DETROIT -- Did Citigroup, one of the most powerful financial institutions in the world, help transfer funds into accounts used to bankroll terrorism? Why do prominent Saudis involved in funneling money to "charitable" accounts that end up funding terrorism escape scrutiny?
Why would the FBI, when given evidence of such conduct, promise to investigate, and then wait 17 months to question the whistleblower? Why would the FBI then suddenly drop the probe just two weeks into it?
These questions haunt Leonard D. Wallace, and the Florida-based financial consultant has spent more than five years working to expose and unravel a baffling $5 billion deal involving Citigroup, a fabulously wealthy Saudi prince and money transfers bouncing around the world.
Wallace suspects money shuffling into what the Saudi government dubbed an Account 98. These are supposed to be accounts supporting humanitarian causes, but some of the money from them has been given to the families of suicide bombers, honored "martyrs." Saudi money has enabled and nurtured al-Qaeda and Osama bin Laden's operations from the get-go. Those funds and the spiritual inspiration of radical clerics helped provide bin Laden with the 15 Saudi hijackers of the 19 he used in the 9/11 attacks.
The Saudi government keeps a tight lid on Account 98 records and shields them from any outside examination. Interpol, the CIA and many other intelligence and criminal investigation agencies would find a treasure trove in the trail of international terrorism and who provides the funding for it with just a peek at Account 98 records. That's why the Saudis wrap them in secrecy.
I've written several columns about Saudi money and the Leonard Wallace story, the last in July 2006, explaining that the FBI had not interviewed Wallace a year after promising to investigate his claims.
In June 2005, Barry Sabin, the chief of the Justice Department's Criminal Division, advised Wallace that the FBI's Terrorist Financing Operations Section would review his evidence of Citigroup's shady dealings.
Wallace's persistence was finally paying off -- or so it seemed. Since the day before the 9/11 attacks, when Wallace realized he was caught in the crossfire of a series of phony bank account authorizations -- he has been crying foul, telling those who should be interested what he knows and urging them to use their authority to uncover the full truth.
He's shared his concerns and evidence in letters to everyone from President George W. Bush, to Citigroup's CEO and board of directors, to members of Congress and the Saudi Embassy. He filed a formal complaint with the Justice Department.
In October, I spoke to Wallace, and we discussed the status of the FBI investigation. Nothing had happened. I planned to ask why in a column. Then, on Nov. 16, Wallace called me, his voice excited. "Bill, you're not going to believe this," he said. "The FBI just called and they want to interview me." Well, that's progress, I thought, planning to shift the focus of my next installment in the saga. Dana Conte, an FBI agent in New York City, was assigned to the case. The FBI usually says nothing about ongoing investigations.
Wallace explained to her how representatives of Citigroup's Singapore office approached him in September 2001 to help facilitate a series of business loans and assist the bank in investing the $5 billion in proceeds into housing and industrial projects. Wallace, who had done work like this before, would handle the paperwork and financial postings to make sure the transactions were in order. He was to be paid fees for his services.
Citigroup's Miami branch authenticated the financial documents, and top officers at the bank's Park Avenue headquarters in New York City were fully informed and signed off on the deal. But then Wallace discovered that collateral for the loans was based on phony documents and the real beneficiary for the money was to be Saudi Prince Alwaleed bin Alsud, one of the richest men on earth and a holder of a substantial block of Citigroup stock.
Wallace believed the whole transaction was a sham used to cloak a deal to funnel funds to a Saudi Account 98. He wrote to Citigroup's then-CEO Sanford Weil alerting him of his suspicions. The deal fizzled, but Citigroup could never explain to Wallace what was really going on. A $5 billion deal goes poof, and nobody is talking.
The FBI's probe of Wallace's claims lasted an entire two weeks. Wallace says he got a call last Wednesday from Conte informing him that she would no longer be involved in the Citigroup case, saying a level of authority above her had determined the bank was clean.
Wallace sees the powerful in Washington protecting their friends: "It took the FBI 17 months to get going with an investigation they agreed to do in June 2005. Then I learn that they're ending the investigation by saying that Citigroup didn't commit any crimes funding terrorism and that it wouldn't have been a crime even if they had transferred funds into a Saudi Type 98 Account. Doesn't it look more than ever that Citigroup is still getting a big pass from the Justice Department?" Wallace was also told Citigroup's prior misdeeds and egregious corporate behavior had no bearing on whether the investigation would proceed. The bank's rap sheet reads like that of a thug in a pinstriped suit.
The Securities and Exchange Commission slapped Citigroup with a $120 million fine for helping Enron disguise loans as cash in order to defraud investors. The bank came to a $2.65 billion settlement with WorldCom investors after it was learned that Citigroup's research department failed to reveal obvious problems with the company before it filed for bankruptcy. Citigroup was WorldCom's lead banker.
Citigroup is under investigation for its role in the failure of Italian dairy giant Parmalat. There are other probes involving Citigroup in Japan, Argentina and Great Britain. Citigroup has to be in every lineup of the usual suspects for any international money-laundering and financial chicanery. But don't tell that to the FBI.
As for our friend Saudi Prince Alwaleed, he's off on another investment binge. The prince found a hot company involved in the instructional software industry, and that's where he's putting some of his money these days.
The company sells high-tech equipment to use in the classroom for the endless tests kids must now take under the federal No Child Left Behind Act. Bush's big education reform is better labeled No Testing Company Left Behind.
The shrewd prince sees great promise in a company that produces computer-projector displays known as COWs, "curriculum on wheels." The expensive equipment -- going for $3,800 a unit -- is selling like hot cakes. The company's president is delighted with his entrepreneur vision and keen insight into a growing business niche.
Ignite! Inc. has sold 1,700 COWs, according to "Business Week," and Prince Alwaleed's investment is a winner. The owner of Ignite! expects 2006 revenue of $5 million.
Neil Bush, the son and brother of the Bush presidents, says his interest in education springs from his own struggle with dyslexia. Neil, the youngest of the Bush boys, earned his corporate stripes as a director of Silverado Savings and Loan. When the Colorado bank went belly-up, U.S. taxpayers picked up the $1 billion bill. Bush should have been indicted, but federal authorities only slapped him with a sanction -- he could no longer be involved in banking.
Neil Bush's fondness for teenage prostitutes in Thailand and Hong Kong was revealed in a sworn deposition during his divorce proceedings. Bush said the young women simply showed up, knocking on the door of his hotel room, and he had sex with them. He claimed he didn't know they were prostitutes because they never asked for money and he didn't pay them.
Typical Bush -- not even a tip for services. He said of his encounters with the ladies of the night, "It was very unusual." At the time, Bush was accepting big consulting fees from Asian firms for nebulous advice. "Ah shucks, all these teenage girls mysteriously arriving at my room every night. I'm just one lucky fella," ne'er-do-well Neil must have thought.
Bush acknowledges his name may have helped a bit with his new business, telling "Business Week," "I'm not saying it hasn't opened any doors. It may have helped with some sales." Bush says his backers like Prince Alwaleed get no favors from his brother in the White House: "Not one of our investors has ever asked for any kind of special access -- a visa, a trip to the Lincoln Bedroom, an autographed picture, or anything." The prince already has that access. He's just further ingratiating himself and the House of Saud with their beloved Bush family.
The Brits are on to a Saudi money deal, and the boys from Riyadh are fuming, even threatening to sever diplomatic relations with the U.K. The Serious Fraud Office (SFO) is investigating a secret slush fund a British defense contractor allegedly created to fund the extravagant lifestyles of members of the Saudi royal family.
BAE Systems has a contract with the Saudi government to build and deliver 72 Typhoon fighter jets, often called the Eurofighter. The deal, worth 40 billion pounds, would safeguard 10,000 jobs in the U.K. for a decade.
Five BAE employees, including the company's managing director for international programs, have been arrested in connection with the slush fund that allegedly provided the Saudi royals with the kind of goodies they so enjoy.
The London Sunday Times reports the SFO found the Saudis were given payments "in the form of lavish holidays, a fleet of luxury cars, including a gold Rolls-Royce, rented apartments and other perks." I'll bet the back 40 the "other perks" included a bevy of those Neil Bush mystery girls appearing at the doors of the Saudi princes. I'm sure the ladies did much more than sip $300-a-bottle single-malt scotch.
The Saudis went ballistic when they found out that a lawyer working on the investigation persuaded a magistrate in Switzerland to "force disclosure about a series of confidential Swiss bank accounts" the Saudi royals use. In the Muslim tradition, the worst sin is shirk: associating anything not God with God. But among the Saudi royals, there is a sin worse than shirk -- revealing their financial dealings.
That's why they are threatening to sever diplomatic relations, cancel the jet deal and even cut off intelligence cooperation with Britain over al-Qaeda. Any examination of the flow of Saudi money will lead to paths that will be more revealing and embarrassing, expose criminal behavior and show conduits used to fund terrorism.
That's why the investigation of Leonard Wallace's claims about Citigroup and the Saudi prince got nipped in the bud. It's too close to Bush family intimates and interests and the entangled reach of a corrupt banking empire.
The truth must be buried.
"By participating in a coverup that protects Citigroup and its political business associates," Wallace said, "the FBI is no better than Citigroup, government officials and the Saudis they're protecting."
Maybe when the Democrats take over Congress someone will have the nerve to ask the Saudis and their bankers what they planned to do with that $5 billion.
| Niagara Falls Reporter | www.niagarafallsreporter.com | December 5 2006 |