Edition: U.S. / Global

Funds for Terrorists Traced To Persian Gulf Businessmen

Published: August 14, 1996

Much of the financial support for terrorists who attack Americans, Israelis and others sympathetic to the West comes from wealthy individuals from Saudi Arabia and other Persian Gulf countries allied with the United States, former and current American officials say.

Over the last decade, the United States has focused its anti-terrorism efforts on state sponsors of terrorism, forbidding trade with countries like Libya and Iran. But officials said the emergence of sophisticated, privately financed networks of terrorists posed a new and even thornier set of diplomatic and legal challenges for Western governments.

American officials suspect that businessmen in Saudi Arabia, Qatar and the United Arab Emirates helped finance the operations of Ramzi Ahmed Yousef, who has been charged with masterminding the World Trade Center bombing in February 1993 and a plot to blow up 11 American airliners.

And American intelligence agencies are closely examining the activities of Osama Bin Laden, the scion of a wealthy Saudi family stripped of his Saudi citizenship in 1994 who finances a host of hard-line groups from Egypt to Algeria.

Officials in several countries, including the United States, say Mr. Bin Laden's money, as well as money he has raised, paid for terrorist acts in Europe, Africa and the Middle East against Americans and other Westerners.

The State Department, in a detailed document made public this year, called Mr. Bin Laden ''one of the most significant financial sponsors of Islamic extremist activities in the world.'' It linked him to terrorist training camps in Afghanistan and the Sudan and said he supported a group that tried to bomb American servicemen in Yemen in 1992.

In the three years before he was charged in the World Trade Center case, Mr. Yousef lived in a Pakistan guest house paid for by Mr. Bin Laden, according to the document. And the Saudi militants who killed five Americans last November in Riyadh said in their confessions that they had been influenced by Mr. Bin Laden's thinking.

Mr. Bin Laden, in interviews with other reporters, has denied any involvement in terrorism, but he could not be reached for comment today. Khaled al-Fauwaz, a spokesman for the Advice and Reformation Committee in London with which Mr. Bin Laden is associated, said he was ''proud'' to be his friend, and described the charges of supporting terrorism as ''rubbish.''

''There is no evidence I know of to support such charges,'' Mr. Fauwaz said.

The State Department's latest annual report on global terrorism touches briefly on the role played by individual financiers. But Philip C. Wilcox Jr., the head of the State Department's counterterrorism office, which prepared the report, recently told Congress that Hamas and Islamic Holy War -- two Palestinian fundamentalist groups based in the Middle East -- receive significant support from individuals in the Persian Gulf as well as in the United States.

Some contributors, Mr. Wilcox added, believe that they are underwriting legitimate charitable organizations. Others, he said, give money to radical groups knowingly through secret channels.

The bombing in Riyadh last year that killed five Americans and truck bomb attack this year on an apartment complex in Dhahran that killed 19 Americans have prompted Saudi Arabia and the United States to intensify their scrutiny of private backing of terrorism.

But the issue is delicate for both countries. In Islam, the line between giving to religious, as opposed to political, causes is often blurred.

For Muslims, giving to Islamic causes is part of a believer's religious duty. So while some supporters of Islamic-financed terrorism do so knowingly, many whose religious charity winds up in violent hands are unaware of what is done with their money.

While Americans may see aid for anti-Communist Afghan Muslims or Bosnian Government soldiers as moral, as opposed to support for Islamic Holy War and Hamas, ''in Islamic terms, it's all defensive and hence moral,'' a Saudi businessman said.

A Saudi businessman tried last year in Jordan on charges of financially supporting terrorism made that defense, arguing that neither he nor the religious school he financed in the Philippines was involved in terrorism. He was acquitted.

Identifying and taking action against individuals who support terrorist groups is much more complicated than moving against rogue states, American officials said.

The United States can ban suspicious visitors relatively easily. But seizing an individual's assets, a key tool in the war against drug traffickers, requires legal proof that is usually unavailable to those trying to combat terrorism.

The biggest obstacle to legal action, according to counterterrorist experts in and outside the Government, is the reluctance of intelligence agencies to share their information with other countries or law enforcement officials.

Much of the information about financing terrorists is gathered through electronic eavesdropping or by covert operatives with ties to the groups. The data are among the Government's most closely guarded secrets, and intelligence agencies have historically balked at making it public or even providing it to prosecutors.