fagih, who runs the London-based Movement for Islamic Reform in Arabia.
Indeed, according to a prosecutor who investigated the 1993 World Trade Center bombing, the whole operation cost the terrorists less than $10,000 -- an amount so small it didn't pop up on law-enforcement radar screens. And last week's terror, like bomb attacks on U.S. embassies in Nairobi and Tanzania, was in many ways a low-budget affair. Consider how two of the hijackers spent their final days from Aug. 26 through Sept. 9: They stayed at the budget Panther Hotel in Deerfield Beach, Fla., renting a double room for $250 a week.
Richard Surma, the motel's owner, says Marwan Alshehhi, the presumed pilot of the second World Trade Center plane, and Mohamed Atta, believed to have piloted the first plane, did their own laundry at the coin-operated machine in the motel at $1 a load. They didn't rent any pay-per-view movies, never used the phone and were seen by Mr. Surma and his wife bringing in bags of groceries for use in the room's full kitchen.
Brad Warrick, owner of Warrick's Rent-A-Car in Pompano Beach, says Mr. Alshehhi and Mr. Atta rented cars on three occasions between Aug. 6 and Sept. 9 and usually picked the cheapest car on the lot. "They weren't blowing money like they had unlimited resources, like you see on TV," Mr. Warrick says. During the second rental, Mr. Atta exceeded the mileage limits and protested when Mr. Warrick charged him an extra $61.80. "He just didn't want to do it," Mr. Warrick says, adding that Mr. Atta eventually agreed to pay without incident.
Both men previously had lived at a $550-a-month house in Nokomis, Fla., while they attended flight school nearby. "This house is nothing extravagant at all -- a real plain-Jane, small, older home," says owner Steve Kona, who noted they drove a 10-year-old car. "It's not like they were living in a $3,000-a-month rental home and driving a Mercedes."
Probably their biggest expense was flying lessons. Mr. Alshehhi and Mr. Atta both paid tuition at Huffman Aviation in Venice, Fla., from July 3, 2000, to Jan. 3, 2001. School officials said Mr. Alshehhi paid a total of $20,000 for lessons on a Cessna 152 and Piper Seneca, while Mr. Atta paid a total of $18,000. (Mr. Atta paid less because he already had a private pilot's license.) The two men paid $1,000 a week each, using checks drawn from a Suntrust Bank branch in downtown Venice. "When they arrived here, all they had was cash," says Charles Voss, the school's former bookkeeper, who briefly rented the two men a room in his home, for which they paid about $250 in cash. "Then they went down to the bank and opened up an account. I probably recommended that bank to them; it was the same bank the company used."
Both men apparently came to the U.S. from Hamburg, Germany. Mr. Atta was a student -- tuition was free -- but also held a variety of odd jobs, including work as a used-car dealer in an open-air car market. How many other people supported them and what resources they had are questions now at the focus of mammoth investigation involving the Treasury and thousands of FBI and intelligence officers. But the example of past terrorist attacks also widely blamed on Mr. bin Laden, particularly the 1998 bombing of U.S. embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania, gives a clear picture of the way al Qaeda prepares, funds and executes its assaults.
In operations in Sudan, Nairobi, Britain and the U.S., Mr. bin Laden's followers often have been scrappy hustlers, opening businesses ranging from hide tanning to gem trading to sesame growing, much of it complementing their ultimate aim of attacking American targets. In Sudan, a peanut and corn farm doubled as a weapons-training site. A plane carrying sugar to Afghanistan returned with weapons. A Nairobi charity provided cover so that Mr. bin Laden's group could obtain visas.
When Mr. bin Laden agreed to furnish Kalashnikov rifles to a brother radical group in Egypt called Islamic Jihad, he didn't hire a plane, a boat or even a car to deliver them. Instead, he bought two 50-camel caravans for the several hundred mile journey from next-door Sudan, according to testimony in the African bombings trial.
Jamal Ahmed al Fadl, a member of al Qaeda who worked in Mr. bin Laden's finance department in Sudan, told a New York court earlier this year how he helped move bundles of cash to supporters in the early- to mid-1990s. Testifying at the trial of four men convicted of involvement in the African bombings, he described how he had carried $10,000 to al Qaeda activists in Kenya and a further $100,000 to a militant Palestinian group based in Jordan. He hid the money under his clothes in a bag and, with help from Sudanese security officials, skirted airport checks.
Mr. al Fadl and other al Qaeda couriers rarely aroused suspicion: Their trips often combined legitimate business with their secret role as emissaries from Mr. bin Laden. Mr. al Fadl traveled to Slovakia to buy spare parts for tractors, and to Cyprus to sell peanuts on behalf of Taba Investments, Laden International and other arms of a sprawling business network set up by Mr. bin Laden and his supporters. Charities, a string of which were closed down by Kenyan authorities after the 1998 bombings, provided added camouflage.
Legitimate business, genuine charity work and political violence coexisted. Another member of al Qaeda, Wadi El Hage, who was convicted in New York earlier this year for his role in the embassy bombings, was sent to Baku, Azerbaijan, to open a charity that would serve as a cover for support to rebels fighting in Chechnya. While there, he decided to try to earn some money, too: He bought bicycles. He later explained to baffled colleagues that they were "cheap over there [and] if we buy a lot, we make money from that," according to court testimony.
Though favoring personal delivery of cash, al Qaeda did open some bank accounts under the cover of business. Mr. al Fadl told the New York court that Mr. bin Laden himself had an account in Khartoum at the Al Shamal Islamic Bank. His lieutenants had accounts in London, at Barclay's Bank, and in Malaysia, Hong Kong and Dubai. Mr. al Fadl said he had an account at Girocredit in Vienna and another one at Girobank in Kenya. Barclays Bank PLC said Wednesday it had frozen a London account that had been inactive "for years" and possibly connected to Mr. bin Laden's organization.
Al Qaeda also used informal financial networks known as hawalas. At the trial in New York, prosecutors presented the ledger from a small money-moving firm called Dihab Shill. It recorded $1,000 transfers from Kuwait and Yemen to a suspected al Qaeda supporter in Nairobi. But the evidence highlighted the problems of tracking such money: The hand-written ledger had been doctored, and the transfer company said it had discarded a fax it received giving details of who had transferred the money.
Business provided good camouflage for Mr. bin Laden in Sudan and elsewhere, but it didn't earn him or his confederates much money, according to court testimony. Many of the ventures floundered. A Nairobi car company run by Mr. El Hage went belly up, for example, when he couldn't resell relatively expensive cars he intended to import from Dubai. Money was so tight at one point that Mr. El Hage told a partner in Black Giant, an al Qaeda gems business, that he was having financial problems and would have to take a side job to raise cash to support his family.
By the mid-1990s, according to court testimony by l'Housaine Kherchtou, another erstwhile al Qaeda supporter and trainee pilot, business was so bad in Sudan that Mr. bin Laden called a meeting to discuss the crisis. He cut salaries and scaled back some ventures. Mr. Kherchtou later asked the organization for money to pay for his pregnant wife's $500 hospital bill. He was told to put her in a free Islamic clinic. He declined, he told the court, saying he knew "she would die on the first day."
Mr. bin Laden's financial problems deepened with the defection of his chief accountant, Abu Fadhl al Makkee Madani al Tayyab, a close associate who had lost part of his leg during the Afghan war against the Soviet Union. Mr. al Tayyab began giving information to Saudi authorities, say people who knew him. Despite such travail, al Qaeda succeeded in bombing two American embassies nearly simultaneously, killing 224 people and injuring several thousand.
Money was also tight in London, where Mr. bin Laden sent Khalid al-Fawwaz to set up an office in 1994 and act as his spokesman. A London-based Saudi dissident, Muhammad al-Massari, says he helped Mr. al-Fawwaz, including installing telephone lines that were secure from the Saudi secret police, by routing the calls through the U.S. He says the office was small and often short of cash. "Everything was tightening the belt," Mr. al-Massari says. He says Mr. bin Laden's envoy once had to borrow money to pay his phone bill and rejected a plea to donate money to his own group, the Committee for the Defense of Legitimate Rights.
Even the 150-pound-a-month rental cost of the office -- a relative pittance in London, equivalent to about $220 -- apparently became too much. Mr. al-Massari says Mr. al-Fawwaz later moved the office to the living room of his home in the Neasden area, a rental property that he estimates cost 700 to 800 pounds a month. The operation shut down in 1998 with Mr. al-Fawwaz's arrest in Britain. He remains in custody, fighting extradition efforts by the U.S. in the embassy bombings case.
Whether Mr. bin Laden at the time was stingy, overstretched or less wealthy than many believe is unclear. Mr. al-Massari, the Saudi dissident, estimates his personal fortune -- inherited more than 20 years after the death of his father, a prominent businessman in Saudi Arabia who died in 1968 -- is closer to $30 million to $40 million, a fraction of usual estimates. He had a raft of companies in Sudan, but most of their value lay in things like bulldozers and land. "He got involved with activities that consume money, that don't produce much money," says Mr. al-Massari.
-- Marcus Walker, Glenn R. Simpson and Laurie Cohen contributed to this article.
Copyright © 2001 Dow Jones & Company, Inc.
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