Sunday,15 July, 2018
Current issue | Issue 1216, (2 - 8 October 2014)
Sunday,15 July, 2018
Issue 1216, (2 - 8 October 2014)

Ahram Weekly

Arab Bank liable for financing terrorism in US “show trial”

The breaking verdict is the first under the US Anti-Terrorist Act and parallels Israeli litigation targeting the Palestinian financial sector

Al-Ahram Weekly

A Brooklyn federal jury last week held the Arab Bank PLC, one of the region’s biggest financial institutions, liable for financing terrorism. The judgement has been viewed in the region as politicised. It is the first terrorism financing civil case to reach trial in the United States and hits at a bank with 600 worldwide branches, but more importantly, one that makes up a quarter of the Jordanian $26 billion stock market.

The US court verdict found the bank liable for providing material support to the Palestinian Islamic resistance movements Hamas and Jihad and said it must compensate 300 Israeli-American plaintiffs as victims — or relatives of victims — of “terrorism” in Gaza and the occupied West Bank between 2001 and 2004.

Hamas is designated a terrorist organisation by the US since 1997 but hailed in the Arab region as a movement that resists the Israeli occupation of Palestinian territories.

A new trial will determine the due compensation. Describing it as a “show trial”, Shand Stephens, a lawyer for the Arab Bank, said his client would appeal the verdict, which he expects will “be reversed in the Second Circuit”. The process is likely to take years.

The case against Arab Bank was filed in 2004 by Israeli-American plaintiffs seeking $1 billion in compensation from the bank they accuse of transferring more than $70 million from a Saudi charity organisation they claim is connected to Hamas to 11 Palestinian terrorists.

During the trial the bank denied the accusations but admitted to transferring the money for its client, the Saudi Committee, to provide humanitarian relief and not to finance terrorism, and that the payments weren’t made to listed terrorists.

The Arab Bank’s executive manager, Sobeih El-Masry, and others testified to this before the court, but their affidavits were brushed aside by the jury. In written testimony, Shukry Bishara — currently Palestinian finance minister and the bank’s former executive in 2001 — told the court that the payments were made to Palestinian families of martyrs and the injured at a time when Israeli-Palestinian violence was at a peak during the second Intifada (uprising). The funds were to provide “assistance to the Palestinian people,” he added.

In a statement, the bank said it was unsurprised by the court’s decision after a series of what it considered legally incorrect court rulings that kept it from mounting a proper defence, and effectively “put Hamas on trial”. The bank also said the verdict exposes banks such as itself to “enormous liability” for providing routine banking services.

In addition, the court gagged the bank by excluding many of its witnesses, severely restricting the ability of other witnesses to testify, and precluding all evidence of the bank’s innocence, the statement added.

The trial lasted six weeks with two days for deliberations. The verdict issued on 22 September immediately resonated in Jordan, a US ally, were the Arab Bank is based. The Amman stock exchange reacted to the news by shedding 0.5 per cent during last Tuesday’s trading session, on the back of a two per cent decline in the shares of Arab Bank, one of the market’s most active blue chips.

While the bank’s shares edged down after the verdict, a statement by Jordanian Central Bank Governor Ziyad Fariz expressing confidence in the strength of Arab Bank’s operations and compliance procedures, and its ability “to withstand the likely repercussions of this litigation”, limited its losses.

But as the case drags on, it continues to pose questions on the double standards of the US federal court system that allows for cases to be filed against Palestinians and Arabs under the Anti-Terrorism Act, while making it impossible for Palestinian-American victims of the Israeli war machine to do the same.

In an essay analysing the case, American-Palestinian legal scholar Noura Erekat explained that the US federal courts “have demonstrated an unwillingness” to challenge Israeli policies, “preferring to punt those questions to the Executive Branch instead” while consistently invoking “the political question doctrine to shield individuals connected to the Israeli government”.

Other more direct questions on the role of a bank in conducting extensive security investigations on all its clients, even if they’re not on terrorism lists, has been left without answers during and after the case. In closing arguments, mid-September, Stephens asked the jury, “Who decides who’s a terrorist?”

Quoted in The New York Times, Stephens said the plaintiffs “have accused, by my count, over 150 people, and 12 charitable organisations, and the Saudi Committee, of being Hamas-associated terrorists. They admit, by the way, that there’s no publicly available list of members in Hamas. They’ve concluded that these people are terrorists, and you are to as well.”

While the point was that the bank should not be expected to identify terrorists on its own, Gary Osen, one the plaintiffs’ lawyers, made press statements voicing what seemed to be the objective of the case: hurting the Arab Bank.

Quoted in The Wall Street Journal on 22 September, Osen said other banks and clients “would have to think twice about doing business with Arab Bank in the future”.

Meanwhile, other banks are being sued in the US over allegations of involvement in terrorism-linked transactions.

Lawsuits are pending in New York against Bank of China, which is accused of providing services to Palestine’s Islamic Jihad, and Credit Lyonnais SA, which is accused of aiding Hamas. Both banks have denied the allegations.

Also, the Second Circuit US Appeals Court in New York ruled Monday that Royal Bank of Scotland Group PLC’s National Westminster Bank must face claims by terrorism victims over banking services it gave a charity linked to Hamas.

Founded in Jerusalem in 1930, Arab Bank has long been committed to rebuilding the Palestinian economy. It was the first private sector financial institution in the Arab world.


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