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Stumbling down the money trail

Nada case shows complexity of tracking terror finances

By Henry Schuster
CNN

Editor's Note: Henry Schuster, a senior producer in CNN's Investigative Unit and author of "Hunting Eric Rudolph," has been covering terrorism for more than a decade. Each week in "Tracking Terror," he reports on people and organizations driving international and domestic terrorism and efforts to combat those.

Nada home
International authorities have threatened to seize Nada's home above Lake Lugano in Switzerland.

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(CNN) -- If you want to understand why it is difficult to investigate financial links to terrorism, consider the case of Youssef Nada.

His home, Villa Nada, perches hundreds of feet above Lake Lugano in southern Switzerland. Worth millions, the mansion is a testament to Nada's success as a businessman and banker. It's a long way from the poverty of his native Egypt.

But the United Nations wants to seize the house from its owner, whom it has designated as a terrorist financier.

No less than President Bush, in a November 7, 2001, speech, singled out Nada's companies for funding al Qaeda.

"Ours is not a war just of soldiers and aircraft," Bush said two months after the September 11 attacks. "It's a war fought with diplomacy, by the investigations of law enforcement, by gathering intelligence and by cutting off the terrorists' money."

The U.S. Treasury Department put Nada on its list of "specially designated global terrorists" that same day, freezing his assets and blocking him from entering the United States.

The Swiss have been investigating him since then.

Until last week that is, when the probe of Nada and his companies was halted.

"We had enough elements to open that investigation. We had enough elements to lead that investigation. We [had] too many elements to close the case earlier. But we didn't have enough elements to go to trial," said Jurg-Mark Wiedmer of the Swiss Justice Ministry.

The ordeal has caused strain and consternation in Washington and Bern as well as inside Nada's palatial home.

"It is a disaster. It is sad and bad," Nada said by phone this week.

Nada denies accusations

I visited him there more than three years ago, a few months after Bush's speech and after Swiss and Italian police had raided his house and office, seizing thousands of files.

He was a gracious host, ready to talk. Yes, he said with pride, he was deeply involved in the Muslim Brotherhood, the oldest of Islamist fundamentalist groups. He added that he handled the group's foreign contacts for 25 years.

But he strongly denied the allegations against him and his companies.

Nada says the accusations surfaced publicly in Italian newspaper Corriere della Sera in the late 1990s. The reports said Nada-al Taqwa, his Lugano, Switzerland-based management company -- along with other banks and financial companies in Switzerland, Lichtenstein, Italy, the Bahamas and elsewhere -- was sending money to the likes of al Qaeda and Hamas through charitable fronts. (Nada says he is suing the newspaper for libel.)

Of particular interest, a Bahamas bank -- Bank al Taqwa, which is controlled by Nada-al Taqwa -- included several bin Laden family members among its shareholders. The bank went out of business in 2000, but not before charitable contributions (the Islamic term is zakat) from some of its shareholders allegedly had been siphoned off to terrorist groups.

Then and now, Nada denies the accusations. The bin Laden link is overblown, he says, given that the relatives involved in the bank had cut off all relations with the al Qaeda leader in the early 1990s. "The bin Laden family is not [the same] as Osama bin Laden. Their business is not his," he says.

Nada insists money did not go to terrorist organizations, tying the bank's collapse to large losses during the mid-1990s Southeast Asian economic slump.

As he served tea during my 2002 visit, Nada expressed confidence that he would be absolved after Swiss, Italian and U.S. investigators pored through the mountains of documents.

U.S. officials said the opposite -- they were optimistic they could make a winning case against him in a Swiss court.

In late 2003, Nada's situation was highlighted in a U.N. report on al Qaeda. When the world body named him a terrorist financier, the Swiss government froze his assets.

Since then, he's claimed to be broke, while living in his luxurious villa.

Stuck in legal limbo

Fast forward to last week. As the Swiss Justice Ministry explains it, a decision was due: Charge Nada or end the investigation after 3 1/2 years.

While careful to give Nada the presumption of innocence, Wiedmer says the investigation is "suspended" but could be revived if new evidence arises.

Wiedmer says that even with all the documents the Swiss government has, it still doesn't have the records it needs from the Bahamas.

The U.S. Treasury Department still suspects Nada funded terrorists. The Swiss decision, a U.S. statement says, "does not in any way affect the designation of Youssef Nada as a supporter of terrorism or the freezing of his assets. The U.S. has a strong evidentiary basis for the designation."

That assessment leaves Nada in legal limbo. The Americans don't believe him, but apparently neither they nor the Swiss can prove a case.

Nada, 74, suffers from kidney and prostate problems, not to mention anxiety from the continuing scrutiny. He says he wants to know who misled President Bush and the U.S. Treasury, and he's willing to testify before Congress to clear his name.

Michael Chandler, who used to track terrorist financing for the United Nations, says he finds what's happened in Nada's case disappointing for those trying to follow the money in terrorism cases.

"If means can't be found to get at terrorist finance effectively, then it will pull the bottom out of the sanctions business," Chandler says.

In the meantime, Nada sits in his beautiful home, wondering if it will remain his.

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