Continued:
November 16, 2001
Much-smuggled gem aids al-Qaida
Bought, sold by militants near mine, tanzanite ends up at Mideast souks
By Robert Block and Daniel Pearl
THE WALL STREET JOURNAL
(snip)
(snip)
ROAD TO DUBAI
Sheik Omari and Mustafa say they sell their stones to a prominent local dealer, Abdulhakim Mulla, who Mustafa says sends some of the gems on to Dubai. The dealer denies the Dubai connection. In any event, on a recent day Sheik Omari could be overheard telling miners to bring perfect stones to the mosque, because “our market in Dubai only wants perfect stones.”
To Westerners in the gem business, mention of Dubai raises alarms. For one thing, the emirate is known as a center of money laundering and the underground cash-transfer system known as hawala, much-favored by bin Laden. Dubai also has no gem-cutting industry. It lies far outside normal channels for the trade in rough gemstones, most of which go to Jaipur, to Bangkok or to a few other traditional centers of cutting and polishing.
“Dubai is the kind of place that should throw up a flag that something is definitely askew,” says Cap R. Beesley, president of American Gemological Laboratories in New York, which tests colored stones. “When you see any rechanneling through nontraditional destinations like Dubai, it means someone is finding some financial incentive not to play by the book.”
U.S. law-enforcement officials have identified Dubai as a haven for al-Qaida business interests. The FBI and the Treasury Department are currently trying to help the United Arab Emirates, of which Dubai is a part, to crack down on the abuse of Dubai’s free-trade zones by terrorists and criminals. While this effort mainly focuses on gold smuggling, the U.S. also has reports that al-Qaida uses tanzanite as a way to move funds around the world, says a U.S. government investigator familiar with Dubai.
Out of more than 12,000 pounds of official tanzanite exports from Tanzania last year, a mere 13 pounds were sold to Dubai dealers. But Magyane estimates that a hundred times that amount actually made its way to Dubai, through smuggling.
CASH BUSINESS
In Dubai, on a strip of small jewel shops along a creek, Africans often go door to door trying to sell plastic bags full of unrefined gold and sometimes uncut gemstones for cash. D.B. Siroya, an Indian dealer based in Dubai for two decades, says he has sometime acquired rough tanzanite in Dubai on behalf of Indian friends, buying from sellers he knows.
The cash element is part of what makes the gem trade attractive to al-Qaida, according to Wechsler, the former U.S. counterterrorism official. He says the gem business is also attractive because it is tiered, with many layers of brokers, traders, cutters, polishers and wholesalers between miner and consumer.
A U.S. government-funded report last year for Tanzania’s mining industry noted that the country’s gem industry was “subject to abuse by money launderers, arms and drug dealers.” Afgem Ltd., a South African mining company, has been trying to change that. It advocates branding tanzanite stones with tiny laser-etched logos and bar codes, plus other regulations to discourage smuggling. But its plan last year ignited clashes with small miners, who, Tanzanian intelligence claims, were funded by foreigners with a stake in the current loose system.
The many tiers in the business make it possible for unsavory players to get in and out without leaving much of a trace. In the U.S. jewelry industry, which consumes nearly 80 percent of tanzanite gems, many participants say they have heard industry reports of tanzanite links to al-Qaida only recently, and tend to discount them.
QVC Inc. says it has met with its seven tanzanite vendors to make sure they comply with its ethics code, which says QVC won’t knowingly deal in gemstones “that originate from a group or a country which engages in illegal, inhumane or terrorist activities.” Darlene Daggett, executive vice president of merchandising, says that if tanzanite “definitively can be linked to terrorist activities, we will not continue to sell it.”
Zale Corp. says it has heard “bits and pieces” about such a link, but not enough to know if it needs to change procedures. “It comes down to knowing who we do business with and knowing where they get their stones,” says spokeswoman Sue Davidson. “But all we really know is what they’re telling us. Without some kind of gemstone authorization, certification and tracking system in place, we cannot guarantee that no stone has been smuggled.”
Zale CEO Robert DiNicola adds: “If it came to light that there is a problem with tanzanite, we wouldn’t deal with it.”
Jewelers of America, a retail jewelers’ trade group, says it has been focusing on the “far more significant consequences to human life” of “blood” diamonds, those whose sale helps to fuel African conflicts. “I’m not suggesting we are not willing to look at other connections,” but “we need more information,” says the group’s chief executive, Matthew Runci.
Continued
(snip)
Terrorist Financing
Alongside the importance of finding fugitive terrorists and assessing military options, tackling terrorist financing and sharing intelligence are paramount. Especially relevant in this case are Saudi Arabia and the UAE. Saudi officials are keen to stress their cooperation with the United States in the war on terrorism, and their cooperation on the law enforcement and intelligence fronts is reportedly rather strong. Terrorist financing remains a very sensitive issue, however. At minimum, the Saudis have long exhibited a pattern of looking the other way when funds are used for extremist purposes.
As a major financial centre, the UAE — Sharjah and Dubai in particular — is also a major concern to U.S. officials: the untraceable hawala money-transfer operators, the gold market, drug smuggling, and unregulated air cargo traffic from the Emirates to Afghanistan and beyond.
In both the Saudi and UAE cases, the United States must express its willingness to work discreetly with their respective officials to address these issues, while at the same time firmly indicating that the events of September 11 have lowered the threshold of tolerance — that behavior which may have been acceptable last August is no longer acceptable today.
(snip)
I think maybe since we told them what
their options were after 9/11 (this
article is from 11/11/01), they were
persuaded to have a cooperative stance
toward US and security issues.
I know they were one of the first countries
to participate in the container security
initiative.
~~~~~
http://uae.usembassy.gov/pe_12152004.html
U.S. - UAE Sign First Container Security Initiative in the Middle East
15 December, 2004
On December 12, 2004, U.S. Customs and Border Protection Commissioner Robert J. Bonner and Sultan Bin Sulayem, Chief Executive Officer of the Ports, Customs and Free Zone Corporation signed a Declaration of Principles that governs the implementation of the Container Security Initiative at seaports in Dubai. The ceremony took place at the Burj al Arab and marks the first time CSI has reached an agreement with a country in the Middle East.
http://uae.usembassy.gov/pr_14mar2005.html
Dubai Customs To Implement The Container Security Initiative And Begin Targeting And Pre-Screening Cargo Destined For U.S.
14 March, 2005