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Federal News Service - Hearing of the Subcom. on Middle East and Central Asia of House Com. on International Relations on Saudia Arabia - Transcript

By:
Date:
Location: Washington, DC


Federal News Service March 29, 2004 Monday
Copyright 2004 The Federal News Service, Inc.
Federal News Service

March 29, 2004 Monday

HEADLINE: HEARING OF THE SUBCOMMITTEE ON THE MIDDLE EAST AND CENTRAL ASIA OF THE HOUSE COMMITTEE ON INTERNATIONAL RELATIONS ON SAUDI ARABIA AND THE FIGHT AGAINST TERRORISM FINANCING (RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, DC, MARCH 24, 2004)

BODY:

REP. ILEANA ROS-LEHTINEN (R-FL): Thank you. The subcommittee will come to order. Since the horrific events of September 11 we have been confronted with the undeniable fact that 15 of the 19 terrorists who caused this act of mass murder were from Saudi Arabia. Because of this it is our duty to examine what the Saudi's have done, are doing now and what they will do in the future to prevent this kind of tragedy from ever repeating. We want to gain an understanding of how Saudi Arabia is working to repair a system that many say was broken or at the very least had grown out of control.

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REP. ROS-LEHTINEN: Thank you very much Mr. Ackerman.

Mr. Berman?

REP. HOWARD L. BERMAN (D-CA): Madam Chair, I think I'll wait for the questions after the witnesses have testified. Thank you.

REP. ROS-LEHTINEN: Thank you.

Mr. McCotter?

Ms. Berkley.

REP. SHELLEY BERKLEY (D-NV): Thank you, Madam Chairman.

I'm in the middle of a transportation markup across the hall so I'd like to give an opening statement and if I could possibly be here for the testimony I'm very anxious as well.

REP. ROS-LEHTINEN: Absolutely.

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REP. ROS-LEHTINEN: Thank you very much, Ms. Berkley.

We'd like to have Congressman Joe Crowley of New York for his opening statement. Joe?

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REP. ROS-LEHTINEN: Thank you, Mr. Crowley.

And I'll introduce both panels, although obviously we will hear from the first panel first. We will have Ambassador J. Cofer Black, the State Department's coordinator for Counterterrorism. And I thank you again, for being with us. Ambassador Black has had a distinguished 28 year career and the directorate of operations at the Central Intelligence Agency. Prior to joining the State Department, Ambassador Black was the director of the CIA Counterterrorism Center. In this capacity, he served as the special assistant for Counterterrorism to the CIA director, as well as national intelligence officer for Counterterrorism.

Also we have testifying Mr. Thomas Harrington, the deputy assistant director of Counterterrorism Operational Support Branch at the Federal Bureau of Investigation. In November 2002, Mr. Harrington was selected by the FBI director for his current position, in which he has national program management responsibility for the foreign terrorist tracking task force, the Counterterrorism Operation Response Section and the National Threat Center. He has served in the FBI field offices in Philadelphia and Denver as well as in the headquarters in Washington. And we thank Mr. Harrington for his appearance today.

And finally we will hear from Juan Zarate, the deputy assistant secretary in the Executive Office for Terrorist Financing and Financial Crime at the Department of Treasury. Mr. Zarate is responsible for formulating and coordinating the department's counterterrorism financing and anti-money laundering efforts. In this capacity, he is responsible for policy guidance and oversight of the Financial Crimes Enforcement Network and the Office of Foreign Assets Control and policy guidance for the IRS Criminal Investigation Division.

On our second panel, which will we hear from shortly, we will be hearing from Mr. Robert Baer, a former Middle East intelligence officer with the Central Intelligence Agency who has served in places such as Iraq, Tajikistan, Morocco, Lebanon, Sudan and India. When Mr. Baer left the agency in '97, he was awarded the Career Intelligence Medal.

And, finally, we will hear from Mr. Steve Simon, senior analyst with the RAND Corporation. Before this position, Mr. Simon was the assistant director and Carol Dean Senior Fellow for U.S. Security Studies at the International Institute for Strategic Studies in London. Before this, he served as the senior director for the Transnational Threats on the U.S. National Security Council. Also at the National Security Council, he served as the director for Global Issues and Multilateral Affairs. He also worked in the Bureau of Political Military Affairs in the Department of State, as acting principal deputy assistant secretary and as the director of the Office of Policy Analysis. We look forward to our second panel insight as well.

And with that, I would like to have Ambassador Black begin his testimony. Thank you.

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REP. ROS-LEHTINEN: Thank you so much, Mr. Ambassador. We appreciate your presence and your testimony.

Mr. Harrington?

MR. THOMAS J. HARRINGTON: Madam Chair, thank you very much, members of the committee, for this opportunity to testify about terrorism financing issues. And in particular as they relate to our joint efforts with the government of the kingdom of Saudi Arabia.

REP. ROS-LEHTINEN: If you could maybe hold on one second and Amy will fix that for you.

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REP. ROS-LEHTINEN: Thank you, Mr. Harrington.

Mr. Zarate.

MR. JUAN C. ZARATE: Thank you, Madam Chair. I'd like to make some brief remarks and ask that my statement be made part of the record.

REP. ROS-LEHTINEN: Without objection.

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REP. ROS-LEHTINEN: Sorry, that's a former colleague of ours, Congressman Melavene (ph). We've got to stop and say hello and give him a --

MR. ZARATE: Not a problem.

REP. ROS-LEHTINEN: Go right ahead.

MR. ZARATE: Congressman.

REP. ROS-LEHTINEN: I apologize. Go right ahead.

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REP. ROS-LEHTINEN: Thank you so much. Thank you all of you gentlemen for excellent testimony. And I'm going to begin with some questions and we'll move through the other members as well, thank you.

Mr. Ambassador, with this new task force that we were discussing, the U.S.-Saudi Terrorism Financing Task Force, what are the operational rules regarding the sharing of intelligence information? Do we grant full and unfettered access to the Saudis? Do Saudi officials see all of the information we possess on the various targets of our investigation? And regarding other details of the agreement for this task force, if you could explain the precautions to prevent Saudis learning how to evade our methods, the security level, who will have access to the information, what types of information they will see. What are the terms of U.S. access and freedom to operate in Saudi Arabia, and is this an open ended operation or will this task force be time limited?

MR. BLACK: Madam Chairperson, if I might, I'd like to turn to Mr. Zarate, who can give you a comprehensive answer.

MR. ZARATE: Madam Chairwoman, in coordination with the Saudis, as you know, there are two task forces in essence set up. One is the task force to share intelligence information on a real-time basis, given the ongoing and real threats faced in the kingdom for attacks, as well as to share information related to threats to the United States.

REP. ROS-LEHTINEN: But we're talking about the financing?

MR. ZARATE: The financing. The financing was set up this past summer. And, as Mr. Harrington can probably discuss as well, that is a system set up with intelligence agents as well as financial investigators from the FBI and IRS. The sharing of information entails the sharing of leads, actual leads, requests for bank records and information and accounts. It also involves requests for access to individuals for interviews and interrogation. And in terms of the protocols for vetting what information is shared with the Saudis, that is something that is largely done both here at headquarters from the FBI, but also done on the ground through our representatives on the intelligence side, as well as the investigatory side to ensure that the relevant information being shared is the type that we want the Saudis to be seeing.

REP. ROS-LEHTINEN: We run the risk of sharing the information and then what happens is they make an in run and know how to evade our tactics, and I'm sure there are going to be some follow up questions on that. And what actions have been taken by the Saudi government against the Saudi financial sponsors of al Qaeda that are listed and the golden chain? According to written testimony provided to the Senate Committee on Banking, Housing and Urban Affairs in October of last year, the list included six bankers, 12 businessmen, two former Saudi ministers, and their cumulative corporate net worth totals more than $85 billion. What can you tell us about what's new with that investigation?

MR. ZARATE: Madam Chairwoman, first in terms of what the Saudis have done. One of the significant designations that we've nominated to the U.N.-this is back in September last year-was the designation of Wail Hamza Juwaidin, a Saudi citizen, key financier whose assets have been frozen in Saudi Arabia. In addition, the Saudis have taken actions to investigate other individuals, including Yasin al-Qadi, who's a Saudi citizen who we designated back in 2001. And they continue to investigate those individuals who we identified to them as being suspect. I think part of the answer may be better answered in a closed session, because of the sensitivity of our ongoing investigations.

But that being said, the Saudis take very seriously the information that we, the FBI, the intelligence services share with them with respect to suspect individuals. I would like to mention, Madam Chair, one of the challenges of the terrorist financing campaign writ large is our ability to compile and ferret the information that's relevant to foreign governments like Saudi Arabia, to help prompt them to take relevant action. I will tell you that when we've been able to do that, when we've been able to provide the Saudis with relevant information, they have taken action, whether it's been taken publicly or quietly.

REP. ROS-LEHTINEN: Mr. Harrington, you mention in your written testimony that the Saudi Labor Ministry is creating a database of charities. How many charities are listed on that database so far? What other ministries will it be merged with? And what authority and what access will the U.S. have as part of our joint task forces on-or will they be separate functions?

MR. HARRINGTON: I can't say that. I don't know how many charities. I don't know if my colleagues can point to that list at this point and tell you how many charities are on the list. Clearly, the Saudis have been very, very open with us. To get back to our-try and answer a couple of your earlier questions on the task force itself. It's a relatively small group of FBI agents, FBI employees, analysts, IRS agents and intelligence folks. Their focus is clearly on just financial issues. There's two sets of FBI employees in Saudi right now. We have a legat that is there that handles the general criminal terrorism leads. There's a legat and two assistant legats, so three agents total, a translator and several office assistants. By creating this financial task force we took the burden off the legat so that this group specializes and focuses solely on financial-on the financial leg of terrorism. As a result, the turnaround time on our leads have been significantly improved. We get real-time information on potential leads here in the United States, as well as covering leads that are generated by our investigations, and we require Saudi assistance to pursue them. And, again, in an open hearing it's difficult to go into more details on that, but I'd be happy to do that at some later date.

REP. ROS-LEHTINEN: Well, we're going to try to schedule that, thank you.

And just one last question for Mr. Zarate. What is Treasury doing to get a handle on the European and Middle Eastern fiduciaries and the shell companies and banks that operate outside the scope of conventional banking activities? Have they acted against correspondent accounts, secret accounts, Saudi sovereign accounts? And what actions have the Europeans, and particularly the Lebanese authorities taken in these directions?

MR. ZARATE: Madam Chairwoman, we've worked very closely with our European allies and with other countries, including Lebanon, to deal with a multiple problem: the problem of the use of front companies by al Qaeda and other groups, the use of charities as we've mentioned here extensively, the use of the hawala network, the information system money exchange operations as well. What we've done in the past, Madam Chairwoman, has been to identify those that we have sufficient information about to the U.N. for designation.

For example, early in the campaign against terrorist financing we identified certain bakeries and honey shops in the Gulf that were being used by al Qaeda to raise and move money. We identified an extensive network, the al Faqwa (ph) network, which had banking operations in the Caribbean as well as in Europe, which formed part of a financial network not only for al Qaeda but for Hamas and other terrorist groups. So we've continued to try to search for information with respect to how to handle these efforts.

I would like to say that part of the efforts are handled in quiet ways with intelligence resources, and otherwise some of this is handled publicly through the designations and the freezing of assets. And part of this-and this is the long term effort-is handled through systemic changes where we have, frankly, driven and quarterbacked the international movement for greater regulatory oversight over some of these networks which, frankly, had never been regulated before. And, again, I think that's where you see greater regulation in Europe over charities, you see greater regulation in the Gulf and South Asia over the hawala network. So all of that is part of the comprehensive campaign.

REP. ROS-LEHTINEN: Thank you so much.

Mr. Ackerman.

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REP. ROS-LEHTINEN: Thank you.

Our vice chair of the Subcommittee, Mr. Chabot.

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REP. ROS-LEHTINEN: Thank you, Mr. Chabot and Mr. Ackerman. We'll try to schedule that classified briefing so that we can get those questions answered.

Mr. Berman.

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REP. ROS-LEHTINEN: Thank you very much, Mr. Berman.

Mr. Pitts.

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REP. ROS-LEHTINEN: Thank you so much, Mr. Pitts. And Congressman Crowley is sweet enough to let us bump his turn so that Congresswoman Berkley can ask her question and get back to her other hearing, and then we'll hear from Congressman Crowley.

Shelley.

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REP. ROS-LEHTINEN: Well put. Thank you, Congresswoman Berkley.

Congressman Crowley.

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REP. ROS-LEHTINEN: Thank you so much, Mr. Simon. Before I recognize Mr. Baer, I'd like to point out that in the audience we have our esteemed colleague, the former chair of the International Relations Committee, Mr. Ben Gilman of New York.

Ben, it's always a delight to see you. And I congratulate you for the wonderful work you're doing on U.S. interests in the United Nations. So we thank you for all of your efforts.

And, Mr. Baer, if you could just bear with us for one minute. There was a question that had arisen regarding Mr. Chabot's line of questioning, and I think a lot was read into the way he had phrased the question. And I'd like to recognize him now so that he could cite the source which his question related to Mr. Clark was based.

REP. CHABOT: Thank you, Madam Chair, and I'll be relatively brief here.

I had asked a question-I wish Mr. Berman was here right now. But I asked a question early on saying, and I'll quote what I said, "There was a recent report that in the days immediately following 9/11 that former White House counter terrorism director Richard Clark authorized that nearly 140 Saudis be allowed to be flown out of the United States out of fear of retribution." So that's what I said.

REP. ROS-LEHTINEN: So you were referring to an article?

REP. CHABOT: Yes.

REP. ROS-LEHTINEN: You did not say that you had knowledge of it, but you had report of an article. So I had asked Mr. Chabot to share with us the source of that questioning.

REP. CHABOT: Well, there was indeed a report and I'd ask unanimous consent that the --

REP. ROS-LEHTINEN: Without objection.

REP. CHABOT: -- International Herald Tribune, dated September 4, 2003, be included in the record. If I could just read two paragraphs here: "Top White House officials personally approve the evacuation of dozens of influential Saudis, including relatives of Osama bin Laden, from the United States in the days after the September 11, 2001, attacks, when most flights were still grounded, according to a former White House advisor. Richard Clark, who ran the White House crisis team after the attacks but has since left the Bush administration, said he agreed to the extraordinary plan because the Federal Bureau of Investigation assured him that the departing Saudis were not linked to terrorism. The White House feared that the Saudis could face retribution for the hijackings, Clark said." And the article goes on.

There's also a second article in National Review which goes into even more detail along the same lines. There's also a reference to a Vanity Fair magazine article, again along those same lines. So I'd ask that these articles be included.

REP. ROS-LEHTINEN: Thank you, without objection. And once again, as Mr. Chabot has pointed out, he is not saying that he has any knowledge himself of this, but just was pointing out that there were some reports. We know that Mr. Clark has denied that and said that he had not approved the request but that other agencies had.

REP. CHABOT: Thank you, Madam Chair.

REP. ROS-LEHTINEN: We thank you so much, Mr. Chabot, for sharing that with us.

Mr. Baer?

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REP. ROS-LEHTINEN: Well put. Thank you so much, Mr. Baer.

I'd like to recognize Mr. Royce to start our line of questioning.

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REP. ROS-LEHTINEN: Of course.

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REP. ROS-LEHTINEN: Thank you very much, Mr. Royce.

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REP. ROS-LEHTINEN: Without objection.

REP. ACKERMAN: -- from that session-thank you, Madam Chair-he said that he couldn't cite the specific at the open hearing, but assured the Senate Judiciary Committee that the decision to send those Saudis out of the country on the plane was sent down to him by the highest levels in the State Department, the FBI and the White House. And that what he did is what any prudent person in that position would do, he asked for the names of the people that were being put on the plane, and to have them vetted, which he believed the FBI did in a cursory fashion.

That's the record as we know it. But to try to use this committee to further a campaign to shaft this guy, to discredit him and his credibility is something that, beneath the dignity of this committee, Madam Chair, and the way that you have always respectfully handled the committee --

REP. ROS-LEHTINEN: If the gentleman would yield.

REP. ACKERMAN: I'd be delighted to yield to the chair.

REP. ROS-LEHTINEN: And I think that if we would read back Mr. Chabot's words, I don't think that there would be any even insinuation that he was saying anything disparaging of the character-this is literally what he said. There was a recent report, which is true, it's right here-doesn't mean the report is true, but listen to what he said, and he read it just like that. There was a recent report that in the days immediately following 9/11 that former White House-so he didn't say that he was an evil man, he didn't say that he's personally responsible, and he alluded to the article, as you had pointed out, in Vanity Fair-and I'll read just this quote, and this is Mr. Clark's quote. Not saying he didn't use any characterization of it.

My role was to say that it can't happen until the FBI approves it. And so the FBI was asked. We had a live connection to the FBI, we asked the FBI to make sure that they were satisfied that everyone getting on that plane was someone okay to leave. And they came back and said, yes, it was fine with them. So we said, fine, let it happen. But if we read back --

REP. ACKERMAN: So Mr. Clark did everything that --

REP. ROS-LEHTINEN: -- Mr. Chabot's words, I don't think he was doing any character assassination or anything of that-he wanted to ask the witnesses what they knew of that, and I think that is something that this subcommittee is directly asking about, the Saudi involvement in this problem.

REP. ACKERMAN: I happen to be very fond of Mr. Chabot. I don't agree with a lot of things he says, and he certainly says them in a rather laid back kind of way. But I know that he said a lot of things that he deeply regrets. The fact that he said it in a kind and offering way, brought it up here at this hearing at a time that was intended, I believe, to just lay out in a matter of-perfunctory way until Mr. Berman called him on it, to try to be discrediting of somebody's reputation, which is very much a part of a campaign on the national level now.

The vice president was very soft-spoken too when he tried to roast a guy on national TV and said, "Well, you know, we don't even know who this guy is. He's only a national terrorism czar, he's not in the loop." But he didn't say it with all the undertones that I'm saying it with, but that's how the American people read it. And despite the fact that Mr. Chabot's tone might be a lot warmer than mine at the moment, still there is no doubt in the minds of anybody who was listening carefully to what he said, and more importantly, what he was doing, that this was intended to be damage control for the administration and roughing up Mr. Clark a bit further in yet another forum and you can turn any dial and you'll see the spinmeisters doing this all over the lot.

That's what I'm sad about, that it would be done here. But if he chooses to do that in even the kind and gentlemanly way he does it, he should expect that this side will be ready for the fight.

REP. ROS-LEHTINEN: Thank you. And just to either continue or end this, I think that if we would read back without any tone what Mr. Chabot's actual words were, it was asking a legitimate question of the State Department, FBI, Department of the Treasury officials, who might have also had a hand in allowing these flights to take off. And there were those press reports. And I literally read what Mr. Chabot said, and if we could read back his comments after that, and I don't think there was any character classification, positive, negative. It was neutral. What about these reports? Are they true?

REP. ACKERMAN: But did he ask that of anybody or did he just lay that out there?

REP. ROS-LEHTINEN: He asked --

REP. ACKERMAN: It was Mr. Berman that put the question.

REP. ROS-LEHTINEN: He said, "What kind of investigation was each of these Saudis put through by the FBI?" Like he wanted a list of the folks who were allowed to travel. And the folks indicated that they had no knowledge of it. I think in the 9/11 investigation --

REP. ACKERMAN: State Department guy didn't know anything, the FBI didn't know anything, and yet this guy is running the country, Mr. Baer. He's deciding to send 140 Saudis out on a special flight when all the airports are closed and no flight could get in and out, and you and I were taking the railroad to get to Washington because we couldn't get airborne. But this guy was running the country and the air control system and everything, despite the fact that the vice president said he's out of the loop. It's just a matter of his putting it out there, Madam Chair, that was --

REP. ROS-LEHTINEN: I know. But I think it was a --

REP. ACKERMAN: Didn't say it in a --

REP. ROS-LEHTINEN: -- legitimate question and that's what the-when the reports were cited, his name was linked. And, you know, I think it was a legitimate question on Mr. Chabot's part. But that's what the 9/11 hearings --

REP. ACKERMAN: I'm sure it was, and I'm legitimately trying to de-link it.

REP. ROS-LEHTINEN: Okay. Good deal. All right.

REP. ROYCE: Madam Chair, excuse me.

REP. ROS-LEHTINEN: Thank you.

Mr. Royce.

REP. ROYCE: If I could-there was another question I wanted to ask, if I could.

REP. ROS-LEHTINEN: Yes. Please go ahead.

REP. ROYCE: And it had to do with the question of a special envoy for money laundering actually setting up a position in our government of having a special envoy who would be held responsible. I think there's a lot of responsibility going around on all of these questions. The question now is how do you give somebody the power and the authority and a high enough position in an administration that they can actually go after the money laundering and stay on it day in, day out, and get answers, and be at the table with the international institutions, for example, when the World Bank meets and so forth, where they can exert their influence from the top and say, if the United States is going to go along with these international institutions we're going to have reforms that allow for more transparency specifically so that we can look at the laundering of money that ends up financing terror.

I would like to ask the two witnesses if they think that if we could push for such an agenda, such an elevation of responsibility and authority into a special envoy that would be given that authority and power, whether that comes out of Treasury or however, what they feel. Would that make a discernable difference or not?

REP. ROS-LEHTINEN: And pigtailing, if I could, Mr. Royce, on your question, the role of banks in Europe also. How would you see this envoy if you would have some sort of capability in overseeing or looking at some of the transfer of funds that we have had reports of banks in Europe and Middle East perhaps having a role in transferring the funds for these groups. And expanding on that, if you could tell us the role of private fiduciaries in Switzerland and Lebanon that we have heard may have had a role in these transferred funds.

MR. BAER: If I could answer first, I think it's a brilliant idea, Congressman. First of all, this government has an enormous amount of resources to trace money. The Central Intelligence Agency, the State Department, the IRS. More than that, the National Security Agency, which has a responsibility for following an incredible database, that a czar for money laundering overlooked this.

And also, getting to the point where you're looking at really what the Department of Justice is doing in a country like Switzerland. And as far as I can tell, the Swiss are more concerned about keeping American money out, because of all the pressure we put on them, than they are of keeping Arab money out. It's the way it works. I think they're being very vindictive about it, the Swiss. And there's also you've got the question of the fiduciary accounts. All you do is you find a nominee trusted. You can either carry cash to him or you can make a transfer. And the money essentially disappears in another man's name.

You have to regulate these fiduciary accounts. They're all over Europe. Some countries are better than others. I think the Swiss are the worst. These people are untouchable. France, they watch it very closely and they put pressure on the nominee. We have to get some sort of unity in Europe as well as the prime banking centers in the Middle East and East Asia. You've got the same problems.

What I found is that people who deal in money are very clever and they're very concerned about keeping their money away form the tax authorities and everybody else. And they seem to be just a little-a step ahead of us. And a more concerted effort to go after these people and throw some of our best bankers at it under a czar I think would be very effective. It would also be very effective in finding where-you've got strange transfers of money which would give leads to the FBI and the CIA to follow people, in particular this country, you know, ATM transfers, things like that. Thank you.

REP. ROS-LEHTINEN: Thank you so much, Mr. Royce.

And thank you, Mr. Ackerman.

And thank you to this excellent panel of witnesses for your testimony today and for all the audience members as well who participated.

So this subcommittee is now adjourned.

END

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