Can U.S. terror-financing litigation curtail terrorism?

September 3, 2014

I’ve spent the past two days in a federal courtroom in downtown Brooklyn, listening to the former head of Israel’s Palestinian Affairs Department, Arieh Spitzen, make a convincing case that Jordan’s Arab Bank processed tens of millions of dollars to Hamas leaders and Hamas-controlled organizations during the second Palestinian Intifada, when Hamas was engaged in a campaign of bombings that killed more than 600 Israeli and foreign civilians. Spitzen was the final witness for nearly 300 American victims of Hamas terrorism operations between 2000 and 2004, and his expert testimony weaved together the strands of their case into a neat bundle. According to Spitzen, Arab Bank transferred more than $4 million into accounts held by 18 prominent and publicly known Hamas officials; processed more than $32 million from Hamas’ worldwide fundraising operations to Hamas-controlled groups fronted by charities; and facilitated another $35 million in payments to Palestinians injured or imprisoned in the Intifada or to families of those who died in the uprising.

Arab Bank will still have a chance during its cross-examination to raise doubts about Spitzen, who has been paid more than $700,000 for his work on behalf of the American plaintiffs. The bank will also, of course, call its own witnesses, who are expected to testify that Arab Bank conducted nothing more than routine banking operations, appropriately terminating relationships with account holders once people or organizations were designated as international terrorists. Arab Bank has long argued that it and other global financial institutions must be permitted to rely on these international designations or else no legitimate bank will operate in terror-ridden parts of the world. “It is the government who decides who should be designated as a criminal and put on the lists,” the bank’s lead trial lawyer, Shand Stevens of DLA Piper, said during opening arguments in August. “That is the way banking works.”

In the abstract, that’s a compelling argument, but through Spitzen’s testimony, lawyers for Hamas’ American victims brought specificity to claims that Arab Bank knew or should have known that it was financing terror. Spitzen, who served with a joint military and Defense Ministry group called the Coordinator of Government Activities in the (Palestinian) Territories, told jurors about dozens of Hamas leaders who either held accounts at the bank or headed supposed charities with Arab Bank accounts. Jurors saw slides with the Hamas operatives’ names, photographs and prison histories. They heard about Israel’s raids on some of the charities, which turned up not only evidence of links between Hamas and the purportedly humanitarian groups but also “martyr files” on suicide bombers whose survivors received wire transfers at Arab Bank branches from the Saudi Committee for the Support of the Intifada Al Quds. (The bank has said that it just processed payments to the families as per the instructions it received from a correspondent bank in Saudi Arabia and that “martyrs” is a term describing all of the more than 3,000 Palestinians who died in the second Intifada, not necessarily suicide bombers.)

Jurors saw translations of a Saudi Committee newspaper advertisement advising “the relatives of the martyrs … to head for the Arab Bank branches in their places of residence in order to receive” a payment of $5,316 – or nearly five times the average household income in the Palestinian Territories in 2002, according to Spitzen’s testimony. The jury heard about Israel’s publication in 2002 of a list of outlawed Palestinian charitable organizations, which included 10 groups with Arab Bank accounts; two of those groups, including one subsequently designated an international terrorist organization by the U.S. government, were responsible for collating information on martyrs and imprisoned and wounded Hamas operatives to the Saudi Committee, according to Spitzen’s testimony. (The bank contends that Israel’s blacklist was not publicly available and is not at issue because it does not have operations in Israel.)

Spitzen told jurors that the charitable groups made no secret of their ties to Hamas; Hamas leaders, he said, regularly gave media interviews and appeared at rallies in the West Bank and Gaza. The jury even got to see a short video clip from one such rally, the funeral of two suicide bombers in the West Bank city of Nablus. Presiding at the ceremony was Sheikh Hamed al-Bitawi, a Hamas parliament member and the chairman of a purported charity outlawed by Israel. Arab Bank, according to Spitzen, processed wire transfers to the group.

My recounting of the testimony probably makes it seem more dramatic than it was in person. Spitzen’s day and a half of direct examination highlighted the painstaking work of the victims’ lawyers – including Gary Osen, Tab Turner of Turner & Associates, Mark Werbner of Sayles Werbner and Michael Elsner of Motley Rice – over the 10 years they’ve litigated claims against Arab Bank. But a civil trial is a highly mannered ritual. Spitzen’s evidence emerged under questioning by Turner, an Arkansan with a careful, deliberate style. The witness spoke through Hebrew interpreters, and the bank’s lawyer, Shand Stephens, interrupted with frequent objections. The process was so slow that it seemed almost plodding. For me – and I’m sure for the 11 jurors hearing the case – the Brooklyn courtroom felt like it was a million miles and light-years away from the Palestinian Territories during the Intifada.

That disconnect deepened when I read accounts Tuesday night that the Islamic State militant group had released a video supposedly showing the beheading of a second kidnapped American journalist, Steven Sotloff. The victims’ lawyers at the Arab Bank trial have told jurors time and again that terrorism cannot take place without financing, and that banks have to be held accountable for making it possible. That’s true, of course. But global money-laundering laws and the threat of private liability hasn’t stopped Islamic State terrorists, whom U.S. Defense Secretary Chuck Hagel has called “tremendously well funded.” Reuters reported in July that the group has financed operations by selling crude oil and gasoline from seized Iraqi oilfields; the Wall Street Journal said Tuesday that Islamic State also extorts payments from religious minorities in the regions it has overrun.

Even Hamas, whose government in Gaza had been running at a deficit of $500 million, according to Reuters, managed to finance this summer’s operations against Israel. In July, Reuters quoted a professor at Gaza’s Ummah University who said that the cash shortage hadn’t hurt Hamas’ military wing and predicted that the latest fighting would prompt new donations to the group.

Terrorism, in other words, is a constantly mutating virus. As soon as one version is stamped out, a new strain flares.

Right before the Arab Bank trial began, Gary Osen told me that one of the victims’ goals was to warn global banks that they’re responsible if they facilitate terror operations. As they reach the end of their case, they’ve succeeded in proving that American lawyers will stop at nothing to establish that liability – surely a tribute to their doggedness and a solace to their clients. I’m just hoping that’s not all this case accomplishes.

For more of my posts, please go to WestlawNext Practitioner Insights

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see