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“People in the Gulf” Talking on Skype

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The NatSec twittersphere is abuzz about the fact that the CIA indirectly warned Hezbollah that some al Qaeda operatives were preparing an attack on a location in southern Lebanon.

I’m actually less interested that we felt the need to warn a political entity that we consider a terrorist organization than the other details of the story — and that it is a story Lebanese sources felt free to share with the press.

For example, the report says we intercepted calls between the al Qaeda operatives and “people in the Gulf.”

“They had transcripts of calls made from known al Qaida people in Lebanon to people in the Gulf that included detailed information about the attacks, including the amounts of explosives that had been smuggled into Lebanon,” said one Lebanese intelligence official who is barred from speaking openly to reporters.

McClatchy suggests these al Qaeda figures were calling other al Qaeda figures in this unnamed Gulf country. But why should we assume that? Qatar has been funding al Qaeda linked militants in Syria. Is it possible this story is public because the US wants it known that we’re so tired of Qatar’s support for terrorists we’ll even tip Hezbollah to plans Qatari backed terrorists have made?

Indeed, a comment from a Hezbollah member quoted in the story seems to suggest this warning (and, I would suggest, the publicity surrounding it) is an effort to put the genie we’ve created back in the bottle.

The Hezbollah commander said he thought the warning was more pragmatic.

“The Americans are starting to realize how bad their friends in Syria are, so they’re trying to get out of this mistake,” he said. “They also think that if a bomb goes off in Dahiya, we will blame America and target Americans in Lebanon. That will never happen, but they’re scared of this monster they created.”’

That monster was created with the funding of one of our close allies.

I’m also intrigued by the suggestion that the US managed to collect these calls whereas the Lebanese could not because it was VOIP.

A security contractor familiar with the capabilities of the Lebanese intelligence services said it was likely that the targets had used voice-over-Internet software that the Lebanese services lack the equipment and expertise to decrypt but that poses few problems for the Americans.

“Lebanon lacks the expertise and the technology for that,” said the contractor, who asked not to be further identified because of the sensitivity of his work. “But once the call left Lebanon for the Gulf, the NSA would have automatically been tracking it.”

We’ve just learned the extent to which Microsoft has helped the government access Skype. And the government claims such disclosures have led terrorists to stop using Skype.

Were these terrorists and their friends in the gulf?

Update: Via Twitter, McClatchy reporter and Middle East expert Jonathan Landay says I’m reading way too much into this, and that there is a backstory he cannot share.

So take these musings as off-base ones.

Our Detention Authority Branches Out beyond Al Qaeda

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It was pretty inconsiderate of Charlie Savage to break the news that the US had filed military commission charges against Ali Musa Daqduq the day after Jeh Johnson gave a speech emphasizing how our detention authority is restricted to those associated with al Qaeda.

But, the AUMF, the statutory authorization from 2001, is not open-ended.  It does not authorize military force against anyone the Executive labels a “terrorist.”  Rather, it encompasses only those groups or people with a link to the terrorist attacks on 9/11, or associated forces.

While Daqduq does, by all accounts, have ties to Hezbollah, there’s no allegation in the charges sheet that he had any ties to al Qaeda.

Now, I don’t dispute that Daqduq could be charged (or could have been, while we were still at war–oh wait, that Iraq AUMF will never be repealed!) for violating the laws of war. What I’m interested in is how the government implicated the various Shia groups with which Daqduq allegedly conspired.

Most of Daqduq’s charges–the murder, attempted murder, intentional bodily injury, and attempted kidnapping of some American soldiers–don’t mention any other people or organizations. Nor do the treachery and spying charges.

The charge of terrorism charges Daqduq alone–he’s a terrorist because he engaged in an act evincing wanton disregard for human life. Which is consistent with the way the Iraq AUMF defines terrorism, but not the way the GWOT one does.

The material support for terrorism charge does name others, though–the Shia group Asa’ib Ahl al-Haqq, which broke off from the Mahdi army in 2004:

In that Ali Musa Daqduq al-Musawi, an alien unprivileged enemy belligerent subject to trial by military commission, did, between about May 2006 and about January 2007, at various locations in Iraq and Iran, in the context of and associated with hostilities, provide material support and resources to be used in preparation for and in carrying out an act of terrorism against U.S. forces in Iraq, knowing or intending that such material support and resources were to be used for that purpose, to wit: advice, training and planning to Qays al-Khazali, Layth al-Khazali, and other members of Asa’ib Ahl al-Haqq, known and unknown, for the purpose of killing or inflicting great bodily harm upon one or more protected persons in or near Karbala, Iraq, on or about 20 January 2007.

Asa’ib Ahl al-Haqq is neither–and I don’t believe it was–on the State Department’s Foreign Terrorism Organization list nor sanctioned by Treasury. And last month it agreed to enter Iraq’s political process. Read more →

Treasury Accuses Iran of Hacking

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The Treasury Department just added the Iranian Ministry of Intelligence and Security (MOIS) to the other Iranian entities listed as Specially Designated National (other entities already covered include Quds Force and the National Police and their leaders). It sanctioned MOIS for a laundry list of reasons generally categorized as support for Syria’s human rights abuses, Iran’s own human rights abuses, and support for terrorism. Under the latter section, Treasury lists the following:

  • MOIS provides financial, material, or technological support for, or financial or other services to Hizballah, a terrorist organization designated under E.O. 13224. MOIS has participated in multiple joint projects with Hizballah in computer hacking.
  • MOIS provides financial, material, or technological support for, or financial or other services to HAMAS, a terrorist group also designated under E.O. 13224.
  • MOIS has facilitated the movement of al Qa’ida operatives in Iran and provided them with documents, identification cards, and passports.
  • MOIS also provided money and weapons to al Qa’ida in Iraq (AQI), a terrorist group designated under E.O. 13224, and negotiated prisoner releases of AQI operatives.

It is the official position of our government that Iran has facilitated the travel of al Qaeda operatives (this accusation may, in fact, date to pre-9/11 transiting of Iran on the same terms as others). And, not surprising, the government says Iran helped Hamas and Al Qaeda in Iraq.

But it’s the Hezbollah claim I’m most intrigued by. Treasury says that Iran’s intelligence service “participated in multiple joint projects with Hizballah in computer hacking.”

Hacking? We’re declaring hacking a terrorist act now? Like the StuxNet project we engaged in with Israel.

And what, precisely, is Iran alleged to have hacked? Because the most public allegations pertain to … drones. You know, the drones violating Iran and Lebanon’s airspace?

We’ve made that a terrorist act now?

Scary Car Broker Plot and the Fifth Amendment

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I’ve always been skeptical of the Scary Car Broker Plot–the suit against a bunch of used car brokers and others based on the claim that the entire thing is a money laundering operation for Hezbollah. At the core of the complaint is the allegation that entities that weren’t listed on Treasury’s sanctions list until early last year transferred money between 2007 and early last year (that is, until they were listed) to purchase used cars in the US.

Between approximately January 2007 and early 2011, at least $329 million was transferred by wire from accounts held in Lebanon at LCB, Federal Bank of Lebanon (“Federal Bank”), Middle East and Africa Bank (“MEAB”), and BLOM Bank (“BLOM”) to the United States through their correspondent bank accounts with U.S. financial institutions located in the Southern District of New York and elsewhere for the purchase of used cars.

But one of the main targets of the complaint–one they don’t actually get to until page 46 of a 65-page complaint–are thirty seemingly Lebanese-American owned car brokers in the US.

In describing these brokers, the complaint seems to offer little perspective on how this business–a perfectly legitimate business designed to get clunkers into countries where they still have market value–normally operates.

The businesses of these Car Buyers typically have little or no property or assets other than bank accounts that are used to receive wires from overseas to buy cars, and to purchase used cars at auction. These cars are then transported to shipping ports, where they are shipped to West Africa. The Car Buyers typically do not have offices, car lots, or an inventory of used cars other than cars that are in transit to the ports. Some of the Car Buyers purchase cars for their own account, but others simply retain a fee of a few hundred dollars for each car that they buy.

That is, the complaint suggests that the marginal nature of these businesses, by itself, makes these businesses sketchy. But it offers no proof for that fact (and I believe that a lot of these businesses are sketchy by design–they’re the automotive equivalent of recyclers who pick through trash to try to find things with ongoing value).

In the section laying out the individual descriptions of the middle men who dealt with the car brokers, there are a lot of assertions of direct and more attenuated ties to Hezbollah with little or no proof.

Nevertheless, the goal of this complaint is to seize money from the auto brokers, about whom the complaint makes no claims of knowledge of ties to Hezbollah.

Since the complaint, I’ve just been assuming that maybe the government has better evidence to tie the American businesses they’re effectively shutting down to Hezbollah (nevermind that the ties have always been closer to Colombian drug cartels).

But yesterday, Al-Jazeera had a long article poking a bunch more holes in the case. Read more →

The Scary Used Car Broker Plot

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Consider these two data points. First, Jo Becker reports that the money laundering scheme run by the Canadian Lebanese Bank involved brokering used cars purchased in America.

In that inquiry, American Treasury officials said senior bank managers had assisted a handful of account holders in running a scheme to wash drug money by mixing it with the proceeds of used cars bought in the United States and sold in Africa. A cut of the profits, officials said, went to Hezbollah, a link the organization disputes.

[snip]

Eventually an American team dispatched to look into Mr. Joumaa’s activities uncovered the used-car operation. Cars bought in United States were sold in Africa, with cash proceeds flown into Beirut and deposited into three money-exchange houses, one owned by Mr. Joumaa’s family and another down the street from his hotel. The exchanges then deposited the money, the ostensible proceeds of a booming auto trade, into the Lebanese Canadian Bank, so named because it was once a subsidiary of the Royal Bank of Canada Middle East.

But the numbers did not add up. The car lots in the United States, many owned by Lebanese émigrés and one linked to a separate Hezbollah weapons-smuggling scheme, were not moving nearly enough merchandise to account for all that cash, American officials said. What was really going on, they concluded, was that European drug proceeds were being intermingled with the car-sale cash to make it appear legitimate.

Hezbollah received its cut either from the exchange houses, or via the bank itself, according to the D.E.A. And the Treasury Department concluded that Iran also used the bank to avoid sanctions, with Hezbollah’s envoy to Tehran serving as go-between.

And we only indicted the guy running this plot, Ayman Joumaa, in November, 10 months after Treasury designated Ayman Joumaa as a Specially Designated Narcotics Traffickers.

Of course, November 23 is roughly two months after Manssor Arbabsiar, an Iranian used car broker whose finances had a remarkable uptick in the last two years, during which period he largely left South Texas, was arrested.

And while all of the ties Treasury noted in January were to Colombian drug networks, November’s indictment rolled out this week includes a Los Zetas angle.

It was part of the conspiracy that the defendant and his co-conspirators coordinated the shipment of at least tens of thousands of kilograms of cocaine from Colombia, through Central America and Mexico, to the United States, including but not limited to 85,000 kilograms ofcocaine shipped from Colombia for sale to Los Zetas drug cartel from in and around 2005 through in and around 2007.

I’ll come back to this later–I’m watching Robert Mueller repeat that it’s more important for FBI to entrap Muslim kids than to crack down on financial fraud at SJC.

But I’d suggest that the discovery of Scary Iran Plot as a side angle to Scary Used Auto Broker Plot would explain a lot of the problems with the case.

Update: One other thing: I’m curious why DOJ sealed the Joumaa indictment from November 23 to December 12. I don’t know the answer to that, but it’s worth noting that Hezbollah and Iran rolled up US and Israeli spy rings during that period.

 

What If We Scrubbed Wachovia Like We Did the Lebanese Canadian Bank?

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I’ll have several things to say about Jo Becker’s story on the big Hezbollah money laundering ring. For the moment, I’m most interested in how Treasury Department authorities uncovered the ring: by first declaring Lebanese Canadian Bank a money launderer, providing reason to break it up. When an affiliate of Société Générale agreed to buy the bank, they also agreed to scrub its money laundering accounts. To do so, it specifically had someone beyond the Big Four accounting firm that had “overlooked” the accounts in the past scrub the books, including bringing in John Ashcroft.

As part of its own agreement with Treasury officials, Lebanon’s Central Bank set up a process to scrub the books. But compliance officers at S.G.B.L.’s French partner, Société Générale, were skeptical of the Central Bank’s choice of investigators. One of them, the local affiliate of the international auditing firm Deloitte, had presumably missed the drug-related accounts the first time around, when it served as the Lebanese Canadian Bank’s outside auditor.

And, according to people knowledgeable about Lebanese banking, the central bank’s on-the-ground representative had been recommended to that post by Hezbollah.

As an extra step, to reassure wary international banks, the chairman of S.G.B.L.,  Antoun Sehnaoui, commissioned a parallel audit, with the help of Société Générale’s chief money-laundering compliance officer. And to make sure that his bank did not run afoul of Treasury officials by inadvertently taking on dirty assets, he also hired a consultant intimately familiar with the Patriot Act provision used to take the bank down: John Ashcroft, the former attorney general whose Justice Department wrote the law.

And then it investigated (presumably using pattern analysis) each and every account at the bank.

Initially, the auditors looked only at records for the past year. As they began combing through thousands of accounts, they looked for customers with known links to Hezbollah. They also looked for telltale patterns: repeated deposits of vast amounts of cash, huge wire transfers broken into smaller transactions and transfers between companies in such wildly incongruous lines of business that they made sense only as fronts to camouflage the true origin of the funds.

Each type of red flag was assigned a point value. An account with 1 or 2 points on a scale to 10 was likely to survive. One with 8 or 9 cried out for further scrutiny. Ultimately, the auditors were left with nearly 200 accounts that appeared to add up to a giant money-laundering operation, with Hezbollah smack in the middle, according to American officials. Complex webs of transactions featured the same companies over and over again, most of them owned by Shiite businessmen, many known Hezbollah supporters. Some have since been identified as Hezbollah fronts.

So effectively, they took a bank known to ignore money laundering controls and took it apart, piece by piece, to see all the money laundering it had sheltered.

Compare how the US dealt with Wachovia, which was involved in laundering a far greater chunk of money for drug cartels: $363 billion.

US authorities partly became aware Wachovia was helping cartels launder money when they captured a plane in 2006. In addition, the DEA first noted their role in launder Casas de Cambio money in 2005, and a British whistleblower had identified signs that same year.

But it’s clear that by 2007 officials from top regulators were aware of the problems.

Late in 2007, Woods attended a function at Scotland Yard where colleagues from the US were being entertained. There, he sought out a representative of the Drug Enforcement Administration and told him about the casas de cambio, the SARs and his employer’s reaction. The Federal Reserve and officials of the office of comptroller of currency in Washington DC then “spent a lot of time examining the SARs” that had been sent by Woods to Charlotte from London.

“They got back in touch with me a while afterwards and we began to put the pieces of the jigsaw together,” says Woods. What they found was – as Costa says – the tip of the iceberg of what was happening to drug money in the banking industry, but at least it was visible and it had a name: Wachovia.

But the prosecution of Wachovia wasn’t initiated until after Wells Fargo took it over in 2008. Which means Treasury could have insisted on the same process–an examination of a bank with known problems with money laundering to find all of its criminal clients.

It’s possible Treasury did–or is still doing that. Read more →