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Israel's Secret War Against Terrorism's Financiers

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November 24, 2017

A new book explores Israel’s daring covert operations against terrorism’s enablers.

Mohammed al-Ghoul had no idea that loading cash-stuffed, leather suitcases into the trunk of his sedan would be one of the final acts of his life. Al-Ghoul was Hamas’s money man, responsible for distributing cash to the terror group’s members.

It was August 24, 2014 and the Gaza War wasn’t going well for Hamas. The Israeli Army (IDF) was wreaking havoc on the terror group, systematically knocking off its field commanders with unprecedented intelligence and accuracy. Hamas terror tunnels, some of which had taken years to construct, were being uncovered and destroyed by the IDF while the terror group’s rocket arsenal was dwindling rapidly.

But of even greater import for Hamas was the fact that its operatives weren’t getting paid. Some of its members hadn’t been paid for a month. Those that weren’t killed, wounded or captured began contemplating desertion. It was an untenable situation for Hamas.

Wiring money to Gaza wasn’t an option. Banks were on notice that wire transfers to the terror entity was a venture that carried high risk and little reward. But al-Ghoul had a plan that would provide a lifeline for Hamas.

Thirteen million dollars, secured from a friendly Muslim country, would be wired to the account of a moneychanger in Sinai. Once the moneychanger received confirmation that the funds were safely in his account, he would give a courier the cash. The courier would then smuggle it into Gaza via one of the many smuggling tunnels connecting the Gaza Strip to northern Sinai. Once in Gaza, the cash could be distributed to the fighters to stave off sagging morale and desertion.

Everything went according to plan. The courier delivered the cash to al-Ghoul, who along with his bodyguards began loading the trunk. Unbeknownst to al-Ghoul however, Israeli intelligence had been monitoring the entire sequence of events.

Lurking beyond visual range was an IDF AH-64 Apache Longbow armed with Hellfire missiles. A missile struck home instantly transforming al-Ghoul’s vehicle into a ball of flame and the car’s occupants into smoldering corpses. More importantly, most of the cash vaporized or otherwise became unusable. Hamas was unable to pay its fighters. Forty-eight hours later, Hamas, after losing 1,000 of its men, agreed to a ceasefire without a single of its demands being met.

Israel’s approach to combating terror has always been somewhat unorthodox but effective. The myriad of terror threats facing the Jewish nation is like no other in the world and compels those on the forefront of combating terror to adopt novel, cutting edge methods to defeat the threat. Harpoon, a new book co-authored by counter-terrorism expert Samuel Katz and human rights attorney Nitsana Darshan-Leitner, of the Israel Law Center, provides us with intriguing insight as to some of those unique but very effective strategies.

In the early-1990s a few maverick-minded security officials understood that cash was indispensable to organized terror networks. They argued for the need to set up a special task force dedicated to identifying and tracking sources of terror financing and methods employed by terrorism’s financial enablers. In 2001, Prime Minister Ariel Sharon sanctioned the creation of a special unit, code-named “Harpoon,” tasked to do just that. The unit was headed by Sharon’s old army buddy, Meir Dagan, who had held various security posts in the past and would end up becoming head of Israel’s vaunted Mossad intelligence organization.

The unit employed the usual muscle one generally associates with such security-related outfits but also employed forensic accountants, tax experts and lawyers to execute their counter-terror operations. Katz and Darshan-Leitner detail some of the more intriguing and complex operations executed by Harpoon including elaborate, Harpoon-orchestrated Ponzi schemes directed at terrorist organizations. One such scheme cost the Iranian-backed terror group Hezbollah hundreds of millions of dollars and sowed dissention among its rank and file. Another Ponzi scheme targeted Yasser Arafat’s PLO, costing the group north of $100 million.

In other operations, Harpoon was less circumspect. During the 2006 Second Lebanon War, at Dagan’s urging, the Israeli Air Force targeted Hezbollah’s treasury offices and several Lebanese banks that housed Hezbollah accounts or otherwise laundered their money. $100 million went up in flames. Two weeks later, Hezbollah agreed to a ceasefire.

Harpoon also unofficially partnered with an Israeli NGO called the Israel Law Center (Shurat HaDin in Hebrew). The Israel Law Center, headed by Darshan-Leitner, specialized in bringing lawsuits against terror groups, their state-sponsors and financial institutions that aided and abetted terrorism through money laundering and maintaining terrorist accounts.

Lawsuits were brought against Iran, Syria, North Korea, the PLO, Hamas, Hezbollah, the Amman-based Arab Bank, the Lebanese Canadian Bank (LCB) and other entities based on variety of legal theories including the Anti-Terrorism Act, the Foreign Sovereign Immunities Act, the Alien Torts Claims Act and even New York State tort law. Some of these lawsuits are still pending while others succeeded in extracting sizable sums from the defendants. Banks and other financial institutions suddenly became cognizant of the fact that doing business with terrorists could cost them a fortune and even bankruptcy. Other banks doing business with banks tainted by terror could also potentially be liable for damages as was the case with the New York-based American Express Bank, which acted as a correspondent bank for LCB and lost its jurisdictional argument.

Perhaps Harpoon’s greatest success was getting the U.S. government on board with the initiative. Harpoon partnered with the U.S. Treasury Department, the Department of Justice, the CIA and other sub-branches of the U.S. government to effectively tie up or seize terror funds. An Israeli source dryly noted that “the power of the U.S. Judiciary and other branches of government like Treasury wielded more force than a fleet of aircraft carriers.”

Harpoon reads like a fast-paced thriller but the James Bond-style operations executed by Israeli and U.S. operatives are not the stuff of fiction. They actually occurred and severely disrupted terrorist operations.

As a result of Israel’s actions, terrorists have now been forced to increasingly rely on hard cash to finance their operations. Banks even whiffing impropriety will immediately cease all contacts with the suspected party wishing to open an account, wire funds or engage in other seemingly innocuous business activity. This represents a break from the past and is a welcoming development but it opens the door to some disturbing questions regarding activities carried out by the Obama administration following the execution of the Iran deal in 2015.

In 2016, then Secretary of State John Kerry lobbied several large banks, including HSBC, to do business with Iran. He was firmly rebuffed by banking officials. The banks were cognizant of the fact that much of Iran’s economy, including its banking sector, is controlled by the Iranian Revolutionary Guard Corps and therefore sent Kerry packing. Why then did Kerry act in such an imprudent manner when it was patently obvious that Iranian banks, if given access to Western banks, would inexorably use those contacts for nefarious purposes?

Even more troubling is Obama’s 2016 transfer of $1.7 billion in cash to the Islamic Republic. The administration was certainly cognizant of the fact that Iran was constrained from wiring money to its terrorist proxy groups due to increased vigilance in the banking sector. The only method of currency delivery available to the Iranians was by physically transporting pallets of cash to the required destinations where the money would then be distributed to pay terrorist salaries and otherwise finance terror activities. Surely, Obama must have known that the $1.7 billion was not going to be used to build hospitals and schools. Indeed, the manner in which the Obama administration transferred the cash – in the dead of night away from prying eyes – lends credence to the notion that it was well aware of the consequences.

These are questions certainly worth exploring. In the meantime, Katz and Darshan-Leitner have done an admirable job providing readers with fascinating insight on the world of terror-financing and innovative methods used by Israel’s counter-terror and intelligence experts to successfully thwart terror-financing activities.