Syrian bank funded insurgency with Saddam's millions

Friday, November 19, 2004

The United States has concluded that Syria helped finance the Sunni insurgency in Iraq.

Officials said the regime of President Bashar Assad used the state-owned Commercial Bank of Syria to relay hundreds of millions of dollars to Saddam Hussein loyalists in Iraq. They said the money has been deployed to finance the insurgency against the U.S.-led coalition primarily in Iraq's Sunni Triangle.

The Commercial Bank of Syria held more than $1 billion in Saddam regime accounts on the eve of the U.S.-led war in Iraq in March 2003, officials said. Most of that money stemmed from Iraqi arms and oil smuggling as well as illegal commissions obtained from Iraqi oil sales overseen by the United Nations.

During a hearing by the Senate subcommittee on Nov. 15, Treasury Assistant Secretary Juan Carlos Zarate asserted that Syria has disbursed $600 million to unidentified Iraqis. Zarate, responsible for terrorist financing and financial crimes at Treasury, said a U.S. team was auditing the Commercial Bank of Syria in an attempt to trace the transfer of funds.

"What we found was when we sent our investigators to Damascus, upon review of the documents and review of the transactional data, it became clear that the Syrians had, in fact, paid out the vast bulk of the amount that had existed in that particular account," Zarate said.

Officials said that over the last 18 months Damascus transferred up to $800 million of Saddam's assets to senior aides of the former president, several of whom have been based in Syria. They said much of the money was believed to have been transferred to ex-Iraqi Vice President Izzet Ibrahim Al Douri, identified as the chief financier of the Sunni insurgency.

"We have folks on the front line right now that are sacrificing their lives, that are under fire, and somewhere, somehow, there's money being used to fuel that insurgency," Sen. Norm Coleman, chairman of the permanent investigations subcommittee of the Senate Government Affairs Committee, said. "And I would just hope that a very strong message is delivered to the Syrians, that we get their cooperation, that we track this down and we figure out what's what."

Officials said Syria has asserted that the money was relayed to Iraqi brokers and traders. They said Treasury was seeking to examine these claims, but said Damascus has failed to cooperate.

"I would have to say poor," Zarate said in his description of Syrian cooperation with Washington.

The United States has identified the Commercial Bank of Syria as a primary money-laundering concern. Officials said the bank, which has come under threat of U.S. sanctions, facilitated illicit activity with Iraq, including the financing of the insurgency war in Iraq.

"This issue has been front and center in terms of the dialogue with the Syrian government," Zarate said. "It's been part of the dialogue at the highest levels. So we are very much concerned, as you are, that the amounts paid out were either not paid out to legitimate claimants or were paid out to people who are attempting to do us harm now."

Officials said Damascus has failed to honor its assurances to the United States regarding Iraq. They said Damascus has also refused to relay any of Saddam's assets to help develop Syria's eastern neighbor.

The Bush administration has been under pressure from Congress to impose additional sanctions on Syria for its failure to halt the flow of weapons, money and fighters to the Sunni insurgency in Iraq. Officials said this would comprise a key issue when Congress begins its new session in 2005.

Zarate said Treasury was working with other U.S. government agencies to trace U.S. currency seized in Iraq to determine the flow of funds to the insurgency. He did not elaborate.

"We also have assets within Iraq, and that's why the Department of Defense, our soldiers on the ground, the FBI and others are working so hard to try to find those caches of cash within Iraq," Zarate said. "And then finally you have traditional sources of terrorist funding in the region which are mobilizing for the Iraqi jihad, in essence."

Copyright 2004 East West Services, Inc.

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