Blood from Stones : The Secret... | Buy

In the aftermath of 9/11, President Bush froze all terrorist assets in traditional financial institutions and money channels. But Al Qaeda and other terrorist groups have long followed a diversification strategy that has rendered the crackdown by the U.S. and other governments almost useless. Blood from Stones is the first book to uncover, through on-the-ground reporting, the interlocking web of commodities, underground transfer systems, charities, and sympathetic bankers that support terrorist activities throughout the world. As a foreign correspondent and investigative reporter for The Washington Post, Douglas Farah ventured into the dangerous and uncharted world of terrorist financing-a journey that took him across four continents. The information he gathered was far ahead of what U.S. intelligence agencies knew as they scrambled to understand the 9/11 attacks. In unprecedented detail, Farah traces the movement of money from the traffickers of "blood diamonds" in West Africa to the world diamond exchange in Belgium and homegrown money merchants in Saudi Arabia, Dubai, Karachi, and Lahore who turn cash into commodities and commodities into cash. He probes charities that siphon off money to pay for such essentials as false identification cards and safe passage for operatives. And he reveals how the funding of terrorist activities is integrated into the age-old hawala network, a trust-based system that has operated for generations across Arabia and Southeast Asia. Focusing on this critical aspect of the war on terrorism, Blood from Stones not only shows how terrorists are able to orchestrate complex and expensive attacks but also makes it clear why the war will be so difficult to win.

DOUGLAS FARAH spent seventeen years working as a foreign correspondent for The Washington Post and other publications and served as the Post’s West Africa bureau chief. Currently a member of the Post's investigative reporting team, he lives in Takoma Park, Maryland.

ACKNOWLEDGMENTS	xi
INTRODUCTION: The Money Trail	1	(8)
CHAPTER ONE: Blood from Stones	9	(27)
CHAPTER TWO: The Merchant of Death	36	(11)
CHAPTER THREE: The al Qaeda Connection	47	(16)
CHAPTER FOUR: Roots of the al Qaeda Connection	63	(21)
CHAPTER FIVE: The CIA Drops the Ball	84	(24)
CHAPTER SIX: The Golden Trail	108	(25)
CHAPTER SEVEN: "And Spend for God's Cause"	133	(29)
CHAPTER EIGHT: The Terrorist Treasury	162	(18)
CHAPTER NINE: Fighting the Last War, Losing the New One	180	(19)
NOTES	199	(16)
BIBLIOGRAPHY	215	(2)
INDEX	217

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CHAPTER ONE: Blood from Stones

I was doing my monthly expense reports at the Washington Post's West Africa bureau, based in Abidjan, Ivory Coast, on September 11, 2001. From Abidjan I covered some twenty countries in Western and Central Africa, traveling and writing stories on everything from wars to HIV/AIDS to politics and human interest stories. A friend called in the middle of the afternoon and asked if I was watching television. No, I laughed, I was doing my bookkeeping so I could get to my 5 p.m. tennis date. She urged me to watch, saying something very bad had happened. Stunned, I turned on CNN and watched as events unfolded.

In the following days the foreign desk at the Post was interested in anything and everything related to terrorism, but I didn't see how my beat, covering largely poor and obscure West African countries, fit into that. I knew thousands of Lebanese lived in West Africa, controlling much of the commerce and monopolizing the diamond trade. I also knew that most of the Lebanese community was Shi'ite Muslim but that there was also a sprinkling of Christians. My grandfather, a Christian born in Damascus, Syria, had migrated to the United States in the early 1900s. He was part of the same exodus from what was called Greater Syria that landed many Lebanese on the coast of West Africa.

From the beginning of my time on the beat I had heard rumors that radical groups from the Middle East used diamonds to fund their activities. But I had no idea that my beat was at the center of some of al Qaeda's most vital financial operations and that my story would land me there too.

In June 2001, all around the gutted town of Kono in eastern Sierra Leone, thousands of young men, dressed only in tiny strips of underwear and tattered T-shirts and armed with buckets and shovels, swarmed into streams and over hills of mud in search of diamonds. Working in teams, one group would dig up mounds of earth and gravel. Another group would move the mud to the round screen sifters held by others. Carefully, the gravel was washed in rivers and streams and examined for the precious stones. The difference between a piece of gravel and a rough diamond is invisible to the untrained eye.

In a frenzy of barely harnessed labor, some worked in narrow, deep pits surrounded by twenty feet of mud. Deaths from cave-ins were frequent. In the mad scramble, workers dug under the foundations of abandoned, burned-out houses, causing collapses. The intervention of recently arrived United Nations peacekeepers prevented a greater tragedy by halting the digging under the pylons supporting the only bridge that connected the region to the outside world. At the end of each day the miners, watched by heavily armed guards of the Revolutionary United Front, had to strip and wash every body cavity where a stone could be hidden.

The RUF had been founded in 1991 as part of the strategy of Libyan leader Mu'ammar Gadhafi to spread revolution across Africa. While claiming to fight to end to Sierra Leone's notorious corruption, the rebels had quickly degenerated into a brutal occupation force in parts of the tiny nation. It was an army that had neither a coherent ideology nor a revolutionary credo.

The rush on one of the world's richest diamond fields in the steaming West African tropics was spurred by strangers offering exorbitant prices for the better-quality stones. Few knew who the buyers were. The remote mining region had been under the control of the hermetic and brutal RUF since 1997, and few outsiders had been there in the previous four years. Long used to selling diamonds to outside buyers chosen by their secretive leadership, the rebel commanders on the ground didn't ask many questions. They just dubbed the new patrons "bad Lebanese," believing them to be part of the Lebanese diamond-buying network that had controlled diamond sales in that country for decades. The buyers were thought to be "bad" because they seemed to wield inordinate power and provided the rebels with large quantities of weapons in exchange for the stones.

Most of the miners were illiterate peasants, either combatants for the RUF or young men held as RUF slaves, a fate marginally better than that of their countrymen who had the misfortune to run into the rebels. Thousands of people, ranging from two-year-old children to grandmothers, had had their arms and legs hacked off by the rebels in the spasm of brutality that had rocked the impoverished nation for twelve years. Women were systematically raped and towns razed to the ground. Water tanks, electrical plants, hospitals, and schools were destroyed. The miners, handling diamonds worth tens of millions of dollars, were lucky to eke out enough rice for themselves and their families. The RUF claimed to want to build a rural, agrarian utopia and end the power of the small, ruling, urban elite. The rebels promised an end to corruption. But they were incapable of winning large-scale military victories or the backing of the people, so the RUF turned to terror to maintain order in the areas it controlled.

The RUF supervisors were not happy to see me and my driver, Issa, that June day when our Land Rover appeared in the warm tropical drizzle. It had been a long eight-hour trek from the capital of Freetown, over once-paved highways that were now overgrown by jungle, littered with burned-out vehicles, and cratered from bombing. Once the nation's main artery, the road ran through what had been Sierra Leone's breadbasket, past the abandoned fields and destroyed homes, the acres of derelict palm tree stands, grown for their palm nut oil, and overgrown rubber tree lots.

Just as the road emerged from the lush green hills onto a flat plain, we stopped beside a large group of miners near the town of Koidu. Stunned by the swarming laborers, I got out and began taking pictures.

I was among the first foreign journalists to travel by road into the diamond fields as a fragile UN-brokered peace agreement was taking hold in Sierra Leone. The agreement was monitored by 16,500 UN troops on the ground, the biggest such peacekeeping force in history. While the UN troops were fanning out across the country, a Pakistani unit had helicoptered into Kono just a few days ahead of me and was still setting up its camp.

Vehicles of any sort were rare on the strip of potholes turned to mud that passed for a road to Kono. As we ground our way through the low hills and broad, shrub-covered savannah, the sight of our mud-covered jeep brought all activity to a halt. Children would point and shriek in amazement "Oputu," meaning "white man," at me as we passed. Hardly a house had been left standing, and the few people who remained in the area during the war looked gaunt and haunted.

I barely had time to take off the lens cap after we stopped when a young man in wraparound shades and an AK-47 assault rifle slung over his shoulder yelled at me to stop. Yelling in Krio, the patois spoken across Sierra Leone, the boy kept pointing and grabbing my arm. My driver Issa translated. Just down the road an RUF officer calling himself Major Nikol, wearing a denim vest and red baseball cap, sat at the foot of one of the few trees still standing. One of his young bodyguards held an umbrella over his head. The major had ordered us brought to him. He demanded to know who I was and why I was taking pictures. He scowled when I told him I was a reporter for the Washington Post. "During the war we took journalists like you into the bush and they did not come back," he said in a heavily accented English laced with Krio. As he spoke in a rumbling, deep voice, he drew one of his enormous, callused fingers across his throat with a thin smile. "But now that we are having peace, you are welcome." However, he said, pictures were not.

He proudly said that most of those I saw mining were his war captives, working as slaves. He said the RUF was mining more diamonds than ever before. Then the major harangued us with a sermon equating RUF founder Foday Sankoh--a barely literate cashiered army corporal whose revolutionary strategy consisted primary of abducting children and turning them into killers--with Nelson Mandela. God had chosen Sankoh to bring justice to Sierra Leone, Nikol said. RUF thugs temporarily abandoned their positions to crowd around and glimpse the outsiders, especially the white one. Workers took an unauthorized break to watch the scene.

As the major lectured us, the sullen combatants stared at us, gauging our response. I sensed the precariousness of our situation. Issa, who I trusted and had often worked with in delicate situations, sensed the same thing and knew what to do. Even though he hated the RUF, he began vigorously nodding his head and saying, "Yes, yes, that is true." My more muted response drew stares from the unblinking eyes behind the cheap plastic wraparound sunglasses. So I soon chimed in with Issa, sounding like the Amen choir in a Pentecostal church as the major rambled on.

We agreed the RUF was the world's premier revolutionary force. We accepted that Sankoh was a divine messenger. We cheerfully conceded that all that had been reported about RUF atrocities by the BBC--the only outside news, via shortwave radio, that the RUF had access to--was a pack of despicable lies. After forty minutes, satisfied that we understood each other, Major Nikol shook my hand and pronounced us "bosom friends forever." But he had a favor to ask.

"I want you to get me a visa to the United States," he said. "That is where I want to live." I promised to use my personal influence with President Bush in repayment for his hospitality, but said I still needed to take pictures. He reluctantly agreed I could take five, but only after I threw a pack of cigarettes and the equivalent of one dollar into the deal. I waded out into the mud while the major held an umbrella over my head. I shot until I sensed he was getting uneasy, then retreated to the jeep amid handshakes and hugs from the major and his entourage. Issa already had the engine running. He barely waited until I was seated before hitting the gas.

The mysterious buyers in the summer of 2001 were only the latest actors in the saga of West Africa's blood diamonds. Among the wars that have been largely tugs-of-war over rich diamond fields are the especially brutal, interwoven conflicts in Sierra Leone and Liberia.

In most places, diamond fields require a substantial investment before mining can commence, and the extraction process is expensive. In Sierra Leone and Liberia the diamonds wash out of the riverbeds. The only investment necessary is about $15 for a shovel and "shake-shake," a simple screen sifter to sift the gravel. Control of these diamond fields almost automatically means easy access to great riches.

But in recent decades the diamonds have brought little wealth to the people of Sierra Leone. Instead, they have benefited profiteers such as warlord turned president Charles Taylor in neighboring Liberia. Taylor was urbane, U.S.-educated, and had a penchant for finely tailored suits, silk ties, and calling visitors "my dear." Liberia, settled by freed U.S. slaves in the nineteenth century, shares an extensive, porous border with Sierra Leone that runs through the diamond fields. Years ago, Taylor set out to exploit his neighbor's riches. A graduate of Bentley College in Massachusetts, Taylor had led an army in Liberia's civil war, where he honed the practice of using children as cannon fodder by forming SBUs, or Small Boy Units, for his savage military campaigns against his rivals.

Taylor got his start in Liberian politics while serving as chief procurement officer for the corrupt, U.S.-backed government of Liberian president Samuel K. Doe. Taylor absconded with $900,000 in Liberian government money and headed to the United States. At the request of the Liberian government he was arrested and imprisoned in Somerville, Massachusetts, in May 1984. But fifteen months later he mysteriously escaped from the Plymouth House of Corrections and made his way back to Liberia to lead the revolt that toppled Doe. His prison escape, which he has hinted was carried out with the collaboration of the CIA, greatly enhanced his aura in Liberia as a "big man," or a person protected by a great foreign power. In a nation constantly at the mercy of world powers, especially the United States, this myth was a valuable asset.

In the ensuing years Taylor's government became a functioning criminal enterprise, exploiting Liberia's natural resources of diamonds, gold, and timber for the enrichment of Taylor and his closest cronies. In the process, he turned Liberia into a pariah state. Taylor, his family, and all senior government officials in Liberia have been banned from international travel by the United Nations. In June 2003 a special UN-backed court indicted Taylor for crimes against humanity, making him only the second sitting head of state, after Slobodan Milosevic, to suffer that fate.

On August 11, 2003, with armed rebels closing in on the capital and the country near starvation, Taylor departed for a gilded exile in Nigeria after turning the government over to his vice president and longtime confidant, Moses Blah. As a jet loaded with luxury cars and household goods sat on the tarmac to carry him, Taylor issued knighthoods for his cabinet and closest friends. "God willing," he said ominously, "I will be back."

Taylor and his family will face little hardship in exile. While his country wallowed near the bottom of the UN index on infant mortality, life expectancy, education, and health care, Taylor, his family, and his business associates had hidden millions--and perhaps billions--of dollars in foreign bank accounts. An investigation by the London-based Global Witness, a nonprofit organization that focuses on natural resource exploitation and governments, found the Liberian government had stashed some $3.8 billion in Swiss bank accounts.

Taylor loves to put on a show for visiting U.S. officials and journalists. My interview with him at the Executive Mansion on January 19, 2001, was typical. First, I waited for several hours in a small dark downstairs office containing a desk, a worn-out sofa, and broken chairs. I was dozing on the couch when the door burst open and several burly men in ill-fitting suits with pistols stuck in their waistbands ushered me upstairs. Most of the lights were out, but a generator kept one elevator operational and one wing of the building well-lit. As I entered a narrow wood-paneled room Taylor, dressed in a fine dark suit and matching tie, sat in a large wooden chair. My chair, opposite his, was straight-backed and austere, surrounded by TV lights that were not yet turned on. The room was crowded with several dozen officials and hangers-on, eager to see the day's entertainment. They milled around excitedly, trying to get close to Taylor or make a witty remark that would catch his attention, until television lights went on and the show began.

Excerpted from Blood from Stones: The Secret Financial Network of Terror by Douglas Farah
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