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EXPERT PROVIDES DETAILS ON AL QAEDA FINANCING SCHEME
http://www.eurasianet.org/departments/recaps/articles/eav102504.shtml

Al Qaeda benefited financially by utilizing networks, originating in Africa, that trafficked in precious gems and metals, an investigative reporter asserted. US government efforts to break up these al Qaeda financing schemes lacked creativity, the journalist, Douglas Farah charged.

Farah recently spoke at an Open Forum, sponsored by the Open Society Institute in New York. Al Qaeda’s diamond trading operations – which generated revenue and helped hide the terrorist group’s assets -- remain a source of debate. Experts and officials find it hard to agree on the extent to which al Qaeda benefited from such operations, and on the effectiveness of efforts to disrupt the organization’s diamond–trading schemes.

Farah told the audience that he uncovered information in 2001 about al Qaeda’s diamond-trading schemes in war-ravaged African countries, such as Sierra Leone and Liberia, when covering the region as a reporter for the Washington Post. He has since developed the story into a book, Blood From Stones.

According to Farah, al Qaeda started trading in precious gems in the months after the terrorist group carried out two bombings against US embassies in Africa in 1998. In response to those attacks, then-US President Bill Clinton froze all identifiable al Qaeda assets. Millions of dollars of al Qaeda assets were confiscated -- something that terrorist leaders had failed to anticipate. Al Qaeda responded like any resourceful corporation -- adopting a new financing strategy, Farah said. "They began channeling money into items that were more difficult to trace, but that retain their value over time," he said. "Diamonds were perfect."

Farah outlined how then-Liberian dictator Charles Taylor, in 1998, "ran the state as a criminal enterprise," attracting a "dream team" of global arms, drug and diamond dealers with the resources to license airplanes, register ships and obtain valid passports. Two al Qaeda operatives went to live in Liberia in 2000, Farah said, "offering to buy the next year’s crop" of alluvial diamonds "at premium prices."

The US Central Intelligence Agency could have disrupted al Qaeda’s operations in precious stones, Farah asserted during his September 17 talk, but US intelligence officials seemed reluctant to act on what they viewed as information coming from unconventional sources. The diamond networks were rudimentary, yet complex – often lacking a paper trail. Accordingly, the CIA’s methods were ineffective in trying unraveling the web of dealers, Farah asserted "We really like [evidence that comes from] wire transfers and bank accounts," Farah says a CIA official told him.

"The CIA never seeks information outside its own community," Farah added. Even when the CIA attempted to follow up on tips, agents often did so in an unproductive manner, Farah asserted. One of his primary sources, a veteran trader named Cindor Reeves, ended up humiliated and infuriated after Farah arranged a meeting between the trader and CIA agents. "Three white agents went to Ghana, dragged the guy to a hotel room, slapped a polygraph on him and asked him why he lied to me," Farah told the audience. The source became angry - leading to low polygraph scores - and walked out.

CIA and FBI officials have vigorously denied Farah’s allegations. Officials at both agencies maintain that the evidence that al Qaeda enjoyed significant benefits from diamond trading is not persuasive.