Key figures in local trust were investigated for possible terror financing, but trust itself was spared serious scrutiny
by Kent Heiner
February 3, 2005
In March 2002, Phelps McIlvaine of Bellingham’s Saturna Capital told the Wall Street Journal that he was confident that Amana Mutual Funds Trust, managed by Saturna, was not tied to terrorism. One might wonder why McIlvaine thought it necessary to make this statement and how this valued local institution came to be mentioned in the context of terrorism.
But before addressing those questions, it may be useful to go back to the year of Amana’s beginnings. In 1984, covert financial networks were needed to launder the money flowing from the U.S. government to the Muslim rebels fighting against the Soviet occupation of Afghanistan. One strategic initiative was the use of Islamic charities as intermediaries to disguise the true sources of funding. The now-infamous Islamic banking entity known as BCCI also began cooperating closely with the CIA in 1983-84. BCCI founder Agha Hasan Abedi and CIA Director William Casey met several times in the mid-1980s as BCCI financed CIA operations in Afghanistan and Pakistan, acted as paymaster, and handled arms transactions.
Though likely coincidental, it was in this historical context that in 1984 University of Chicago MBA and Bellingham native Nicholas Kaiser was approached by the North American Islamic Trust (NAIT) with an idea. At the time, there were few investment options to serve a growing market of American Muslims. Islamic law forbids, among other things, the earning or paying of interest. Cooperating with the NAIT, Kaiser formed Amana Mutual Funds Trust, which began operations in 1986 and moved from the midwest to Bellingham in 1989. The company takes its name from an Arabic word meaning “trust.” As well as shunning interest-bearing investments, Amana also takes great care to avoid “vice” industries such as alcohol, gambling and pornography. This pioneering service is highly valued by its investors, some of whom are Bellingham residents.
Amana also offers to calculate for its customers the amount of Zakah, or alms, due as a result of earnings. Alms-giving is one of the five “pillars,” or basic principles, of Islam. The Koran teaches that Zakah is to be given, for example, to the needy or to debtors. It also allows Zakah to be paid under a broader category of “in the cause of God” (fi sabili illahi). The Amana Funds web site (www.amanafunds.com) offers more specific guidance on the subject:
“The last category, fi sabili illahi, is broad to allow Zakah funds to be used for the general welfare of the community. Under this category, considering the fact that our Islamic and community centers promote Islam and in many ways act as dawah centers, a portion of one’s Zakah may be paid to these centers. Zakah funds may also be used for education of the people and for promotion of Islam and the ummah.”
The “cause of God” can of course be broadly interpreted. Christians, Jews and Muslims all share a common heritage of incidents in which the faithful believe they are serving God by destroying unbelievers. In all three cases, these faiths have matured to a level of greater tolerance, but there are some groups who still use the old ways to justify their violence. In the specific case of Islam, religious schools receiving charitable donations are sometimes centers for indoctrination and training of mujaheddin, or religious fighters.
Though Amana Funds does send a statement to its investors on the appropriate amount of Zakah to be paid, it does not make the donations on behalf of its investors. Nor does it have an influence which charities receive the money, Kaiser says.
During the 1980s, donations to Islamic charities were not regarded as a great problem in the United States; on the contrary, they were considered a valuable means of clandestine support for the mujaheddin in Afghanistan. Shortsighted American policy extended even to the encouragement of Islamic extremism abroad. But the Afghan resistance evolved into al Qaeda, and Islamic extremists became so encouraged by their victory over the USSR that they became determined to bring down the United States as well.
In the wake of 9/11, federal attention on Islamic charities increased sharply. In March 2002, the FBI raided offices and private residences connected to what the Treasury Department dubbed the “Safa Group,” a closely-connected group of charities and businesses headquartered in Herndon, Virginia. Warrants were granted on the basis on an affidavit filed by Customs agent David Kane, who alleged that the interlocking officers of these entities and the extremely convoluted money transfers among them were indicative of money laundering. More than three dozen Safa Group companies were being run out of a single office. There was no evidence of fundraising, yet – according to Kane – large sums of money flowed from one paper entity to the other before being transferred offshore to corporations controlled by M. Yakub Mirza, who had helped create Amana Mutual Funds Trust and was the principal signatory on Safa Group checks. False or incomplete information was filed in the group’s tax forms, Kane said.
Most alarming of all, Kane described connections between the officers of these companies and alleged fronts for the terrorist organizations Hamas and Palestinian Islamic Jihad (PIJ). The Safa Group raids were an outgrowth of a years-long investigation into the possible terrorist connections of Sami al-Arian, a computer science professor at the University of South Florida. Al-Arian’s home and offices were searched in 1995 amid suspicions that he was helping to fund Hamas and the PIJ. According to Kane’s affidavit, a deposit slip was found at al-Arian’s home for a $15,000 check which had been signed by Mirza, the Safa Group figure who was until 2003 the chairman of Amana’s board of trustees. Correspondence was also found from Taha J. al-Alwani, Amana Funds’ religious consultant, which expressed solidarity with al-Alwani and several prominent PIJ figures on behalf of the entire Safa Group. Amana trustee Jamal Barzinji was mentioned by name. These “Safa Group” connections to al-Arian were cited in Agent Kane’s affidavit as justification for the 2002 raids. Al-Arian himself was finally indicted and arrested in early 2003.
Although Amana Funds was not itself the subject of the 2002 raids, Amana was mentioned by name in Agent Kane’s affidavit, and Amana figures were very prominent in the investigation. Among the targets of the raid were three of Amana’s six trustees (Mirza, Barzinji, and Iqbal Unus) as well as its religious consultant, Taha J. al-Alwani. A fourth trustee, Samir Salah, was listed in Kane’s affidavit, but a warrant was not sought for the search of his home. The Herndon residences of the four other men were searched, as well as the Herndon office shared by Salah, Mirza, and Barzinji. Mirza drew the most attention in the press, and the December 2002 FBI investigation of Ptech, a Mirza-connected software firm, cemented Mirza’s misfortune as the most notorious of the group. One of Ptech’s major investors was Yassin Qadi, named by the Treasury Department in 2001 as a Specially Designated Global Terrorist. Mirza and Barzinji, who had both served on Amana’s Board of Trustees since its inception, left Amana by early 2003. Unus and Salah continue to serve on Amana’s board. Amana’s member services consultant, the Islamic Society of North America, was another of the scores of businesses sharing the raided office.
The Amana connection to the March 2002 raids was noted in Bellingham’s local press, but the true scope of the connection was not yet apparent. In “Bellingham firm has link to wealthy investor raided by FBI” (Bellingham Herald, 3/22/02), Mirza alone was reported as a target of the raids.
Looking at the board members and officers in Amana’s past, one finds the names of Bassam Osman (trustee until 2001) and M. Naziruddin Ali (Vice President until 1999). Ali’s name appears on a classified FBI terrorism suspect list circulated in 2002 by the Anti-Money Laundering division of the Italian Foreign Exchange Office. The name “Bassan Osman” appears as well. Osman’s first name may be misspelled, but the age and nationality on the suspect list match that of Amana’s former trustee. The North American Islamic Trust (which was instrumental in Amana’s creation and of which Ali was General Manager) is also listed. Although the list in most cases provides one or more addresses for the suspects, the addresses for Ali, Osman, and the NAIT are missing from the list, as if their whereabouts are or were unknown.
The classified list, labeled “Law Enforcement Sensitive,” was leaked on the internet and was apparently authenticated by Christopher Bollyn for American Free Press. AFP contacted Assifact, the Italian financial institution which was the apparent source of the leak. "If we deal with anybody on this list, we are obliged to notify the authorities," Assifact said. AFP also inquired with the FBI, who responded, "We're not going to validate your questions by talking about the list. You are not supposed to have it. It is not for public consumption."
To put this in greater perspective, however, it must be noted that being a suspect does not mean being a fugitive, much less being guilty. Dr. Osman (the former Amana board member, not necessarily the FBI suspect) continues his years-long practice as a neurologist at a Chicago-area hospital and was recently listed as Chairperson and President of the Dow Jones Islamic Index Fund, a position he has held since 2000.
Although Amana Funds is filed with the Securities and Exchange Commission at 1300 North State Street, you won’t find a sign for Amana Funds at that address, nor will you find their street address on their web site. That’s because their day-to-day operations are handled by Saturna Capital Corporation and Saturna Brokerage Services at that same address. Nicholas Kaiser is the Director and President of Saturna, which he founded upon moving to Bellingham in 1989. Although the March 2002 raids included locations in Virginia and Georgia, no warrant was sought for this Washington office and Kaiser confirms that it was not searched. Though the majority of Amana’s current and former trustees have been suspects in one or more federal investigations, Amana itself does not seem to have merited such attention.
Last year, Harper’s magazine reported that Treasury agents chose not raid Amana despite “large sums of money” which had been moved through Amana by “suspect groups.” (Harper’s, March 2004, “Charity cases: Why has the Bush Administration failed to stop Saudi funding of terrorism?”) No such flow of money between Herndon and Bellingham was described in Agent Kane’s 2002 affidavit, and author David Armstrong’s source of information for this allegation remains unknown. Neither Armstrong nor Harper’s public relations department could be reached for further comment. When contacted asked about the article, Amana trustee Nicholas Kaiser said he was unaware such an allegation had been made. “I have no idea where they dreamed that one up,” he responded. The Securities and Exchange Commission and the IRS would have access to the information necessary to investigate that possibility, but investor information is private and not available to reporters.
Why was Amana Funds overlooked in 2002? The simplest and most likely explanation is that no money trail led there, even though the personal connections were many. Yet Armstrong in the above-mentioned article offers an alternate explanation which revolves around one Amana trustee’s connection to the White House and a meeting between this trustee and the cabinet official in charge of the Herndon raids:
“Just two weeks after the Customs task force raided the Saudi-backed groups in northern Virginia, two leading Muslim activists with ties to the groups were allowed to meet with Paul O'Neill, then the secretary of the Treasury Department (which, at the time, controlled Customs) to complain about the conduct of the raids. . . . One of the Muslim activists who met with O'Neill was Talat Othman, a longtime friend and former business associate of President Bush. The two served together on the board of the Texas-based oil company Harken Energy starting in the late 1980s and have remained close ever since. . . . Othman serves on the board of Amana Mutual Funds Trust . . . “
No charges have been filed as a result of the March 2002 “Safa Group” raids. Was there no evidence of wrongdoing by the targets of the raids, or is the case merely progressing slowly, as it did in the eight years between the search of al-Arian’s home and offices and his eventual arrest? The FBI denies that it still investigating, although prosecutors say the case is still being pursued, according to a 2004 article in the Atlanta Constitution-Journal.
Investigation of Islamic financial institutions remains a politically sensitive problem not only because of potential accusations of religious discrimination but also because of financial ties between the powerful on both sides of the Bush administration’s “War on Terror.” Furthermore, the roots of today’s terrorist financing organizations often lie in U.S. government policy. Since ordinary citizens are not made privy to the processes by which decisions are made regarding which institutions to target for investigation, the question of whether the right decision was made in Amana’s case is a matter of trust or suspicion.