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TERENCE SMITH: The government has stepped up its efforts to halt the illegal flow of money to countries it defines as “rogue states” and to terrorist organizations. Today the U.S. Customs Service and the Treasury Department announced the arrests of six people accused of illegal money transfers to Iraq. Wednesday, the Justice Department announced the indictments of seven people in Texas on money laundering charges and selling computer equipment to Syria and Libya.
Six others were arrested in Michigan on charges of illegal money transfers to Yemen. On Monday, three men in Lackawanna, New York, were arrested and charged with sending money to Yemen without a license. One of the men was related to a member of an accused sleeper cell there. We get more on these latest announcements from two reporters who have been watching Operation Green Quest for some time– Elaine Shannon of Time Magazine, and Eric Lichtblau of the New York Times. Welcome to you both. Eric, yet another Announcement today, this one of a federal indictment unsealed. Tell us about that.
ERIC LICHTLBAU: Well, it’s been a pretty remarkable couple of days. We’ve had, as you said, arrests and search warrants all across the United States in the last four days. Today’s was based out of Seattle. This was an operation where the Treasury Department says a local money manager in Seattle was running an illegal network that laundered money from Iraqis around the United States through Europe and ultimately into Iraq to the tune of about $12 million over the last few years, in violation of U.S. sanctions.
TERENCE SMITH: Was there any accusation, Eric, that that money was going to support terrorist organizations or activities?
ERIC LICHTLBAU: Well, that’s the ultimate question. The Treasury Department had to cut short the investigation a little bit earlier than they had hoped. And they’re still looking at the question of whether or not this actually went to support Saddam’s regime or terrorism. There is some evidence that it did, but they don’t have the goods yet.
TERENCE SMITH: All right, Elaine, earlier this week, seven people were arrested in Dallas. And that’s a big case, isn’t it?
ELAINE SHANNON: Yes, this case has been going on for years and years. It has to did immediately with the InfoCom Corp, which is run by a man who’s also an officer in Holy Land Foundation, which is one of the charities where treasury says there have been significant funds diverted to terrorism, specifically it’s linked to Hamas.
TERENCE SMITH: Right, and so these people were arrested with that accusation. And it’s a part of this pattern that Eric was talking about?
ELAINE SHANNON: Exactly. About a year ago, Mike Chertoff, the architect of the counterterrorist strategy for the Justice Department says, “we’re going to do three things: We’re going to go after the players, the operators, we’re going to go after the people who provide the logistical support infrastructure, the money-movers the people who get apartments and cars and all. And the third thing we’re going to do is go after the illegal enterprises that may know nothing about terrorism, but are exploited by terrorists who want driver’s licenses or want their money moved or want aliens smuggled.” And so what we’re seeing is number two and number three, the witting and the unwitting, being wrapped up and taken off the street any way they can get them.
TERENCE SMITH: Right. Now, Eric earlier this week, there was also… there were these arrests for operating what is called a Hawala. Tell us about that related to the others.
ERIC LICHTLBAU: Yeah, that was an operation out of Detroit where there were told of six people arrested for funneling money to Yemen, again in violation of U.S. embargoes, that they were allegedly funneling about $50 million a year. So in terms of just dollars, that was the biggest operation we’ve seen yet.
TERENCE SMITH: Right. But again, the same question: Was it an objection to the money operation, or a linkage to alleged terrorism or terrorism activities?
ERIC LICHTLBAU: Again, they don’t have the firm link to terrorism yet. These cases are being handled by the people who are investigating terrorism financing. So that says something about how they view these cases. They didn’t charge it as a more serious charge of lending material support to terrorists, as they’ve done in some cases in the past. But there were serious violations of embargo and trade regulations because they say that the money could end up in the hands of terrorists, rogue nations, et cetera.
TERENCE SMITH: Elaine, the earlier case in Lackawanna, New York, the additional arrests, what are we seeing there?
ELAINE SHANNON: A relative of one of the men who’s still missing and probably in Yemen, from that alleged cell and some of his relatives, and again, we’re seeing the charges basically amount to a Hawala case. They’re not charged with material support of terrorism. They’re charged with operating a money-transmitting business without a license, so that’s…
TERENCE SMITH: Which is what a Hawala is basically.
ELAINE SHANNON: It can be by telephone, word of mouth, credit, maybe e-mail, but it’s certainly not anything like we understand of the banking system. And again, they’re shutting down the businesses they suspect may have been directly or indirectly used. But they can’t say that.
TERENCE SMITH: The charges are not really aiding and abetting terrorism or at least not yet?
ELAINE SHANNON: No.
TERENCE SMITH: They are violations of these money regulations?
ELAINE SHANNON: That’s correct. And they’re going to continue to use any regulation that they can get to take somebody down where they think that they may be exploited, even unwittingly.
TERENCE SMITH: All right. Eric, explain to us, full, what’s basically going on here, this sudden up-tick in activity — all these announcements, arrests, indictments, in just, as you say a number of days.
ERIC LICHTLBAU: Well, the feds will tell you that the timing is basically coincidental, that these are investigations that have been going on for months or as Elaine said, some cases years, and that a number of them are just coming to fruition at the same time. Some of the cynics out there would say that the administration is under fire for its progress, or lack of it, in the war on terrorism, and this is a good cup of days of publicity for them, that they are showing we are doing something, we’re clamping down on the people who are fueling terrorism by providing the money behind it. And that perhaps there is some orchestration to this in terms of the big push.
TERENCE SMITH: Elaine, what’s your read on that – orchestration or coincidence?
ELAINE SHANNON: Well, you can have a good purpose for orchestration, too. It doesn’t have to be purely political, although all these agencies need a big win right now. If you bring a lot of cases, you scare people. And then you get more informants. You flip more people. More people turn state’s evidence or they become more aware that this is illegal and they come in and they give you tips. They’ve got to generate leads because they’re still not confident that we couldn’t have another something bad like September 11.
TERENCE SMITH: When you say these agencies need to demonstrate some activity and some arrests, why would you say that?
ELAINE SHANNON: Well, the FBI particularly has been under fire from the Joint Intelligence Committee and from the Justice Department inspector general’s report, and there’s been a lot of criticism. And certainly they want to show that they’re authoritative, they’re in charge, they’re in the know, they’re out there making sources, passing out business cards, getting to go know people who are good citizens in communities where there may be some bad guys, and doing everything they can to raise their profile. And this is one way.
TERENCE SMITH: Eric, do you see it that way, as well, the FBI trying to demonstrate something here?
ERIC LICHTBLAU: Yeah, I think both the FBI and the Treasury Department are trying to show that they’re on top of the terrorism financing front and that is one that that is one of the main areas that they are hitting that, as Attorney General Ashcroft and Mike Chertoff on down have said that is a key way to cut off terrorism is to cut off the money.
TERENCE SMITH: And Elaine, you suspect, do you, that this will be effective in one way or another by the creation of a new Department of Homeland Security?
ELAINE SHANNON: Well, we hear two things. First of all, we hear that there are more cases coming because these financial cases take time, and some of them are coming to fruition or will be in the coming months. I think you’re going to see a lot more after the first of the year. But on the other hand, there’s a lot of nervousness, particularly at Treasury, about what happens when you take those Customs investigators, who are very expert at this, and put them into homeland security, which has a different mission, a mission of protection and defense, rather than offense and attacking the illegal networks. So I don’t know what’s going to happen there. They don’t either.
TERENCE SMITH: Eric, what do you see as the bureaucratic consequences of this?
ERIC LICHTBLAU: Well, I think a lot of it is up in the air. It makes a lot of sense organizationally to put these different law enforcement agencies under one roof, but there’s also a lot of cultural resistance. Agencies like customs have their own institutional history there, and you break from that and there’s always the danger of sort of upsetting the cart.
TERENCE SMITH: And of course Elaine, there’s the suggestion now to create a Department of Homeland Intelligence, which would actually put somebody in charge of coordinating all of this.
ELAINE SHANNON: Well, yes, and boy is there a lot of resistance to that. When you… and Eric has heard this, too, when you go to the FBI and some of the other agencies, they say, “why are we going back in time? The Brits, the Canadians and some other countries that have separated intelligence from law enforcement are now trying to put it together because when you create two bureaucracies that don’t like to talk to each other very much and are secretive by their mandate, that’s not good for the general good of the citizenry. And so they’re trying to break down walls and that’s request what the patriot act did, break down walls. Why create new walls?
ERIC LICHTLBAU: And I would note that Director Mueller at the FBI gave a pretty strong defense today in speech in New York saying why it was not necessary to create a domestic intelligence agency and why, in his view, the FBI is up to the task, even though there are a growing newspaper of critics who don’t think they are.
TERENCE SMITH: All right and you, too Eric, expect some more action on this?
ERIC LICHTLBAU: Oh, yeah. I mean certainly the domestic intelligence debate is one that’s going to be a very hot one for the next few months. And I think that we’ll see more crackdowns in the area of terrorist financing, as that plays out.
TERENCE SMITH: We’ll watch. Thanks, Eric. Thanks, Elaine. Thank you both very much.