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Another tack in terror-financier lawsuit

New evidence links a Saudi bank to al-Qaeda, say Cozen lawyers representing insurers.

Only days after suffering a significant setback in their lawsuit against Saudi Arabia, lawyers at Cozen O'Connor and other plaintiffs' lawyers have opened a new front in their battle to hold terrorism financiers accountable for the Sept. 11, 2001, attacks.

In court papers filed in federal district court in Manhattan, Cozen O'Connor, based in Center City, and the others are asking for additional discovery against the Saudi-owned National Commercial Bank, the largest bank in the Arab world.

Cozen represents three dozen insurers in its attempt to hold Saudi Arabia, several Islamist charities, banks, and financiers liable for more than $5 billion in damages.

While the lawyers have yet to generate evidence showing that any senior Saudi official conspired with al-Qaeda to attack the United States, they allege that Saudi money, some of it from the government, fueled al-Qaeda's rise from ragtag regional terrorists into global threat.

To support their claim for more discovery against the National Commercial Bank, the plaintiffs have filed new evidence they say suggests the bank was a conduit for funds to Osama bin Laden before the 9/11 attacks, including previously unreleased French diplomatic cables and a report by German intelligence.

The primary vehicle for the money-laundering scheme, the plaintiffs' lawyers allege, was a now-defunct Islamic charity called Muwafaq Foundation, which was established by two former senior officials of the bank. "NCB's sponsorship of al-Qaeda flowed largely, although not exclusively, through Muwafaq Foundation," said Cozen O'Connor lawyer Sean Carter, in a letter to U.S. Magistrate Judge Frank Maas, who is managing discovery in the sprawling case.

A lawyer for National Commercial Bank did not return phone calls for comment. But in a July 22 motion to dismiss the case, Mitchell Berger, the bank's attorney, argued that the plaintiffs had failed to produce facts showing that NCB "played a knowing role in financing terrorist activities."

"Plaintiffs offer only speculation and hearsay in their effort to link NCB to al-Qaeda terrorists who committed the Sept. 11 attacks," he said.

The request for additional discovery against NCB and two of its former executives, Yassin al-Kadi, designated by the U.S. Treasury Department as a terrorism financier, and Khalid bin Mahfouz, a wealthy Saudi businessman who once had an ownership interest in NCB, is the latest front in a long-running litigation battle that began within days of the Sept. 11 attacks.

Al-Kadi's attorney could not be located; bin Mahfouz's attorney in Washington did not return a call for comment.

On Thursday, Cozen and other plaintiffs' lawyers suffered a serious reversal when the U.S. Court of Appeals for the Second Circuit, ruling in Manhattan, said Saudi Arabia could not be sued because such lawsuits are barred unless the State Department had officially designated a government as a supporter of terror.

There has been no such finding in the case of Saudi Arabia.

Lawyers for Cozen and other firmssay they likely will appeal that ruling to the Supreme Court. Such efforts usually are long shots; the Supreme Court typically accepts only about 1 percent of the cases submitted to it on appeal.

But quite apart from Saudi Arabia, the Second Circuit ruling leaves untouched, for the moment at least, scores of other defendants with ties to the Saudi government such as the charities and the National Commercial Bank.

The lower court overseeing the litigation already has authorized limited discovery - the process by which lawyers for both sides get to question witnesses and request documents that they believe will prove their main assertions.

It was in response to a motion by lawyers for National Commercial Bank that discovery be halted and the case dismissed that lawyers for Cozen, which is representing dozens of U.S. and global insurers, and other firms representing victims and survivors of the attacks filed their discovery motion.

They charge that al-Kadi, himself a wealthy Saudi businessman who has had investments throughout the world, including in the United States, and bin Mahfouz founded the Muwafaq or Blessed Relief Foundation while they were affiliated with NCB in the early 1990s and used it to funnel money to al-Qaeda.

The plaintiffs' lawyers cite as evidence a U.S. Treasury Department finding in 2001 that al-Kadi had helped bankroll various terrorist organizations including Hamas and that he maintained a close relationship with Wa'el Julaidan, also designated, who allegedly helped bin Laden found al-Qaeda and who allegedly helped bankroll terror cells around the world.

In a related letter to Swiss authorities in 2001, then Treasury general counsel David D. Aufhauser said, "Mr. Kadi's actions and those of his Muwafaq Foundation and businesses . . . give rise to a reasonable basis to believe that they have facilitated terrorist activities."

The plaintiffs also filed what they said were reports by the Bundesamt fuer Verfassungsschutz, a German intelligence service, asserting that the NCB was used to launder money into al-Qaeda. Also filed was what plaintiffs' lawyers said was a cable from the former French ambassador to Saudi Arabia from 1998 to 2004, Bernard Poletti, to the French foreign ministry.

In the cable, Poletti says Saudi authorities had unearthed information that bin Mahfouz had been involved in fund transfers from NCB to an Islamic charity that in turn directed the money to bin Laden.

Bin Mahfouz has never been designated by U.S. authorities as a terrorism supporter. The National Commercial Bank, of which he was chief executive officer, was described as a conduit for money to Islamic terrorist groups in congressional testimony by Vincent Cannistraro, former chief of counterterrorism operations at the CIA

"There is little doubt that a financial conduit to bin Laden was handled through the National Commercial Bank," Cannistraro said in testimony before the House Committee on International Relations on Oct. 3, 2001.

Bin Mahfouz has bitterly rejected assertions that he helped support terrorists. On the bin Mahfouz family Web site he has posted a history of challenges to publications and individuals he says have unfairly accused him of supporting terrorism.

In this regard, he has had considerable success.

In one notable example in 2007, bin Mahfouz and his attorneys successfully pressured Cambridge University Press to apologize for the April 2006 publication of Alms for Jihad, which accused bin Mahfouz and members of his family of supporting terrorism. The publisher also promised to destroy unsold copies of the book that at the time still were in warehouses or accessible through the distribution chain.

In another example, bin Mahfouz successfully sued terrorism author Rachel Ehrenfeld in British courts for falsely accusing him of terrorism ties, an allegation she bitterly denies. She was ordered to pay $225,000 in damages and to destroy copies of her book.

Read an Inquirer series on the 9/11 lawsuit, plus court documents, at