Last February, the Obama administration accused one of Lebanon's famously secretive banks of laundering money for an international cocaine ring with ties to the Shiite militant group, Hezbollah.
Now, in the wake of the bank's outing and arranged sale, its ledgers have been opened to reveal deeper secrets: a glimpse at the clandestine methods that Hezbollah, a terrorist organisation, in American eyes that has evolved into Lebanon's pre-eminent military and political power uses to finance its operations. The books offer evidence of an intricate global money-laundering apparatus that, with the bank as its hub, appeared to let Hezbollah move huge sums of money into the legitimate financial system, despite sanctions aimed at cutting off its economic lifeblood.
At the same time, the investigation that led the U.S. to the bank, the Lebanese Canadian Bank, provides new insights into the murky sources of Hezbollah's money. Intelligence from several countries points to the direct involvement of high-level Hezbollah officials in the South American cocaine trade.
The revelations about Hezbollah and the Lebanese Canadian Bank reflect the changing political and military dynamics of Lebanon and the Middle East. American intelligence analysts believe that for years, the Hezbollah received as much as $200 million annually from its primary patron, Iran, along with additional aid from Syria. But that support has diminished, the analysts say, as Iran's economy buckles under international sanctions over its nuclear programme and Syria's government battles rising popular unrest.
“The ability of terror groups like Hezbollah to tap into the worldwide criminal funding streams is the new post-9/11 challenge,” said Derek Maltz, the Drug Enforcement Administration official who oversaw the agency's investigation into the Lebanese Canadian Bank, once a subsidiary of the Royal Bank of Canada Middle East. In that inquiry, U.S. 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 U.S. and sold in Africa. The outlines of a broader laundering network, and the degree to which Hezbollah's business had come to suffuse the bank's operations, emerged in recent months as the bank's untainted assets were being sold. In all, hundreds of millions of dollars a year sloshed through the accounts, held mainly by Shiite Muslim businessmen in the drug-smuggling nations of West Africa, many of them known Hezbollah supporters, trading in everything from rough-cut diamonds to cosmetics and frozen chicken, according to people with knowledge of the matter in the U.S. and Europe.
For the U.S., taking down the bank was part of a long-running strategy of deploying financial weapons to fight terrorism. As the case travelled up the administration's chain of command beginning in the fall of 2010, some officials argued that simply blacklisting the bank would disrupt the network while insulating the U.S. from suspicions of playing politics. But the prevailing view was that the case offered what one official called “a great opportunity to dirty up Hezbollah” by pointing out the hypocrisy of the “Party of God” profiting from criminal activity.
John O. Brennan, the President's counterterrorism adviser, recalled the debate in a recent interview. “I thought that if Hezbollah was involved in the drug trade,” he said, “let's make sure that gets out.” Founded three decades ago as a guerrilla force aimed at the Israeli occupation of southern Lebanon, Hezbollah has never before had such a prominent place in the country's official politics. Yet much of its power derives from elsewhere: from its status as a state within the Lebanese state.
That this sliver of a country would be a crossroads for all manner of trade owes much to the flourishing of a worldwide diaspora; more Lebanese live abroad than at home. Through criminal elements in these emigre communities, Hezbollah has gained a deepening foothold in the cocaine business, according to an assessment by the U.N. Office on Drugs and Crime described in a leaked 2009 State Department cable.
In South America and Europe, prosecutors began noticing Lebanese Shiite middlemen working for the cartels. But the strongest evidence of an expanding Hezbollah role in the drug trade comes from the two investigations that ultimately led to the Lebanese Canadian Bank. The trail began with a man known as “Taliban,” overheard on Colombian wiretaps of a Medellin cartel, La Oficina de Envigado. Actually, he was a Lebanese transplant, Chekri Mahmoud Harb, and in June 2007, he met in Bogota with an undercover agent for the Drug Enforcement Administration and sketched out his route.
Cocaine was shipped by sea to Port Aqaba, Jordan, then smuggled into Syria. The undercover agent casually remarked that he must have Hezbollah connections. Harb smiled and nodded, the agent reported. Soon the cartel was giving the agent money to launder: $20 million in all. But before Harb could reveal the entire scheme and identify his Hezbollah contacts, the operation broke down.
Before long, a new target emerged. A call had come in to a wiretapped phone tied to Harb and the cartel. Agents had known that there was a major money launderer whose phone sat in Lebanon. Now they had a name: Ayman Joumaa, owner of the Caesars Park Hotel in Beirut. Israeli intercepts showed him in contact with a member of Hezbollah's “1,800 Unit,” alleged to coordinate attacks inside Israel. Joumaa's contact, in turn, worked for a senior operative who the Israelis believed handled Hezbollah's drug operations.
Eventually an American team dispatched to look into Joumaa's activities uncovered the used-car operation. Cars bought in the U.S. were sold in Africa, with cash proceeds flown into Beirut and deposited into three money-exchange houses. The exchanges then deposited the money into the Lebanese Canadian Bank. Hezbollah received its cut either from the exchange houses, or via the bank itself, according to the DEA.
In Washington, after a long debate over when to act and what to make public, the administration decided to invoke a rarely used provision of the Patriot Act. Since the bank had been found to be of “primary money-laundering concern,” the Treasury Department could forbid U.S. financial institutions from dealing with it. President Obama was briefed, and on February 10, Treasury officials pulled the trigger.
The indictment announced on Tuesday charges Joumaa with coordinating shipments of Colombian cocaine to Los Zetas in Mexico for sale in the U.S., and laundering the proceeds. The U.S. has no extradition treaty with Lebanon, and Joumaa's whereabouts are unknown.
From the Treasury Department's perspective, the case is a victory, albeit an incremental one, in the battle against terrorism financing. — New York Times News Service