Following the Money

GWEN IFILL:

Today, the Bush administration took action against what it described as two financial networks with ties to Osama bin Laden. Officials say the two groups-al-Taqua and al-Barakaat– funnel money to the Al-Qaida terrorist organization. Top administration officials also provided a progress report on the financial war on terrorism. Around the world, $43 million in money tied to al-Qaida has been blocked; of that amount, $24 million has been isolated in the United States; 112 nations now have financial blocking mechanisms in place. And 62 names of individuals and businesses connected to the two suspect organizations have been added to a terrorism watch list. Speaking to Treasury officials today, the President described the two groups involved in today's action.

PRESIDENT GEORGE W. BUSH:

Al-Taqua and al- Barakaat raise funds for Al-Qaida. They manage, invest and distribute those funds. They provide terrorist supporters with Internet service; secure telephone communications and other ways of sending messages and sharing information. They even arrange for the shipment of weapons. They present themselves as legitimate businesses, but they skim money from every transaction for the benefit of terrorist organizations. They enable the proceeds of crime in one country to be transferred to pay for terrorist acts in another. The entry point for these networks may be a small storefront operation, but follow the network to its center and you discover wealthy banks and sophisticated technology, all at the service of mass murderers. By shutting these networks down, we disrupt the murderers' work.

GWEN IFILL:

Joining us now is David Sanger, White House correspondent for the New York Times. David, tell us, what are the new wrinkles today in the President's announcement? What's the significance?

DAVID SANGER, New York Times:

Well, I think there are a few new things, Gwen. The first is this is the first time that the President has identified a clear network that would make it evident to everybody how the money flows across borders. The second is he identified some operations in the United States, and until now we've had very little of that. I think the third is we now know some of the countries that are central to all of this. Al-Barakaat, which you referred to, has its headquarters in Somalia. We sent one of our correspondents to its headquarters today, and they gave us a tour of their computer centers and so forth and then went on to explain how they were an ordinary business that returned money from the United States and other countries to ordinary Somalis. So, as the President said, these have the sheen of legitimate businesses about them. What we didn't hear today, Gwen, is we didn't hear a link to September 11 and we didn't really hear any evidence about how these groups provide money to al-Qaida itself.

GWEN IFILL:

Well, so when Secretary Powell says, as he did today, that "money is the oxygen of terrorism," what does he mean by that?

DAVID SANGER:

Well, he means that any business cannot operate without cash and terrorists are no different. Now, the question here may be the scale of the cash. I mean, we heard early estimates, you'll recall, soon after September 11 that the entire operation, terrorist operation that hit the World Trade Center and the Pentagon may have cost $300,000 or $500,000, didn't add up to very much considering the amount of damage done. And that's what makes this particularly difficult. You heard the Treasury today say that they have blocked $43 million. That sounds like a big figure. We don't know how much of that is really terrorist money. And in a world in which, what, a trillion dollars transact across borders every day, $43 million doesn't add up to very much, and it makes it clear why it's so easy to hide these amounts. They're relatively small transactions.

GWEN IFILL:

Very small transactions and also passed around in a kind of unusual way through these hawalas, describe them for us.

DAVID SANGER:

A hawala is a very informal way of wiring money. Let me give you an example here. Supposing you wanted to move $5,000 to Somalia or to India or whatever and you came to me and I was a hawala representative. You would give me the $5,000. And then I would contact another representative in the country that's going to be the recipient. And we would simply put on our books by fax or by telephone an understanding that he owed me $5,000 after all of this. And he would pay out the $5,000 and wait until there was a transaction happening in the reverse direction and then everybody would settle up their books. But no money gets wired. No taxes obviously are paid because of the informality of the entire arrangement. And it makes it very difficult to trace.

GWEN IFILL:

So what countries are being helpful and unhelpful as the administration tries to expand this financial war?

DAVID SANGER:

Well, good question. Somalia is being medium helpful perhaps. Switzerland and Italy today detained two people who we believe are at the center of one of these networks. The United Arab Emirates, surprisingly enough, was cited by the Administration today for being helpful. Indonesia, which early on said it would not freeze any assets, has turned around and said it would. That's important because they're the world's largest Islamic country and because they have a huge number of banks, many of which operate in very shady ways. The question is, how well do they perform? It's one thing for a central bank to say, we're with you, we're going to go do this. It's another for them to take the initiative to really search their books and look for clues and tip us off.

GWEN IFILL:

And, David, how do you measure success in this kind of an enterprise?

DAVID SANGER:

You know, Gwen, it's a little like the war itself, because in the war, we can't really see whether or not the Taliban troops are being decimated. We can't see the degree to which their operations are being disrupted. And with cutting off money, it's the same thing. It's possible you've actually frozen the money. It's also possible that you've just forced the terrorists to reroute it, to be more creative, to move more in cash. In any case, that could be helpful because if they're forced to reroute, it means they may also be forced to surface. I think that's what this is all about. It's all about disruption.

GWEN IFILL:

David Sanger, thank you very much.

DAVID SANGER:

Thank you, Gwen.