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Editor's Note:
The Saudi-U.S.
Relations Information Service would like to
thank the Middle
East Policy Council for permission to share
this series with our readers. These
presentations were made at the 35th Capitol
Hill Conference on U.S. Middle East Policy
on January 23, 2004. The conference was
hosted by the Middle
East Policy Council. This item
provides the panel presentation of Mr. David
Aufhauser, Former General Counsel, Department of
the Treasury. Individual
transcripts will be provided separately by email
and posted on-line -- see links below.
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participate in a discussion of this issue with
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Middle
East Policy Council
35th in the Capitol Hill Conference Series on U.S. Middle East Policy
Saudi
Arabia: Enemy or Friend?
Transcript -- David
Aufhauser, Former General Counsel, Department of the Treasury
CHAS. W. FREEMAN: With these
rather too-lengthy remarks behind us, let me invite David Aufhauser to the
podium.
DAVID AUFHAUSER: Thank you. I
don't think anything has more political resonance with the American populace
right now in terms of the American-Saudi relationship than the issue of the
financing of terror. I say that as an observation of their perception. In many
respects my responsibility at Treasury with regard to terrorist financing
showed me that we may be too Saudi-centric in some of the vocabulary and
focus, and that terrorist focus is a significant global problem. But
nevertheless, in the American politic, eyes of the American politic, I don't
think anything has a higher profile in terms of needing to be resolved, and
also do-able -- and also do-able. So it's a perfect proxy for trying to
demonstrate comity rather than animus.
Hussein and I were talking just before the conference. With all due respect, I
actually think the title for the conference does a disservice to the purpose
of the people on the panel. I understand it's a crowd-pleaser and it draws
people in, but it's really not a binary operation that we're talking about,
whether it's either a zero or a one in the computer operation of our
relationships. There's a great deal of complexity. But to say there's a great
deal of complexity doesn't mean there isn't an opportunity for clarity on some
of these issues.
I want to talk to you about the financing issue, which is a very sore wound, I
think, between the countries, and one -- although I don't think I'm
pollyannish about this -- one which has real problems but still one which is
quite open to resolution. You had some encouraging news - we all had some
encouraging news yesterday. A joint Saudi-U.S. action in the designation of
four offices of one of their largest charities, I must say a charity sponsored
by the royal family and one in essence overseen by fiduciars of the royal
family; these four offices in various places have been designated as
essentially fronts for terrorist activity, and they were designated jointly.
That's very, very encouraging news, and it's a very important indication of
joint resolve to try to attack a common problem, at least vis-�-vis al
Qaeda's conduct globally.
It's also one more step in a long litany of very positive developments between
both countries. Let me just tick them off so you get a sense of their breadth.
First, the establishment of charities oversight, since a great deal of the
money that goes unaccounted for and eventually gets diverted in outposts of
the world where NGO's are located, is a significant problem in the funding of
terror. Second, a bar on cross-border cash giving. Third, the requirement that
charities have single disbursement accounts so that there can be tighter
controls. Fourth, approval of the signatory over those accounts. Fifth, a
relatively new and sophisticated anti-money-laundering regime, legislation and
rules. Sixth, opening that regime to international audit recently by the
financial action task force. About two months ago a team went out there to
scrutinize those rules and to try to make suggestions about how to improve
them. Second, prohibiting and closing down unlicensed money exchange houses
and more supervision over the informal transfer houses known popularly as
halalahs. Sixth, actually no cross-border transfers unless licensed. I guess
that's a subset of what five was. Seven, the actual arrest of six, eight, or
10 significant financial facilitators within the peninsula who are identified
either to us or to the Saudi government by detainees as significant players in
the raising of money. Seventh, the designation of two prominent Jeddah
merchants over the last year and a half as having been too casual about what
transfers and transpires in their businesses, and therefore freezing their
assets. Lastly in this long list is the establishment of a joint task force
with federal officials in Riyadh. It was one of my last and most significant
official acts to actually pursue, with the benefit of compulsory process,
investigations of people within the peninsula for participating in terrorist
financing.
But there are two other measures which to me speak greater volumes for the
promise held here of jointly working on this problem. The first is a bar and a
ban on the collection of coin and currency today in their mosques. Now, just
take a step back for a second. Probably for more than 1,500 years in every
mosque in Saudi Arabia there's been a collection box. It's known as a qaddah
(ph), if I'm giving it the right pronunciation. And it's a place where people
make their own covenant with their own god, and it's actually a quiet,
private, secret act, and it's no business of the government to get involved in
it. But they, and we, found that these collection boxes were in the hands of
various al Qaeda cells, and therefore they had the potential of significant
unaccounted-for funds falling into the hands of terrorists, and they decided
that they would ban the collection of these coins and currencies. Now, you may
think this is a small matter, but small collections aggregated together pose
significant problems, not only in Saudi Arabia but throughout Islamic call
centers and schools and mosques throughout the Islamic world, and it's very
important to try to get control of unaccounted-for funds. This is a real sea
change, to actually make this change. It may be difficult to police, but its
symbolism cannot be understated.
The second is a nascent yet very important commitment to begin to vet clerics
and imams and what they teach, and what they do with the money that are given
to them and entrusted to them by their congregations. That started
domestically, and you've seen some recantations recently by some of their
clerics, people who previously championed openly terror but who've said they
see the error of their ways.
This is all the good news. I don't want to be totally pollyannish about this.
I'm still troubled and concerned about the relationship and about the effort
on terrorist financing, and let me give you a summary of those because time is
short.
The first is the action on Al Haramein simply took too long. It's been part of
a dialogue that's been going on a year. It's been part of a dialogue which has
been frustrated, actually, by lethargy and inaction. I don't know whether
people perished during the year of the dialogue, particularly in these four
jurisdictions, but we took these jurisdictions, and indeed other names of the
Al Haramein charity, to the Saudi government a long time ago, and we took it
because it was our strongest case for demonstrating that people who've used
the cover of NGOs and charity are actually underwriting terror in Indonesia,
in Tanzania, in Kenya, in Pakistan and elsewhere.
The second rather, to me, troubling statement - a statement that I will say
apparently the U.S. Treasury joined in yesterday in the official press
release, was that the Saudi government said they had no control over these
foreign offices of Al Haramein. Now think for a minute. Al Haramein is
established by the royal family. It strikes me that there's too much of an
abdication of actual power and responsibility when you say you do not have
control and the ability to actually close down these offices abroad, and the
best you can do is to freeze what assets they have within the jurisdiction and
to prohibit future contributions.
Second observation about the Al Haramein effort. It's the result of U.S.
information brought to the Saudis. They need to be incubators of information
themselves. They need to be initiators themselves of - in other words, they
need to be more pro-active.
Third, all the changes I ticked off for you are largely systemic and
structural changes and they are absolutely necessary, but none are sufficient
unless you get at the core issue of personal responsibility. And in the two
and a half years that I spent on this matter I cannot remember -- I cannot
honestly remember a single Saudi who has been held accountable for
participating and being a donor in terrorist financing. Until we get to the
issue of donors, the exercise is a fool's errand. Now, that's what's promising
about the joint task force that has been established between the Saudi
government and the U.S. government.
Let me get on somewhat more contentious grounds. I also don't think we get
ahead of the curve until it is a principle of our friends abroad that it's a
crime to give money to organizations that you know take portions of the money
to blow up school buses and to kill families, and who put a premium on
civilians. And today, even as I speak, during the Haj and during the
pilgrimage, Hamas is collecting significant amounts of money in Saudi Arabia,
if the past is prologue. And until we get a declaration that giving money to
the Hamas's of the world is just not acceptable and is culturally, morally,
and legally in violation of sharia or any other principle of conduct, we're
not going to make sufficient headway.
And by the way, prohibiting giving to the Hamas's of the world does not
prohibit giving to schools and libraries and the building of default civilian
governments in Palestine. It just puts political will and the capabilities of
the governments to the test of establishing surrogates or alternatives for
that giving. But we must actually have clear rules about prohibitions about
giving to organizations which actually openly champion on TV and the radio the
underwriting of terrorist conduct.
I actually have a prescription, but I won't share it because I'm getting the
hook here. I do want to reemphasize what I said in the beginning. At least in
the eyes of Americans and the body politic in America, this issue of whether
or not Saudi Arabia is one of the banks for terror needs to be resolved.
Otherwise, the relationship will be irreparably breached.
CHAS. W. FREEMAN: Thank you very much,
both for the excellent summary of what has been done and more particularly for
the challenge of what has to be done. I think it's fair to say that on the
Saudi side, the popular side, this is equally contentious. Views of Hamas in
Saudi Arabia and in the Arab world more generally do not coincide with views
in the United States, and while Europeans have recently agreed with us on
this, this remains a very contentious political issue. But I'm glad you raised
it, and we will look forward to hearing your prescription when we come to the
general discussion.
Click on a speaker's name to read a
transcript of the paper that each presented at the 35th Capitol Hill
Conference on U.S. Middle East Policy.
Speakers:
- David
Aufhauser
Former General Counsel, Department of the
Treasury
- Frank
Anderson
Former Chief, Near East and South
Asia Division, CIA
- David
E. Long
Retired U.S. Foreign Service Officer --
Saudi Arabia, Sudan, Morocco and Jordan
- Nathaniel
Kern
President, Foreign Reports, Inc.
- Hussein
Shobokshi
President, Shobokshi Development &
Trading; Managing Director, Okaz
Printing and Publishing
David Aufhauser was
general counsel of the U.S. Department of the
Treasury, March 2001-November 2003 before
rejoining Williams & Connolly LLP in
2004. While at Treasury, Mr. Aufhauser
supervised 1600 lawyers in the department's
banking & finance, international affairs and
enforcement groups, and in the Internal Revenue
Service, the U.S. Bureau of Customs, the Bureau
of Alcohol, Tobacco and Firearms, the Office of
Foreign Asset Controls, the Financial Crimes
Enforcement Network, the Office of Terrorist
Financing, the U.S. Mint, the Bureau of Public
Debt, the Financial Management Service, and the
Bureau of Printing and Engraving. Mr.
Aufhauser also served as the secretary's
representative on the Department of Justice
Corporate Fraud Task Force, and as the chairman
of the National Security Council's (NSC) policy
coordinating committee on terrorist
financing. Mr. Aufhauser also currently
serves as a Senior Fellow at the Center for
Strategic & International Studies. He
received his MBA from Harvard Business School,
his law degree from the University of
Pennsylvania, and his BA from Wesleyan
University.
Related
Items:
- "Ten
Reasons for Reforging the US and
Saudi Relationship," by
Anthony H. Cordesman, February 1,
2004, Item of Interest,
Saudi-American Forum
- "United
States-Saudi Arabian Relations in
Light of the Current International
Crisis" -- A joint
conference presented by California
State University, San Bernardino,
and King Saud University, Riyadh --
Summary by Mary E. Morris, January
29, 2004 - Item of Interest,
Saudi-American Forum
- "Re-inventing
Saudi Arabia: The View from
Washington," by John R.
Bradley, January 20, 2004 - Item of
Interest, Saudi-American Forum
- "Of
Virtue and Vice: The
Saudi-American Fight Against Terror
Financing," by Tanya Hsu
and Grant F. Smith, December 23,
2003 - SAF Essay #25, Saudi-American
Forum
- "Understanding
US-Saudi Relations: Challenging
Stereotypes - Amb. Chas Freeman at
SAIS," December 12, 2003,
Item of Interest, Saudi-US Relations
Information Service
- "Riyadh:
Rooting Out Al Qaeda," by
Edward S. Walker and Wyche Fowler,
November 17, 2003 - Item of
Interest, Saudi-American Forum
- "Saudi
Arabian Crown Prince Abdullah
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and Non-Muslim Nations,"
October 19, 2003, Item of Interest,
Saudi-US Relations Information
Service
- "Strengthening
Arab-US Relations: What is Required?
A Saudi View of the Palestine
Program -- Amr Khashoggi Talks About
Regional Political Dynamics,"
October 11, 2003 - Item of Interest,
Saudi-American Forum
- Ambassador
Chas Freeman -- A Relationship in
Transition, SAF Interview,
September 12, 2003, Saudi-American
Forum
- Saudi
Officials Take on Challenges in
the Media Prince Saud Al-Faisal and
Prince Turki Al-Faisal Respond to
Charges,
September 12, 2003, Item of
Interest, Saudi-US Relations
Information Service
-
Whither
Saudi Arabia? Three Authors Try to
Penetrate a Middle East Enigma,
by David Long, September 4, 2003,
Item of Interest, Saudi-US Relations
Information Service
-
Saudi
Arabia: Current Issues and
U.S. Relations Congressional
Research Service Issue Brief for
Congress, by Alfred B. Prados,
August 21, 2003, Item of Interest,
Saudi-US Relations Information
Service
-
Views
on the Saudi-U.S. Relationship, August
12, 2003, Item of Interest, Saudi-US
Relations Information Service
- "Common
Enemy: U.S. and Saudi Arabia Unite
Against Terrorists," by
John Duke Anthony, July 15, 2003 -
Item of Interest, Saudi-American
Forum
- Saudi-American
Relations Solid Despite Shock Waves
of 9/11, July 14, 2003, Item
of Interest, Saudi-US Relations
Information Service
- "Debunking
the 'Saudi's As Enemies'
Thesis," -- "The
Approaching Turning Point: The
Future of U.S. Relations with the
Gulf States," by F. Gregory
Gause, III [2nd in a series], May
21, 2003 - Item of Interest,
Saudi-American Forum
- "Saudi
Bombings Work Against Al
Qaeda," by Wyche Fowler and
Edward S. Walker, May 20, 2003 -
Item of Interest, Saudi-American
Forum
- "Saudi
Arabia: Don't Let Bin Laden
Win!," by Anthony H.
Cordesman, May 16, 2003 - Item of
Interest, Saudi-American Forum
- "In
the Eye of Yet Another Storm:
US-Saudi Relations and the Iraqi
Campaign," by Gregory J.H.
Dowling, May 10, 2003 - Essay #14,
Saudi-American Forum
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