23-Sep-14: Arab Bank terror funding case raises side-issue about what the US knew and when

From the home page of a prominent
New York legal affairs website [source]

As we wrote here yesterday ["22-Sep-14: Arab Bank found liable today for knowingly supporting terrorism"], a long-running civil litigation matter reached a decision in New York on Monday with a jury finding that Arab Bank is liable to the victims of Hamas terror attacks.

Media sources are calling this the first instance of a financial institution being held civilly liable for supporting terrorism.

The Jerusalem Post sums it up today:

The Arab Bank trial took place in a federal court in Brooklyn for the last five weeks and revisited some of Hamas' worst terror attacks, including the August 2001 Sbarro suicide bombing in Jerusalem killing or wounding 130 and a range of 24 horrid terror attacks during the Second Intifada. 297 plaintiffs who were injured or are family members of those murdered in the 24 terror attacks from 1998-2004 financed via Saudi Arabia and Hezbollah’s al-Shahid Foundation sued the bank in 2004 for allowing itself to be used as a conduit for the terror funds.

Along the way, the US Supreme Court was petitioned. It and/or other appellate courts may yet be involved again if Arab Bank appeals the verdict, as its lawyers say they will. In addition, the US Departments of State, Justice and Treasury were subjected to efforts by the Kingdom of Jordan [as we wrote: "23-Apr-14: Litigation against bank accused of funding terrorism is "splitting" US government"] relating to the Arab Bank litigation.

Jordan told the US Supreme Court that Arab Bank is so crucial, that a billions dollar judgment that tanks the bank could lead to economic and political instability and devastation, possibly damaging crucial US-Jordan counter-terror cooperation. Commentators have written that if Arab Bank was held liable for being a conduit for funds which eventually reached terrorists, the precedent could shake the international banking system to its foundations as many major banks may use their size and looking the other way to dabble in such transactions. [Jerusalem Post today]

One of the attorneys representing the plaintiffs says the implications go beyond banking:

“Every bank, every company and every government in the world now has to decide whether it is willing to continue doing business with an institution proven to have knowingly supported terrorism,” [Gary M. Osen] said in a statement.[Financial Times, London, today]

Evidence put before the court by the plaintiffs showed how Arab Bank served as the conduit for a Saudi Arabian charity created in October 2000 called the Saudi Committee in Support of the Intifada Al Quds. The plaintiffs asserted that the people receiving money at the far end of that conduit were the families of Palestinian Arab human bombs and prisoners. For its part, Arab Bank does not agree with that characterization, and has said (and created a website to say it more clearly) that

"The Saudi Committee is an internationally recognized humanitarian organization sponsored by the government of Saudi Arabia. Specifically, the Saudi Committee was established to provide relief to thousands of families in need, including widows, orphans and those who were wounded, left homeless or lost wage earners..." [From "Arab Bank Facts"]

It turns out that the US government view things differently. It warned the Saudis about the Saudi Committee's true nature eleven years ago. But that fact itself was evidently not known. The Jerusalem Post article describes what happened next:

According to an unclassified U.S. State Department memorandum released after the jury [in the Arab Bank litigation] began deliberations, “In 2003, the United States provided evidence to Saudi authorities that the Saudi al Quds Intifadah Committee (“Committee”) founded in October 2000, was forwarding millions of dollars in funds to the families of Palestinians engaged in terrorist activities, including those of suicide bombers.”

“The timing of the State Department’s disclosure raises deeply troubling questions,” said Plaintiffs’ trial counsel Michael Elsner, who requested the records. “Obviously, the jury reached the same conclusion about the Saudi payments in finding Arab Bank guilty for its support of Hamas, but this last minute disclosure of this evidence six years after we requested it and hours after the jury began its deliberations is telling." 

"We don’t expect the State Department to take sides in a civil case, but by withholding critical evidence until the jury began its deliberations, the State Department continues its unfortunate pattern of siding with foreign interests against American victims of terrorism," said Elsner.

To clarify: the plaintiffs' lawyer asked the State Department in 2008 what the US government knew about what the Saudi Committee had been doing. The State Department reply took six years to arrive. And - entirely by coincidence we have to assume - the reply reached the lawyers this past Friday, just hours after the jury in the Arab Bank case had retired to consider its verdict.

There are more details about this in a Reuters piece published yesterday: "Did U.S. State Department hide document to protect Arab Bank?" Other than that, the matter appears to have gotten almost no news coverage.

If the State Department has anything to say in response about what the Jerusalem Post article or the Reuters piece say, we will write about it here. We ourselves don't have a great track record in getting them to respond to anything we ask [see for instance "14-Sep-13: Memo to Secretary of State Kerry: Your staff need some urgent guidance"; and "29-Dec-13: Tweeting with the State Department"], and we have certainly been asking.

Still, this might yet become an issue that produces a reaction. We'll be watching.