Arab Bank Accused of Turning Blind Eye to Terror Funding

Arab Bank Plc went on trial in New York accused of turning a blind eye as terrorists used its services to finance attacks in and near Israel.

A lawyer for victims and their family members told jurors yesterday that the Amman-based lender, Jordan’s largest bank, helped Hamas during a wave of Israel-Palestinian violence in the early 2000s. The claims at issue were brought on behalf of about 300 U.S. citizens who were either victims of 24 attacks or relatives of those injured or killed. The trial of the decade-old case in federal court in Brooklyn may take as long as six weeks.

The bank’s account holders during some of that period included Osama Hamdan, a spokesman for Hamas, the Palestinian militant group that has been designated a terrorist organization by the U.S., the plaintiffs allege.

“You’re going to see that this bank served as paymaster” to people who helped carry out terrorist attacks and was “turning a blind eye to the fact they were providing these services to Hamas,” Tab Turner, a lawyer for the plaintiffs, said yesterday in his opening statement.

“What we look forward to most is justice on behalf of these victims,” he said.

The case, the first time a bank has gone to trial on civil claims of violating the U.S. Anti-Terrorism Act, may test the extent to which which financial institutions can be held responsible for monitoring their customers. Arab Bank, which has about 600 branches worldwide, contends that it followed proper compliance procedures and checked transactions against government blacklists.

Bank’s Defense

“It’s the government that decides who the criminals are,” Shand Stephens, a lawyer for the bank, said yesterday in his opening statement. For many potential terrorists, “you can’t look them up in a phone book.”

Established in Jerusalem in 1930, Arab Bank is alleged to have provided services to terror operatives and charities controlled by Hamas and to have helped the Saudi Committee for the Support of Intifada Al Quds distribute benefits of more than $5,000 to families of suicide bombers and other so-called martyrs.

The trial will include witnesses who were on the scene during some of the attacks, such as bombings at popular gathering sites in Jerusalem and Tel Aviv, as well as experts in terrorist groups, plaintiffs’ lawyers said.

Fueling Terrorism

“Money is the oxygen that fuels this kind of terrorism,” said Mark Werbner, one of the lawyers for victims and their families.

Werbner said the bank, owned partly by the Jordan’s government, had made public statements that it “considered Israel to be the enemy” and distributed a calendar featuring “destroyed villages of Palestine.”

“This was their ideology,” he said.

The case originally encompassed about twice as many attacks and thousands of plaintiffs, including many who weren’t U.S. citizens. Claims of non-citizens were thrown out and the trial was tailored to include only attacks alleged to have involved Hamas rather than other groups. The jury will decide whether the bank is liable for the incidents. Damages would be determined through later proceedings.

A verdict for the plaintiffs would “undermine” automated compliance systems used by the global banking industry to processes trillions of dollars in transfers each day, and “create vast uncertainty and risk in the international finance system,” the bank said in a statement.

Customer Records

Arab Bank refused to provide some customer records to plaintiffs in the case, arguing that it couldn’t supply the information without violating criminal laws of Jordan, Lebanon and the Palestinian territories. A federal judge ruled that jurors can be told to infer from the bank’s failure to produce the information that it intentionally provided services to terrorist groups, giving plaintiffs a potential advantage in the trial.

In a brief to the U.S. Supreme Court, which declined to take up the bank’s appeal of the sanctions, the Obama administration called the bank “a constructive partner with the United States in working to prevent terrorist financing.”

Stephens, the lawyer for the bank, said yesterday some payments distributed by the bank were part of humanitarian efforts to provide relief during a conflict in the region.

“The evidence in the case will show you that the economy in the West Bank and Gaza was terrible -- 60 percent of the population was below the poverty level,” he said. “Jobs were impossible to find,” particularly during that time period, “because there was so much violence and chaos going on all the time.”

The case is Linde v. Arab Bank Plc, 04-cv-02799, U.S. District Court, Eastern District of New York (Brooklyn).

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