Special Report: A Phila. law firm wages an epic legal battle to win billions
from Saudi Arabia.

By Chris Mondics

http://www.philly. com/philly/ news/20080531_ Pinning_the_ blame_for_ terror.html

INQUIRER STAFF WRITER

Less than a mile from the mournful place in Lower Manhattan where the World
Trade Center came crashing to the ground, in a hushed federal courthouse, a
small band of Philadelphia lawyers is prying loose secrets of the Sept. 11,
2001, terror attacks.

 

It is here that the Cozen O’Connor law firm has filed an 812-page lawsuit on
behalf of U.S. and global insurance companies alleging that Saudi Arabia and
Saudi-backed Islamist charities nurtured and financed al-Qaeda, the author
of those deadly attacks.

Led by its flinty chairman and founder, Stephen Cozen, the firm has invested
thousands of hours and millions of dollars to scour the world for witnesses,
documents and other evidence in its attempt to hold the oil-rich desert
kingdom liable for more than $5 billion in damages.

Among the companies represented in the lawsuit are Chubb, Ace, Allstate, One
Beacon, and nearly three dozen other insurers.

“Our concern was whether there was a viable case to be made against the
defendant,” Cozen said, “and whether the defendant could pay.”

Round 1 in this titanic legal battle went to the Saudis and their
high-powered lawyers three years ago when a U.S. District Court judge
removed the government and Saudi royals as defendants.

Defense lawyers have declined repeated requests for interviews, citing the
pending litigation. But in court papers, they describe Cozen’s allegations
as “fabrications” and note that the 9/11 Commission found no evidence of
official Saudi involvement. Moreover, they point out that Saudi Arabia
itself has been an al-Qaeda target.

“The showing that the plaintiffs purport to make is complete and utter
garbage,” said Michael Kellogg, a top Washington appeals lawyer representing
Saudi Arabia and members of the royal family, during an appeals argument in
January. “It is a collection of newspaper articles, and reports and press
releases that show at most the kingdom exercises some supervisory control
over the charities.”

But Cozen argued that the kingdom and its officials should be restored as
defendants. A fiercely competitive lawyer who built a tiny practice into one
of the world’s leading law firms for insurers, Cozen, 67, contended that the
defendants “knew and intended to support al-Qaeda through these charities.”

With a ruling from the U.S. Court of Appeals for the Second Circuit
imminent, Cozen and his partners have unearthed facts and made connections
missed not only by the 9/11 Commission but also by Congress in its
investigations.

At the heart of the suit, the biggest and most complex legal action ever
undertaken by the law firm, are warnings from U.S. and European officials
that the charities were serving as terror fronts.

Among the suit’s key assertions:

Senior Saudi officials and members of the royal family or their
representatives served as executives or board members of the suspect
charities when they were financing al-Qaeda operations. Overall, the Saudi
government substantially controlled and financed the charities, the lawsuit
alleges.

The charities laundered millions of dollars, some from the Saudi government,
into al-Qaeda and other terrorist groups and provided weapons, false travel
and employment documents, and safe houses.

Regional offices of the charities employed, in senior positions, al-Qaeda
operatives who helped coordinate support for terror cells.

Although the lawsuit argues that the Saudi government “intended” the 9/11
attacks to happen, the public record supporting that allegation is thin, and
lawyers suing the kingdom have yet to generate direct evidence that any
senior Saudi official conspired with al-Qaeda to attack the United States.

Instead, the lawsuit compiles hundreds of incremental disclosures from U.S
government and other sources and weaves them together to form one basic
assertion: Al-Qaeda’s development from ragtag regional terrorists into a
global threat was fueled by Saudi money, some of it from the government.

And the charities, the lawsuit contends, were the money’s conduit.

With the help of charities affiliated with the Saudi government, the lawsuit
contends, al-Qaeda spread to the vicious 1990s Balkans war, which pitted
indigenous Muslims, their al-Qaeda allies, and other mujaheddin against
Serbs and Croats.

The organization then leapfrogged to attack Western targets, including two
U.S. embassies in East Africa, the U.S. destroyer Cole, and finally the
World Trade Center and the Pentagon.

“In a lot of ways this case is very unique, and in a lot of ways it is very
mundane,” Cozen said in an interview. “It is unique in that it is grounded
in one of the worst events in U.S. history. It is mundane in that we are not
breaking new ground in tort [liability] law. The law has always recognized
the liability of those who participate in a conspiracy and those who aid and
abet.”

Cozen is suing under the 1976 Foreign Sovereign Immunities Act, which
protects foreign governments from being sued by U.S. citizens except in rare
circumstances. While the standard is extremely high, federal courts have
permitted lawsuits in cases where foreign countries engaged in criminal
conduct, such as murder.

Even if Cozen loses the appeal and the Saudis retain immunity, U.S. District
Judge Richard Conway Casey ruled that there is enough evidence to proceed
against several Islamist charities, banks, and alleged terrorism financiers
named in the lawsuit.

While Cozen was the first, a half-dozen other groups have sued the Saudis to
hold them liable for supporting Islamist charities allegedly tied to
al-Qaeda.

Among the other plaintiffs: the estate of an FBI agent killed in the 9/11
attacks on the World Trade Center, and the investment firm Cantor
Fitzgerald, which lost 657 employees when American Airlines Flight 11
slammed into the north tower.

Outside the courtroom, the Cozen lawsuit has caused friction between the
United States and Saudi Arabia, which, after Israel, is this nation’s most
important Mideast ally.

In a filing with the Second Circuit, Saudi Arabia said the lawsuit had
undermined the nations’ ability to work together to fight terrorism.

“This concern is felt in all circles of the Saudi government,” said Nizar
bin Obaid Madani, Saudi minister of foreign affairs.

The litigation, Madani said, “sends a confusing and mixed message about the
relationship between the governments of the United States and Saudi Arabia.”

The question of whether elements of the Saudi government offered support to
jihadists intent on attacking the West has fueled intense and even
acrimonious debate at the highest levels of the U.S. government.

Former New Jersey Gov. Tom Kean, who chaired the 9/11 Commission, said he
was uncertain. The royal family is so huge – there are thousands of members
– that Kean said it was difficult to know how power was distributed and who
had authority.

Former Republican Sen. Slade Gorton of Washington, a 9/11 Commission member,
is less cautious.

“Clearly, the central moving figures in the 9/11 scandal were Saudi, and
clearly that wasn’t a coincidence, ” he said. “The fact that there is a
particularly militant and extremely conservative form of Islam that is, in
effect, the state religion of Saudi Arabia – well, there has always been
tension between the United States and Saudi Arabia over that.

“Do we pull punches with the Saudis on the charities and other matters
because they can help us counterbalance Iran, they can help us bring the
Palestinians and the Israelis to the table, they can serve as a forward
staging area for our military in the Middle East?” Gorton asked. “I don’t
think there is any question but that is the case.”

David E. Long, former deputy director of the State Department’s Office on
Counterterrorism, who is fluent in Arabic and travels regularly to the
Mideast, said he believed it was unreasonable of Americans to expect that
before 9/11 the Saudis would have cracked down on terrorism financiers.

They didn’t have the forensic skills or financial monitoring tools, said
Long, a former lecturer on the Middle East at the University of
Pennsylvania. Moreover, until then it was unthinkable to many Saudis that
charitable organizations might promote violent international jihad.

One of the central principles of Islam, he said, is Zakat, the giving of
alms to the poor, and once the money went out the door, Saudi donors assumed
it would be used for charitable purposes.

“Traditionally, there was little or no oversight throughout the economy,
trust was highly personalized, and caveat emptor was the order of the day,”
Long said. “It is . . . my view that there is no basis for the claim that
the Saudi government wittingly supports or has continued to turn a blind eye
on foundations supporting terrorist operations.”

Cozen’s case is built on thousands of Treasury Department and law
enforcement findings, declassified diplomatic cables, and military and
intelligence reports.

The story that emerges details a saga linking the charities to
money-laundering, police raids, and terrorist attacks. It spans the globe,
from New York and Philadelphia to the Balkans, the Mideast and beyond. It
begins in Saudi Arabia.

Riyadh, November 1994

French Interior Minister Charles Pasqua, in the capital to discuss security,
delivered an urgent official message to his Saudi counterpart, Prince Naif,
Cozen alleges.

Pasqua, gruff, confident and imposing, had oversight of French intelligence
operations. He pulled Naif aside.

The French, he said, had information that the Muslim World League, a
sprawling charity that the Saudi government had created to promote Islam
around the world, was funding terror cells in France.

The French were deeply worried, Pasqua said, and he needed the Saudis to
address the situation.

Pasqua’s warning was the first of several that Western intelligence agencies
gave the Saudis before 9/11, the lawsuit asserts.

The government, the suit contends, did nothing.

Washington, 1998

Acting on information from sources overseas, U.S. intelligence reported to
the Saudis that employees of a government-affiliat ed charity, al-Haramain
Foundation, may have been involved in the bombings of U.S. embassies in
Kenya and Tanzania.

Six years later, the 9/11 Commission concluded that the Saudis never acted
on that information.

The Cozen suit also cites a conclusion by Sen. Robert Graham of Florida,
chairman of the congressional joint inquiry into 9/11, that a Saudi
government employee named Omar al-Bayoumi helped two of the hijackers find
an apartment in Southern California and lent them money.

Although the 9/11 Commission and the FBI discounted Bayoumi’s involvement,
Graham told The Inquirer that he was convinced Bayoumi was a Saudi
intelligence agent and that his aiding of Nawaf al-Hazmi and Khalid
al-Mihdhar signaled some degree of Saudi government participation.

During the inquiry, Graham said, the FBI repeatedly stonewalled efforts to
subpoena a Muslim academic and FBI informant who had housed the hijackers.

“That is one of the major unanswered questions of 9/11: Why the
administration tried to disguise the role of the Saudis,” Graham said.

Washington, 1999

The East Africa embassy bombings focused U.S. officials on al-Qaeda. They
needed to shut down its financing. Vice President Al Gore made a personal
appeal to Saudi Crown Prince Abdullah at the White House: Help the U.S.
disrupt al-Qaeda’s flow of money.

Abdullah agreed to put U.S. officials in touch with their Saudi
counterparts.

Following up on Gore’s request, two delegations of senior U.S. officials
traveled to Riyadh, one in 1999 and the second a year later.

On both trips, according to people familiar with the meetings, U.S.
officials gave the Saudis lists of suspect charities, money exchanges,
banks, and suspected terrorism financiers.

It was essential, the Americans said, that the Saudis crack down on these
entities. If their financial support could be stopped, jihadist groups would
have a harder time extending their reach.

“We gave them detailed and very specific intelligence, ” said William
Wechsler, then a senior National Security Council official, who traveled to
Riyadh with the U.S. delegation in 1999 and helped oversee the follow-up
visit.

But the delegations did not have the desired effect.

Testifying before the Senate Governmental Affairs Committee in 2003,
Jonathan Winer, former deputy assistant secretary of state for international
law enforcement, said he had helped oversee the 1999 delegation and had been
briefed after the diplomats returned.

“We didn’t have as many facts as we should have,” Winer said of the
charities.

“But we went to the Saudis as a government, shared with them what we had,
asked them for more information, warned them of what might take place, and
ultimately nothing happened.”

After 9/11, the U.S. Treasury Department designated as terrorism supporters
many of the charities, banks and alleged financiers that U.S. officials
listed on their trips to Riyadh.

The Philippines, 1990s

The International Islamic Relief Organization (IIRO), a major Islamist
charity with ties to the Saudi government, opened branch offices in the
Philippines, according to Treasury Department reports cited by the Cozen
lawyers.

The director of the Philippine branches for a time was Mohammad Jamal
Khalifa, Osama bin Laden’s brother-in-law and a senior al-Qaeda member,
according to the department.

Treasury designated the Philippine and Indonesian IIRO branches as terrorist
financiers two years ago for funneling money to al-Qaeda and other radical
groups.

At that time, the department also designated Abd Al Hamid Sulaiman al-Mujil,
an IIRO official in Saudi Arabia who channeled money to those branches, as a
terrorist financier.

Mujil, according to Cozen’s lawsuit, traveled regularly to meet with bin
Laden; Khalid Sheikh Mohammed, the planner of the 9/11 attacks; and al-Qaeda
financiers.

Mujil also “provided donor funds directly to al-Qaeda,” Treasury said.

The Cozen lawsuit also cites a 1996 CIA report that said the IIRO had
financed six militant training camps in Afghanistan in the 1990s.

Since filing their lawsuit in 2003, the Cozen lawyers obtained a
declassified memo by Matthew Levitt, a former deputy assistant secretary for
the Office of Intelligence and Analysis in the Treasury Department,
concluding that the IIRO supported terrorists from the early 1990s through
the first half of 2006.

Before the lawsuit was filed, it might have been plausible to argue, as the
Saudi Embassy in Washington once did, that the IIRO had no affiliation with
the government.

But since then, investigators have found an IIRO report showing that members
of the royal family play a supervisory role in connection with some of the
local offices of the IIRO in Saudi Arabia.

Making much the same point, albeit for different reasons, the IIRO has
argued that it cannot be sued because it is an agency of the Saudi
government and thus enjoys immunity.

Sarajevo, October 2001

Three weeks after the 9/11 attacks, NATO forces hunting for jihadists raided
the offices of an obscure Islamist charity. What they found had little to do
with charitable works.

At the Saudi High Commission for Relief of Bosnia and Herzegovina, they
seized computer hard drives with before-and-after pictures of the twin
towers; pictures of the bombed U.S. embassies in East Africa; photos of the
Cole after a bomb ripped a four-story gash in the destroyer’s side, killing
17 U.S. sailors; materials for forging State Department identification
badges; and files on pesticides and crop-duster aircraft – potential
weapons.

An organization founded and chaired by Saudi Prince Salman, which had
represented itself as a humanitarian mission to aid refugees and orphans,
seemed instead to be a haven for extremists.

Five months later, during a March 2002 raid in Sarajevo on another Islamist
charity founded in Saudi Arabia, the Benevolence International Foundation
(BIF), the FBI and Bosnian police uncovered what one prosecutor called “the
one and only al-Qaeda archive.”

That archive is now part of the Cozen lawsuit.

Seized was a huge cache of computer-stored information on BIF executive
director Enaam Arnaout’s early ties to bin Laden. It allegedly included
published photographs of the two men touring a camp in Afghanistan, a list
of al-Qaeda financiers called the “Golden Chain,” and bin Laden’s plans to
use Islamist charities for his jihad.

There were minutes of al-Qaeda’s founding in Afghanistan in 1988 and copies
of an al-Qaeda loyalty oath and criteria for membership, including,
prosecutors said, a need to be “listening and obedient” and to have “good
manners.”

Chicago, 2002

Based on evidence from the Sarajevo raid, U.S. authorities indicted Arnaout
in Chicago, where the BIF had begun fund-raising a decade earlier.

He was charged with illegally diverting charitable funding to al-Qaeda
operatives in the Balkans and elsewhere.

The government also shut down the organization, then the third-largest
Islamist charity in the United States.

The Chicago-based BIF traced its origins to Saudi Arabia in the 1980s, when
Saudi businessman Adel Batterjee founded it to raise money for Arab fighters
battling to eject Soviets from Afghanistan, according to the Cozen suit.

The FBI had been investigating the charity for years. While the BIF had no
apparent institutional links with the Saudi government, the Cozen lawsuit
contends that the Sarajevo files and Arnaout’s criminal investigation show
that the BIF was part of a conspiracy that included Islamist charities
openly tied to the Saudi government.

The lawsuit cites criminal evidence that bin Laden planned to use the BIF
and other charities, including the Muslim World League, to fund his jihad
beyond Afghanistan.

And it contends that BIF officials were al-Qaeda insiders who worked for
other relief organizations with links to the Saudi government.

One day before his 2003 trial, Arnaout pleaded guilty to reduced charges
that he fraudulently diverted charitable funds to rebel fighters in Bosnia
and Chechnya for the purchase of boots, telecommunications equipment,
blankets and other supplies.

Arnaout’s lawyers and the trial judge said the government had failed to
prove that Arnaout had used BIF money to support al-Qaeda.

He was sentenced to 11 years and three months in federal prison, later
reduced to 10 years, for sending BIF money to Islamist fighters while
telling donors it was used for humanitarian purposes.

Treasury still lists the BIF as a supporter of bin Laden. And designating
the BIF as a terrorist supporter, which the charity challenged, was upheld
by a federal judge.

Riyadh, May 12, 2003

On a clear, hot evening, what had been to many Saudis a nightmarish
possibility became a grisly reality.

Car bombs exploded in three Western housing compounds, while gunmen fired on
buildings. Al-Qaeda, which for a decade or more had been hitting targets
outside Saudi Arabia, had struck inside the country.

When the smoke cleared, 35 people were dead, including nine Americans, and
the kingdom seemed far less secure.

Within months, the Saudis arrested or killed more than a dozen alleged
al-Qaeda figures involved in the bombings. The government pledged to
redouble strikes at homegrown operatives, a resolve U.S. officials lauded.

In the litigation over the 9/11 attacks, the Saudis cite those attacks in
their defense: How could the government promote a movement that had vowed to
destroy it?

In fact, Saudi officials insist they had been pushing hard against bin Laden
for years.

When in the early 1990s it became clear that bin Laden was emerging as a
threat, the Saudis revoked his passport.

After bin Laden moved from Sudan to Afghanistan, the Saudis point out,
Prince Turki, then head of Saudi intelligence, traveled twice to Kandahar in
1998 to persuade the Taliban to turn him over.

When the Taliban leader, Mullah Omar, refused, the Saudis broke off
diplomatic relations with Afghanistan.

In his own defense to Cozen’s lawsuit, Prince Turki said Saudi intelligence
had formed a security committee with the United States to share information
regarding bin Laden’s activities.

“I was deeply shocked and remain profoundly saddened by the tragic events of
Sept. 11, 2001,” Turki said. “The victims of the terrorist attacks and plane
crashes and their families have my deepest sympathy. I share their resolve
to bring to justice the perpetrators of these terrible crimes. My own
father, King Faisal, was killed in a terrorist attack on March 25, 1975.”

As to why Saudi Arabia would finance a movement that has attacked the
kingdom, Cozen contends the Saudi royal family was trying to mollify radical
clerics and buy peace.

“As best we can tell, the kingdom was between a rock and a hard place,”
Cozen said. “They had radicals and extreme imams within Saudi Arabia who
wanted to see worldwide jihad; they wanted to see Wahabism [a conservative
form of Islam] spread and succeed, and if the kingdom did not support them,
they would become their victims. It was peace within the nation at almost
any cost.”

The Islamist Charities

Most of the Islamist charities named in the Cozen lawsuit are based in Saudi
Arabia or trace their origins to the kingdom. Here are brief descriptions of
six that are central to the case:

<http://objects. phillynews. com/element/ square.gif> The Muslim World League
was founded in 1962 in Saudi Arabia. It is closely tied to the government
and is one of the world’s largest Islamist charities.

<http://objects. phillynews. com/element/ square.gif> The International
Islamic Relief Organization was founded by royal decree in Mecca on Jan. 29,
1979. It says its purpose is to provide relief to victims of famine, floods,
and other natural disasters. It describes itself as an arm of the Muslim
World League. The U.S. Treasury Department has designated two IIRO offices,
in Indonesia and the Philippines, as terrorism supporters.

<http://objects. phillynews. com/element/ square.gif> The Saudi High
Commission for Relief of Bosnia and Herzegovina was founded by the
government in 1993 to provide relief to Muslims uprooted during the Balkans
war. It describes itself as an instrument of Saudi government policy. In its
detainee hearings, the Pentagon considers past employment by the commission
a reason to keep someone in custody at Guantanamo Bay.

<http://objects. phillynews. com/element/ square.gif> The Benevolence
International Foundation was founded in Saudi Arabia by Saudi financier Adel
Batterjee. It moved to Chicago in early 1992. It described its mission as
providing humanitarian relief projects throughout the world. The Treasury
Department has designated the BIF and Batterjee as terrorism supporters.

<http://objects. phillynews. com/element/ square.gif> Al-Haramain Foundation,
a sprawling Islamist relief organization, long enjoyed close ties to the
Saudi government. Since 9/11, it has been under pressure from U.S.
authorities, which designated more than a dozen of its overseas offices,
including one in the United States, as terrorism supporters. The Saudi
government joined the United States in making more than half those
designations.

<http://objects. phillynews. com/element/ square.gif> The Rabita Trust says
it was founded to assist struggling refugees in Bangladesh. It is based in
Islamabad, Pakistan, and is headed by Wa’el Julaidan, a financier whom
Treasury has designated a terrorism supporter. The Rabita Trust also has
been designated.

 

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