CATF Reports Sep. 25, 2015, 4:44pm


The conference of the Union of Arab Banks held in Sharm el-Sheikh last week (September 17 – 19) brought to the public attention a shared concern in the world of banking and finance: no conversation on finance and politics in the Arab world seems able to transcend the issue of terrorism, even when the topic is consciously left out of the agenda. Wissam Fattouh, the Secretary General of the Union of Arab banks, told Al-Monitor that the Arab banking sector is exerting great effort to cooperate with international institutions and UN agencies in the field of fighting terrorism, but a structural problem stands in the way of a more efficient monitoring of fund movements in Arab countries. Many Arab citizens - Fattouh stressed - do not deal with banks and resort to cash exchanges for daily transactions, thereby evading any form of financial screening.

The lack of control over a significant portion of daily financial transactions in the Arab world may be one of the factors limiting the effectiveness of anti-money laundering and terror financing measures, but certainly not the primary one. After 9/11 most international efforts in the field of terrorism finance focused on bank transactions for a good reason. To mention one, al-Qaeda has provably funded its operations worldwide through international wires executed by banks, often to divert charitable contributions or to fund front businesses, as well as through remittances typically used by foreign workers to send funds home. In spite of Fattouh’s suggested approach, the implementation of a closer financial scrutiny by Arab and international banks must be regarded as a higher priority.

Qatar’s financial system deserves particular attention especially in the light of the increasing evidence of corruption related to Qatar being awarded 2022 World Cup. On May 27, 2015 the U.S. Department of Justice released the 47-count indictment that charged 14 defendants with “with racketeering, wire fraud and money laundering conspiracies, among other offenses, in connection with the defendants’ participation in a 24-year scheme to enrich themselves through the corruption of international soccer.” The FIFA corruption investigation brought up the central involvement of Doha Bank, another Qatari giant of Sharia-compliant finance.

The legal proceedings claim that Doha Bank authorized on or around July 14, 2011a $1,211,980 wire transfer from an account held in the name of Jack Warner – the Trinidad and Tobago former FIFA Vice President and one of the most visible faces in the ongoing FIFA scandal, who will face an extradition hearing in November - to a correspondent account at Citibank. The money was wired directly from a corporate account at Doha Bank in Qatar related to Walker’s company “Kemco” (Khalid Electrical and Mechanical Est).

According to The Telegraph, which uncovered and reported evidence of the payment in March 2014, the fund transfer would have been attempted more than once, and would have initially involved several intermediaries. The first effort to process the payment traces back to December 15, 2010, two weeks after Qatar won the right to host the tournament. A Kemco employee then issued a note requesting “Jamad” “$1.2?million in payment for work carried out between 2005 and 2010.” Jamad was one of the companies owned by the Qatari billionaire Mohamed Bin Hammam, a former high-ranking FIFA official who was banned for life in 2011 after FIFA found him guilty of attempting to bribe executives to support his presidential campaign. The note specified that the amount was “payable to Jack Warner,” and was supplemented by an additional $1 million (£600,000) paid by the Kemco to Mr. Warner’s two sons, Daryan and Daryll, and Walker’s personal assistant. According to the legal proceedings, however, the US bank “where those accounts were held refused to accept the funds.”

Only few days ago Doha Bank’s head of Public Sector, Khalid al Namma, received the “Bank of the Year Award” on behalf of the institution for its strong financial performance. There is no sign that the bank has suffered from its implication in the ongoing FIFA scandal. It would be reasonable to expect that allegations involving FIFA officials compelled internal investigations by the banks named in the indictment. Shortly after the release of the 47-count indictment Standard Chartered, HSBC and Barclays announced their intention to proceed to probe their transactions. Doha Bank did not follow suit, just like Qatar Islamic Bank never severed ties with a number of its extremely controversial correspondents, even after evidence of their involvement in terrorism funding activities was uncovered.

Qatar is facing growing allegations concerning its hosting of soccer's biggest event, and more is yet to come as a result of the U.S. and the Swiss parallel investigations. On September 15 U.S. Attorney General Loretta Lynch promised more charges against individuals and entities. In a recent joint appearance with Lynch, the Swiss attorney General Michael Lauber declared that the Swiss authorities had seized real estate in the Alps and identified 121 bank accounts in connection to the FIFA investigation. This morning Lauber announced the timely opening of criminal proceedings against Sepp Blatter, the longtime president of FIFA, for “suspicion of criminal mismanagement and suspicion of misappropriation” of funds.

No country has ever been stripped of the World Cup, but the ongoing investigation and the growing criticism involving Qatar on multiple fronts – from labor violations to corruption to its long history of supporting terrorism – may produce enough evidence to set a precedent.

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