Funding Terrorism in Southeast Asia: The Financial Network of Al Qaeda and Jemaah Islamiya
Abuza, Zachary, Contemporary Southeast Asia
The war on terror has continued apace in Southeast Asia, and the governments in the region deserve credit for the arrests of some 150 Jemaah Islamiya (JI) members through April 2003. Several of the members of JI's regional shura (council) were arrested, including Mohammed Iqbal Rahman (Abu Jibril), Agus Dwikarna, and Faiz bin Abu Bakar Bafana. These arrests were significant, especially as the JI is not a large organization, with probably no more than 500 members. The fact that they are now focusing on soft targets such as tourist venues rather than hard, though symbolic, targets may indicate institutional weaknesses, the result of 20 mouths of intensive investigations and arrests. They are less able to plan and execute terrorist attacks than they were a year ago, though they still maintain their capacity to attack soft targets. That said, one would be foolish to underestimate JI's capabilities or goals. As many of the key operatives are still at large, the organization retains the capacity and will to launch devastating attacks throughout the region.
The glaring exception to the success in fighting terrorism has been on the financial front: mechanisms for funding terrorism have continued unabated in Southeast Asia, and to date no terrorist assets or funds have been seized in the region. Two leading members of Jemaah Islamiya, Hambali and Abu Jibril, had their assets blocked by the United States under Executive Order 13244 on 24 January 2003 (18 months after Abu Jibril was arrested). Indeed, this is a worldwide problem: as of January 2003, only US$113 million in Al Qaeda-linked assets had been frozen.
In early 2003, the U.S. Department of Treasury's Office of Foreign Asset Control drew up a list of 300 individuals, charities and corporations in Southeast Asia believed to be Al Qaeda and Jemaah Islamiya funders. Due to inter-agency politics, the list was winnowed down to 18 individuals and 10 companies. But even at the time of writing in early April 2003, the list was still unannounced due to diplomatic and bureaucratic pressure.
Yet Southeast Asia seems to have gained in importance to Al Qaeda's money men, according to U.S. law enforcement officials. The head of the terrorist financing tracking unit at the Federal Bureau of Investigation (FBI), asserts that, with the crackdown on Middle Eastern funding mechanisms, especially the financial centres in Abu Dhabi and other parts of the United Arab Emirates, Al Qaeda has increasingly relied on Southeast Asia to move its money and hide its assets. (1)
Al Qaeda's financial network is very sophisticated and complex, dating back to the late-1980s to early 1990s. Osama bin Laden set out to establish an organization that would be self-sustaining over time; one part self-reliant, another part reliant on the ummah, the Muslim community. Built on "layers and redundancies", Al Qaeda's financial backbone was built on a foundation of charities, non-governmental organizations, mosques, websites, fund-raisers, intermediaries, facilitators, and banks and other financial institutions that helped finance the mujiheddin throughout the 1980s. This network extended to all corners of the Muslim world. (2)
"The goal of counter-terrorism", according to Mathew Levitt, "should be to constrict the environment in which terrorists operate", including "their logistical and financial support networks", which "denies terrorists the means to travel, communicate, procure equipment and conduct attacks". (3) This is arguably the most difficult part of the war on terror, as terrorist organizations use myriad ways to fund their operations, legal and illegal, overt and covert, with paper trails or without. Tracking this funding was also never a priority for law enforcement or counter-terrorist officials--terrorist financing was always seen as ancillary to counter-terrorist operations, but never a primary agenda in its own right.
How does Al Qaeda fund its operations in Southeast Asia? How does its regional arm, the JI, support itself? (4) Malaysian intelligence officials believe that Hambali, the head of JI's operations and a member of Al Qaeda's shura, has approximately US$500,000 in assets at his disposal for use in operations. There are eight primary sources of income, both internal and external, though most funds come from external sources. As Mukhlas (Ali Gufron), the leader of the cell that perpetrated the Bali attack said, "Hambali is not known to have any big [local] funding sources". To that end, Indonesian investigators unequivocally stated that "Jemaah Islamiya's jihad operations were funded by Al Qaeda". (5) The sources of funding include:
* cash brought into the country by individuals
* funds skimmed from Islamic charities
* corporate entities (some very overt, others are self-sustaining fronts for terrorist activities)
* proceeds from hawala shops and gold sales
* contributions (zakat and infaq) from its own members
* contributions (infaq) from outsiders
* Al Qaeda investments and accounts already established in the region, especially in the region's Islamic banks, and
* petty crime, racketeering, extortion, gun-running and kidnapping.
None of these funding mechanisms has been effectively shut down since the war on terror began. In part it has been due to the near impossibility of shutting down, for instance, hawala networks, or stopping petty crime. In part, it is also due to bureaucratic inertia, a lack of political will, and diplomatic pressure. Indeed, one of the aspects that made Southeast Asia so appealing to the Al Qaeda leadership in the first place was the network of Islamic charities, the spread of poorly regulated Islamic banks, business-friendly environments, and economies that already had records of extensive money laundering. Al Qaeda saw the region, first and foremost, as a back office for their activities (especially to set up front companies, raise funds, recruit, forge documents, and purchase weapons); only later was it seen as a theatre of operations in its own right. As Al Qaeda's affiliate organization in Southeast Asia, the Jemaah Islamiya developed its own capabilities.
Southeast Asia has long been a centre for transnational criminal activities such as drug and gun-running, money laundering, people smuggling, and document forging. Indeed money laundering has still not been made a criminal offence in all Southeast Asian states--the OECD's Financial Action Task Force (FATF), still has Indonesia, the Philippines and Myanmar on its blacklist. In most cases, terrorists differ from transnational criminal organizations, which are driven by profit motives. But if you strip away terrorist actions themselves, terrorists require the same infrastructure as transnational crime. Southeast Asia, thus, becomes an important area of operations.
It is also important to realize that fairly modest sums of money are all that are needed to perpetrate acts of terror. The Bali bombing in which 202 people were killed, and led to the estimated loss of more than US$1 billion in tourist revenue for Indonesia, cost under US$35,000--terrorism is truly asymmetrical warfare.
Funding Jemaah Islamiya
Bags of Cash
The most direct way that the JI is funded is through deliveries of cash by personal couriers. This is literally impossible to stop. According to Malaysian and Singaporean intelligence reports, the JI received some Rp1.35 billion from Al Qaeda since 1996. According to regional intelligence officials, that year, the JI received Rp250 million, Rp400 million in 1997 and Rp700 million in 2000 (roughly US$40,000 and US$70,000 respectively). (6) 0mar al-Faruq testified to transferring US$200,000 to the JI's Indonesian cell after 2000. (7)
Sheik Abu Abdullah al-Emarati, an alias of Osama bin Laden, was also involved in funding JI operations. He purportedly gave US$74,000 to Omar al-Faruq to purchase three tons of explosives for JI operations. The Bali attack likewise was funded by US$35,000 transferred by Wan Min Wan Mat, believed to be an important JI treasurer in Malaysia, (8) to Mukhlas and Imam Samudra, the leading perpetrators in the Bali bombings.
A Jordanian man, Hadi Yousef al-Ghoul was arrested in his home west of Manila, Philippines, on 27 December 2001. Police officials contended that "Al-Ghoul is a member of one of the terrorist cells in the Philippines assigned to carry out a string of bombings in Metro Manila", but more importantly, he was seen as a mid-level Al Qaeda money man, who provided cash to locally-based Jemaah Islamiya operatives to whom he was believed to be financially supporting. (9)
Mohammed Mansour Jabarah, a Canadian-Kuwaiti Al Qaeda operative, was dispatched to Southeast Asia in 2001 with some US$10,000 in seed money provided by Khalid Sheikh Mohammed, Al Qaeda's chief of operations. To conduct operations against U.S. targets in Singapore and Manila, Jabarah was given US$30,000 in three US$10,000 instalments in November 2001 from a man he identified as Al Qaeda's main money man in Malaysia. Jabarah was the primary conduit for Al Qaeda funds to Fathur Rohman al-Ghozi, the head of JI operations in the Philippines, who was responsible for purchasing TNT for operations in Manila and Singapore. When Jabarah left Singapore for Kuala Lumpur and later Thailand when he was on the run, the Canadian Security and Intelligence Service interrogation report states that he relied on infusions of cash from Al Qaeda operatives based in the region. (10)
As one Indonesian intelligence official said, "you could bring a container of cash into the country without being noticed." As it is impossible to halt this source of funding, short of searching everyone entering the country, we should focus on sources of funding that we have a chance to stop.
Much of Al Qaeda's funding is thought to come from charities, either unwittingly or intentionally siphoned off. This is possible as Al Qaeda inserted top operatives in Southeast Asia into leadership positions in several Islamic charities. Indonesian intelligence officials estimate that 15 to 20 per cent of Islamic charity funds are diverted to politically motivated groups and terrorists. (11) In the Philippines, estimates range from 50 to 60 per cent. (12)
In Islamic culture, Muslims are expected to donate 2.5 per cent of their net revenue to charity, known as zakat. (13) "In many communities, the zakat is often provided in cash to prominent, trusted community leaders or institutions, who then commingle and disperse the donated moneys to persons and charities they determine to be worthy." (14) This practice is unregulated, unaudited, and thus leads to terrible abuse by groups such as Al Qaeda. There are some 300 private charities in Saudi Arabia alone, including 20 established by Saudi intelligence to fund the Afghan Mujiheddin that send upwards of US$6 billion a year to Islamic causes abroad. (15) It is estimated that US$1.6 million per day is donated by wealthy Saudis alone. More disturbing, a Canadian intelligence report concluded that Saudi charities alone were funnelling between US$1--2 million annually to Al Qaeda's coffers. (16) The Council on Foreign Relations, which published one of the most authoritative accounts of the problems facing the war against terrorist funding, concluded that "For years, individuals and charities based in Saudi Arabia have been the most important source of funds for Al Qaeda; and for years, Saudi officials have turned a blind eye to this problem". (17) One Saudi analyst believed that between US$40 to US$58 million that was donated to legitimate Saudi-based charities "has gone astray" in the past few years, with no legal or diplomatic repercussions. (18) A former senior U.S. Treasury official, Stuart E. Eizenstat, stated that Saudi Arabia was treated "with kid gloves," even though U.S. officials were aware of the use of Saudi charities by terrorists. (19)
The four most important Saudi charities are the Islamic International Relief Organization (IIRO), which is part of the Muslim World League, a fully Saudi state-funded organization whose assets were frozen by the U.S. Treasury; the Al Haramain Islamic Foundation, also based in Saudi Arabia; Medical Emergency Relief Charity (MERC); (20) and the World Assembly of Muslim Youth. (21) The President of the World Assembly of Muslim Youth is Sheikh Saleh al-Sheikh, the Saudi Minister of Islamic Affairs. He is also the "superintendent of all foundation activities for Al Haramain. In March 2002, the United States froze the accounts of Al Haramain's offices in Bosnia and Somalia. The Bosnian branch was re-opened in. August 2002 under Saudi pressure. (22) In September 2002, Bangladeshi authorities raided Al Haramain's offices in Dakha, which they suspected of funnelling Saudi money to recruiting Bangladeshis to fight in Kashmir and Afghanistan. (23) Although most donations to Islamic charities go to legitimate social work, albeit to win political support, such as mosque construction, charities, cultural centres, and NGOs, a significant amount of money is diverted to terrorist and paramilitary activities. To be sure, it is doubtful that the leadership of any of these charities has set out to assist terrorists, but there is a surprising lack of knowledge of what their branch offices are doing on the ground. There is paltry oversight of how their funds are actually being used and allocated.
Zakat donations are common throughout Southeast Asia, indeed in late 2001, the Indonesian government agreed to make zakat tax deductible in order to encourage charitable donations. In addition to zakat donations, which are obligatory, there are also infaq and shadaqah donations--both are voluntary and made depending on individual circumstances. Yet, unlike Western closely regulated and audited NGOs and charities, those in Southeast Asia are almost completely unregulated, allowing for financial mismanagement and the diversion of funds to terrorist cells (though, even in the United States, two large Muslim charities were shut down post September 11 for their ties to terrorist organizations: the Benevolence International Foundation and the Holy Land Foundation for Relief and Development). For this reason, Osama bin Laden's initial foray into the region came in the form of charities run by his brother-in-law, Mohammed Jamal Khalifa, in the Philippines, including a branch of the IIRO.
Mohammed Jamal Khalifa's Philippine Charities
In 1988, bin Laden dispatched his brother-in-law Mohammad Jammal Khalifa (24) to the Philippines to recruit fighters for the war in Afghanistan. Khalifa was already engaged in radical Muslim politics and was a very senior member of the Muslim Brotherhood in his native Lebanon. Starting in 1985, Khalifa ran the Peshawar office of the Sandi Muslim World League, where he was active in sending recruits to join the mujiheddin. He had close ties to two of bin Laden's top financiers, Wael Hamza Jalaidin and Yasin al-Qadi, who was the head of the Muwafaq Foundation that was designated by both the Saudis and the Americans as a terrorist front. Muwafaq, which had a US$20 million endowment, was found to have sent millions of dollars to Al Qaeda in the 1990s before it was shut down. (25)
Khalifa established several other charities and Islamic organizations in the Philippines, ostensibly for charity and religious work, which channelled money to extremist groups, including a branch office of the Saudi charity MERC International and two local NGOs, Islamic Wisdom Worldwide and the Daw'l Immam Al Shafee Center. He established Al Maktum University in Zamboanga using funds from IIRO. (26) He also established a branch office of the IIRO in Zamboanga. According to IIRO's office in Saudi Arabia, its activities include an orphanage and dispensary in Cotabato City, dispensaries and pharmacies in Zamboanga, including a floating dispensary that served remote coastal communities in Western Mindanao. It provides food and clothing to internally displaced people who fled war zones. In addition, IIRO funding went to schools and scholarships. The IIRO asserted that it always did this, if not in cooperation with the government, with at least official approval. (27) All of these projects, though legitimate charitable work, were located in MILF zones or in urban population centers where the MILF was trying to make inroads as they began to focus on a political strategy and pursue an East Timor-like referendum process.
Perhaps the most important charity established by Khalifa was the little known International Relations and Information Center (IRIC), which engaged in numerous activities, for the most part philanthropic: livelihood projects, job training (carpentry, fish farming, farming), orphanages, Islamic schools and other social work. (28) The IRIC was also the primary funding mechanism for Khalid Sheik Mohammed, Ramzi Yousef, and Wali Khan Amin Shah's attempt to blow up 11 American jetliners in early 1995, in what was known as Oplan Bojinka.
According to the Philippine National Security Advisor, Roilo Golez, Khalifa "built up the good will of the community through charity and then turned segments of the population into agents". (29) Yet, the IIRO quickly attracted the interest of the Philippine police and military intelligence which saw it as a front organization for insurgent activities. "The IIRO which claims to be a relief institution, is being utilized by foreign extremists as a pipeline through which funding for the local extremists are being coursed through", a Philippine intelligence report noted. (30) An Abu Sayyaf defector acknowledged that "The IIRO was behind the construction of mosques, school buildings and other livelihood projects" but only "in areas penetrated, highly influenced and controlled by the Abu Sayyaf". (31) For example, in Tawi Tawi, the director of the IIRO branch office was Abdul Asmad, who was the Abu Sayyaf's intelligence chief until he was killed on 10 June 1994. The defector said the IIRO was used by bin Laden and Khalifa to distribute funds for the purchase of arms and other logistical requirements of the Abu Sayyaf and MILF: "Only 10 to 30 per cent of the foreign funding goes to the legitimate relief and livelihood projects and the rest go to terrorist operations". (32)
The Philippine government has asserted that all the charities run by Khalifa in the Philippines used to funnel money to the Abu Sayyaf group and the MILF have been shut down? (33) Yet, one senior intelligence official complained to me, "We could not touch the IIRO". (34) It took the Philippine government almost six years to shut their office in the Philippines; from 2000 until September 2001, the IIRO still funded projects in the country through its representative offices in Malaysia and Indonesia. The IRIC's operations and staff were taken over by another Islamic charity, the Islamic Wisdom Worldwide Mission, headed by a close Khalifa associate Mohammed Amin al-Ghafari in 1995. (35) The Daw'l Immam Al Shafee Center, likewise, remains operating.
Why was the IIRO allowed to stay open? The simple answer was that there was intense diplomatic pressure from Saudi Arabia on the government of the Philippines. It is a very well connected charity, whose supporters include the Saudi royal family and the top echelon of Filipino society. Their most important source of leverage was the visas and jobs for several hundred thousand Filipino guest workers. One of the board members of the IIRO Philippine office was, not coincidentally, the Saudi Ambassador.
Unfortunately, the Philippine experience is not as unusual as it seems. For example, although the United States and Saudi Arabia shut down the Somali and Bosnian offices of Al Haramain on 11 March 2002, by August 2002, the Saudi Arabian government had applied enough diplomatic and financial pressure that the charities' assets were released and licences were restored. (36)
Malaysian and Indonesian-based Charities
Al Qaeda established a number of other charities in the region. In Malaysia, Hambali, established a charity, Pertubuhan al Ehasan, in 1998, in order to fund jihad activities in the Malukus. The charity remained open until its closure in 2002 and in total raised Rp500,000 (roughly US$200,O00). (37) The money went to purchasing weapons, training, clothing and feeding recruits for the jihads in the Malukus and Poso. Much of the money came from donors within Malaysia, though foreign donors were solicited through the Internet. It is not clear if the donors were aware that their money went to militant activities, as they were told that their money went to humanitarian causes in the Malukus.
In Indonesia, a similar development of charities as terrorist fronts occurred. JI and Al Qaeda leaders assumed leadership positions, often becoming regional branch chiefs, or formed alliances with several important Saudi-backed charities, including MERC, the IIRO and Al Haramain.
One of the most important charities in all of this was the Komite Penanggulangan Krisis, better known as KOMPAK, an independent arm of the Dewan Dakwah Islam Indonesia (DDII), founded on 1 August 1998. The Dewan Dakwah is one of Indonesia's most important Islamic social organizations that was founded in February 1967, and to the degree that it survived under the New Order regime, it earned the respect of the community for frequently standing up to the Suharto administration and pushing for Islamic causes.
The Dewan Dakwah established KOMPAK to address humanitarian needs that arose from the sectarian conflict that erupted in the Maluku Islands in 1998. KOMPAK officials, while acknowledging that they operate in regions struck by sectarian conflict (Aceh, Poso, Malukus, and Bangunan Beton Sumatra), assert they are there to alleviate the crises and provide necessary relief. They deny any links to "jihad activities". (38) "We never give our money to the mujiheddin or terrorists. We give our money to the needy, unemployed of the ummah". The official stated that "I have no comment on the conflicts" and that the "link between KOMPAK and terrorism is not true." Undoubtedly, KOMPAK has been involved in charitable work: there is ample evidence that it has distributed food, clothing and medicine.
Yet there is also considerable evidence that KOMPAK played an important role in supporting sectarian conflict in the Malukus and Poso while channelling money from Al Qaeda to these causes. Even their humanitarian work--medicine and food distribution--supported the Muslim paramilitaries, fleeing up the latter's own resources for weapons and salaries. KOMPAK has never been neutral; it was founded and coalesced around the issue of sectarian fighting in the Malukus and South Sulawesi.
Many KOMPAK officials themselves have been linked to terrorism. The former chairman of KOMPAK's South Sulawesi office was Agus Dwikarna, and the head of the Jakarta office was Tamsil Linrung. Linrung, a member of the DDII and the former treasurer of the National Mandate Party (PAN) before quitting the post in January 2002, was identified by Omar al-Faruq as a JI operative and a participant in the three Rabitatul Mujiheddin meetings in Malaysia from 1999--2000. (39) One of Abu Bakar Ba'asyir's top lieutenants, Aris Munandar, suspected of purchasing much of the explosives for the bombings across the region on the anniversary of 9/11, was the head of KOMPAK. Dwikarna was the head of a group called the Committee to Implement Sharia in South Sulawesi and the number four official in Abu Bakar Ba'asyir's overt civil society organization, the Mujiheddin Council of Indonesia. He established one of the JI's two paramilitary organizations, the Laskar Jundullah, and was arrested at Manila's international airport in March 2002 carrying C4 explosives in his suitcase. (40) When asked about that, the Secretary of KOMPAK stated, "What he does outside of KOMPAK is not our responsibility." (41) When asked how they could be sure that none of their money goes to the Laskar Mujiheddin or the Laskar Jundullah, KOMPAK's secretary general curtly replied, "We have no link to them." (42)
KOMPAK also produced propaganda and recruitment videos for Dwikarna's paramilitary group, the Laskar Jundullah, and Abu Jibril's Laskar Mujiheddin, emphasizing both their military strength and sense of Muslim persecution. (43) The videos are graphic and one-sided, portraying the Muslim communities being victimized by Christian vigilantes, and small groups of poorly armed Muslims fighting back. Although the KOMPAK videos do show the organization distributing food aid to beleaguered refugees, the context of the documentaries is biased. Their graphic footage conveys a sense of brutality and utter victimization, justifying self-defence. Several of the videos have professionally produced footage, soundtracks, and minimal narration. In KOMPAK's Jakarta headquarters, officials denied all knowledge of the videos but a number of them viewed by the author were clearly produced by KOMPAK, with their logo on the screen throughout.
In addition to these senior KOMPAK officials being arrested for, or detained on, suspicion of terrorism, KOMPAK has joint projects with important Saudi charities, notably, the IIRO, Al Haramain, and MERC, often serving as their executor or sub-contracting agency. Both MERC and the IIRO were engaged in "projects" in Ambon and Poso. (44)
MERC too has been engaged in "documentary film-making" in Indonesia. Unlike KOMPAK's videos, MERC's do not show fighting or convey any sense of hope by showing Muslim militias or jihadis fighting back. MERC's videos are of a very high quality; produced by their own information office and production company, they focus on the innocent victims of sectarian conflict and show makeshift hospital wards or squalid refugee quarters. The videos stay close to MERC's core mission of providing emergency medical and humanitarian relief. Like the KOMPAK videos, they convey a sense of Muslim victimization at the hands of Christian militias. With their emotionally evocative music, they would be very effective fund-raising tools.
Al Haramain was also tied in with militant groups and the Jemaah Islamiya in Southeast Asia. Again, a similar cast of characters emerges, with overlapping leadership. Agus Dwikarna was the local representative of the Saudi Charity Al Haramain in Makassar in South Sulawesi, which al-Faruq admitted was the largest single source of Al Qaeda funds into Indonesia. (45) Al-Faruq lived near Agus Dwikarna in Makassar (Ujung Pandang) in South Sulawesi and was the key backer of Dwikarna's Laskar Jundullah, one of the JI's two paramilitary organizations. (46) Al-Faruq also worked closely with Ahmed al-Moudi, the head of the Al Haramain Foundation office in Jakarta.
Indonesian intelligence sources contend that the head of Al Haramain's headquarters in Saudi Arabia, a Saudi citizen they identify only as Sheikh Bandar, was a frequent visitor to Indonesia, as he kept a wife in Surabaya. A senior Al Haramain official, he was known to deliver briefcases of money on his visits to Indonesia, which were delivered through Ahmed al-Moudi. (47)
A figure central to all of this was not even Southeast Asian, but Middle-Eastern. In CIA's September 2001 Orange Alert document, one of the key