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.
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