Well Connected, A Saudi Mogul Skirts Sanctions

by Glenn R. Simpson
WALL STREET JOURNAL

ISTANBUL, Turkey -- Yassin Qadi is a well-known multimillionaire, founder of a large supermarket chain here and a close friend of the Turkish premier. "I trust him the same way I trust my father," Prime Minister Recep Tayyip Erdogan said on national television last year.

But the Saudi businessman also is a major financier of Islamic terrorism with close business associates who are members of al Qaeda, according to the U.S. Treasury and the United Nations Security Council. At Washington's request, the Security Council ordered Mr. Qadi's assets frozen a few weeks after the Sept. 11, 2001, terrorist attacks in the U.S.

The asset freeze has largely crippled Mr. Qadi's international business empire. But previously undisclosed records show he has managed to free up millions of dollars of holdings in Turkey, in apparent violation of the Security Council sanctions -- and without incurring punishment by Turkish authorities.

The case of Mr. Qadi shows the challenges Washington faces in separating friend from foe in the Islamic world. The records detailing his business activities also suggest how easy it can be to skirt sanctions designed to restrict funding of terrorism -- especially for well-connected figures.

Mr. Qadi's friendship with the prime minister also plays into the growing debate in Turkey over the role of Islam in a secular society. Turkey's Parliament for the first time yesterday elected a politician with an Islamist background, Foreign Minister Abdullah Gul, to the presidency. Immediately after being sworn in, Mr. Gul pledged impartiality, saying, "Secularism -- one of the main principles of our republic -- is a precondition for social peace." But the development nonetheless has heightened concern about the direction this pivotal nation, poised between East and West, is taking.

Within Turkey, a Muslim nation of 70 million with a constitutionally mandated secular government, the role of Islam has been the subject of intense debate in recent years, as rising religious sentiment clashes in some quarters with the country's longstanding commitment to secularism. Mr. Erdogan and his Justice and Development Party are broadly popular, but their Islamist roots draw criticism and provoke controversy, especially among critics in the military.

Amid this debate, Mr. Erdogan has been blasted for his ties to Mr. Qadi by political opponents in Turkey and some conservatives in Washington, who say the Turkish government has a hidden Islamist agenda. Mr. Qadi -- who lives near the Red Sea city of Jidda, the Saudi business capital -- denies all links to terrorism and says his U.N. blacklisting is unjust. Officials of Mr. Erdogan's Justice and Development Party and aides to the prime minister didn't respond to requests for comment.

Pro-Western Rule
Since coming to power in 2002, the Justice and Development Party has run one of the most pro-Western governments to rule Turkey. It has encouraged a Western-style market economy and made painful overhauls in a bid to join the European Union. The party just won an overwhelming new mandate in parliamentary elections.

But tensions are likely to persist. U.S. diplomats lodged strong objections last year when the Erdogan government intervened in Turkish courts to try to lift the freeze on Mr. Qadi's Turkish assets, according to U.S. officials. The Turkish government reversed course.

"That Erdogan personally vouches for this man...raises the possibility that the prime minister of Turkey is far less interested in combating terrorism than he says," said former Defense Department aide Michael Rubin, a conservative critic of the Turkish government who has close ties to top officials in the Bush administration.

The cosmopolitan Mr. Qadi is an architect by profession who trained with the Chicago-based firm Skidmore, Owings & Merrill in the 1970s. He speaks fluent English and has a son who is an American citizen. Mr. Qadi, whose own father belonged to Jidda's business elite, inherited several million dollars in 1988. He also married into money by wedding a member of the Jamjoom family, one of Saudi Arabia's leading business clans, and is now an influential business figure whom the Saudi media and other Saudi businessmen often defend against U.S. and U.N. terrorism allegations.

The sanctions prohibit international travel by Mr. Qadi, a longtime globe-trotter. It is unclear whether his assets are frozen in Saudi Arabia, which some U.S. officials and private-sector experts claim has failed to take action against powerful business figures suspected of supporting terrorism. In an effort to reclaim his reputation, Mr. Qadi has filed civil suits in the United Kingdom, Switzerland, Turkey and other countries. He has also submitted voluminous briefs to the U.S. Treasury in Washington. All of these efforts have been unsuccessful to date.

Mr. Erdogan has defended his friendship with Mr. Qadi, saying the Security Council's terrorist blacklist doesn't prove someone is a terrorist.

Guy Martin, a London-based lawyer for Mr. Qadi, called his terrorist designation "a gross and ongoing miscarriage of justice."

Mr. Qadi, whose business empire is based mostly in Saudi Arabia, is a longtime partner of Turkish businessman Cüneyd Zapsu, as well as other key Justice and Development Party figures. Over the past year, Turkish media and opposition leaders have disclosed that Turkey's financial police investigated the activities of Mr. Qadi and alleged al Qaeda supporters in Turkey. That led them to delve into the relationships of Mr. Qadi and other Saudis with senior Justice and Development figures, including Mr. Erdogan.

Among Mr. Qadi's largest Turkish investments is the discount-supermarket chain BIM, one of Turkey's biggest companies, with more than 1,500 outlets and annual sales of about $1.5 billion. BIM, which trades on the Istanbul Stock Exchange, is a discounter modeled in part on Wal-Mart and other low-price chains. Mr. Zapsu also was among BIM's founding partners.

Mr. Zapsu, who in 2001 helped Mr. Erdogan found the Justice and Development Party, also supported an Islamic charity Mr. Qadi founded that is at the center of the U.S. and Security Council decision to freeze the Saudi businessman's assets. A Turkish financial-police report seen by The Wall Street Journal found that in the 1990s, Mr. Zapsu and his mother gave $300,000 to Mr. Qadi's Muwafaq charity, which U.S. officials labeled a front for al Qaeda shortly after 9/11.

Central Intelligence Agency reports say Muwafaq, now defunct, specialized in purchasing and smuggling arms for Islamic radicals. The U.S. government's special commission on the Sept. 11, 2001, attack and law-enforcement agencies have cited Saudi-backed Islamic charities as a primary source of funding for al Qaeda.

Mr. Zapsu also has business ties to two Islamic banks funded with Saudi capital -- Dallah Al Baraka and Dar Al Mal Al Islam -- that were accused of supporting al Qaeda in civil suits filed by families of Sept. 11 victims in the U.S. District Court for the Southern District of New York. Both defendants adamantly deny the allegations, and the court dismissed claims against Al Baraka.

Mr. Zapsu said in an email that his business and personal relationships with Mr. Qadi were investigated by Turkish police. He said prosecutors decided last year "that there was no reason for a court case and no wrongdoing." Mr. Zapsu said he sold his interest in BIM in 2003 and no longer is involved with the company.

Finance Probes
Two reports by Turkey's financial police allege potential money-laundering and other possible crimes by Mr. Qadi and unnamed associates. But Turkish prosecutors declined to bring criminal cases in both 2004 and 2006, citing a lack of evidence. Mr. Erdogan's political opponents say the probes were quashed by the Finance Ministry. The top officer on the case was recently fired. According to the government, he abused his authority to investigate top politicians.

Mr. Qadi arrived in Turkey in 1996, within a month of alleged al Qaeda logistics coordinator Wael Julaidan. The two men are longtime business partners and engaged in large transactions with a Turkish firm controlled by two of al Qaeda's top leaders, according to business records and U.S. intelligence files. Lawyers for Mr. Julaidan say he denies supporting al Qaeda.

A lengthy paper trail involving an offshore company in the Isle of Man shows how millions of dollars of assets in Turkey once controlled by Mr. Qadi have been shifted in recent years to his associates, in potential violation of the U.N.'s asset freeze. Corporate records show a 26.4% stake in BIM that was originally controlled by Mr. Qadi passed to two of his business partners, through a company called Worldwide Ltd. in the Isle of Man, a tax haven in the U.K.

Worldwide originally was controlled by several people who use the same Jidda business address as Mr. Qadi. In 2004, two Jidda businessmen who are longtime associates of Mr. Qadi took control of Worldwide, Isle of Man filings state. The following year, when BIM released a new financial report, Worldwide disappeared from its list of major shareholders and the two businessmen appeared on the list for the first time. Together with another Isle of Man company, they control precisely 26.4% of BIM shares.

One of the men, Abdul Ghani Al Khereiji, is a longtime business partner of Mr. Qadi who co-founded the Muwafaq charity, records show. He didn't respond to requests for comment. The other new BIM shareholder, architect Zuhair Fayez, also is a longtime associate of Mr. Qadi. Mr. Fayez said in an email that his shares in Worldwide "were not purchased from Mr. Qadi," but he didn't elaborate.

Transferred Stake
In a statement, BIM said Worldwide transferred its stake to the two men in March 2005. "Our information...is that the assignment procedures were made in accordance with the law," BIM said. The company said it "has no knowledge of the share structure of Worldwide." If Mr. Qadi benefited from the sale of Worldwide shares, that would breach the U.N. sanctions against him.

Some of Mr. Qadi's dealings in Turkey are recounted in a 2006 book, "Charitable Terrorist," by Nedim Sener. Mr. Qadi has filed a defamation suit in an Istanbul court against Mr. Sener, who in the Turkish daily Milliyet also wrote of a real-estate deal involving Mr. Qadi that may also violate the Security Council sanctions. The sanctions, legally binding on U.N. member states, ban any large financial transactions or international travel by the roughly 350 individuals designated as terrorists or their sponsors.

Christophe Payot, a spokesman for the U.N.'s sanctions committee, declined to discuss any possible violations by Turkey or Mr. Qadi. The panel's chairman announced in May it would examine "possible instances of noncompliance" with the al Qaeda sanctions.

The U.N. sanctions aren't always effective, according to experts on the subject. Many countries either don't write or police laws to enforce them, or aren't equipped to track designees who use offshore companies and complex corporate structures. In the case of Mr. Qadi's Turkish assets, the problem is that "there are so many ways of structuring and layering things, they are not clearly his assets," said Victor Comras, an attorney and former U.N. terror-finance expert.

Watchdog faces Berlin inquiry on banks bail-out

by Bertrand Benoit in Berlin and Ivar Simensen in Frankfurt
FINANCIAL TIMES

The German government will launch an inquiry into Bafin, the German financial services regulator, amid accusations that the watchdog took too long to address crises at two banks that had to be bailed out.

Torsten Albig, a spokesman for the finance ministry, which oversees Bafin, said on Monday, the ministry would look into “what reasons Bafin had to take, or not take, action”. The recent turmoil in the global credit markets, triggered by a weakening US mortgage market, has hit Germany's financial sector particularly hard.

In the past month, IKB, a small cmpany lender, and Sachsen LB, the public Landesbank, had to be rescued after they were unable to provide credit facilities they had pledged to their own investment funds.

Both banks had promised back-up credit facilities that far exceeded their own size, making it highly unlikely they could provide the funds when prompted. The facilities were designed legally to avoid regulatory limits on credit exposure. . . .

[ARTICLE CONTINUES]

German banks remain silent after warning

by Richard Milne in Frankfurt
FINANCIAL TIMES

German banks, locked in a crisis over the fallout from volatile credit markets, have adopted a curious strategy over their increasing image problem: silence.

After the head of a regional bank warned that the situation of German banks was critical as some foreign banks were refusing to lend to them, top executives at other financial institutions have decided to gag themselves.

“Given the situation in the financial markets, the main commercial banks have decided to refrain from commenting in public on the general market situation,” said an e-mail from the head of communications at Dresdner Bank to journalists to explain why its chief executive was cancelling a meeting.

The association of German banks, the BdB, which represents the main commercial institutions, was keen to underline that there was no formal ban on executives speaking out. But an official said: “The banks have said they don’t want to cause any more uncertainty by speaking out.”

Many financial executives were dismayed by the reaction to comments by Alexander Stuhlmann, chief executive of WestLB, warning that German banks were having difficulties getting credit from foreign institutions. “That was a complete mess- up,” said one senior executive.

Other actors in the German financial system are also keeping their own counsel, despite coming under severe pressure to justify their actions. The Bundesbank, the central bank, has said very little since its head called a state-led bail-out of one bank an “isolated” incident in mid-August – only for the rescue of another bank to be necessary days later. Likewise Bafin, the financial regulator, has said little despite criticism of its handling of the situation.

Some German executives complain that this reluctance to speak out hurts the country and its image.

GOP Consultant, 2 Men Found Dead in Fla.

AP

ORLANDO, Fla. — A Republican political consultant and two other men were found dead in a home in an apparent double-murder and suicide, authorities and relatives said.

Authorities have not determined a motive for the deaths of Ralph Gonzalez, 39, his roommate, David Abrami, 36, and a friend, Robert Drake, 30.

Investigators found weapons and signs of a struggle in the house, but they did not say what the weapons were or which man they believe was the killer. The men are believed to have died several days before the bodies were discovered Thursday.

Gonzalez was executive director of the Georgia Republican Party from 2001-2002. He managed U.S. Rep. Tom Feeney's 2002 campaign and was president of Strategum Group, an Orlando-based political consulting firm that represents Republican candidates.

"He was a born political consultant. He had bravado, he was intense, and he lived and breathed tactics and strategy," Feeney said. "He was an adviser and strategist for me and became a very good friend."

Abrami, an attorney, was active in Republican politics as well.

Gonzalez, the son of Cuban immigrants, was devoted to politics even as a youth, said his father, Rafael Gonzalez of Miami. He graduated from Florida International University and received his master's degree in campaign management at the University of Florida.

"He was a smart person who built a business by himself," Rafael Gonzalez said. "He traveled all over the world."

Tragic end for Blairs' chum Nico

by Tony Kay
DAILY MAIL

A wealthy banking friend of Tony Blair has died following a freak accident at his fabulous French chateau where he entertained the former prime minister and his wife Cherie.

Multi-millionaire Nicholas Lethbridge - known as Nico - fell two weeks ago from a landing at the house in southern France he had lovingly restored. He died eight days later in hospital.

The tragedy has stunned friends of Lethbridge, 58, who worked for the World Bank and investment firm Babcock and Brown before quitting the rat-race to spend time with his wife Rachel, 42, and their children Josephine, 16, and Max, 12.

Much of his time was devoted to renovating the Chateau de Queille near Toulouse which had stood empty for 20 years. He also launched an acclaimed arts festival there.

The magnificent house, which dates back to the 11th century, was his great passion and the scene for many a champagne soiree.

Five years ago, the Blairs, who were holidaying nearby, were guests. Those present at one particular dinner party still recall the comic scene when Mrs Blair removed her trousers after spilling wine down them - and then sat in just her blouse for the meal.

But Labour-supporting Lethbridge, who divided his time between France and a period family house in Greenwich, South London, later became disenchanted with Blair over the war in Iraq.

Friends are today flying to France for his funeral and the family will bury him in the tiny local graveyard in the grounds of the chateau. "Nico loved the house so much he bought a family plot there only this year," says a friend.

It is believed he fell after getting up early to make himself a cup of coffee and tragically crashing through the balustrade and down a stairwell.

His close friend of 20 years Gerry Grimstone, chairman of insurance giant Standard Life, tells me: "The house was full of very difficult staircases to negotiate. He was one of the really good guys in this world and was known as one of the cleverest men in the City.

"But he was also a Renaissance man - he loved the arts and his wife is a singer - and they had their wedding on the Cutty Sark."