TERRORIST FINANCE: RESPONSE TO REQUEST ON FROZEN

S E C R E T SECTION 01 OF 02 ANKARA 002332 SIPDIS STATE FOR EUR/SE, EB/ESC/ESP (GLASS) AND SC/T TREASURY FOR GENERAL COUNSEL (DAVID AUFHAUSER) AND TASK FORCE ON TERRORIST FINANCING E.O. 12958: DECL: 04/10/2006 TAGS: ETTC EFIN PTER CVIS TU SUBJECT: TERRORIST FINANCE: RESPONSE TO REQUEST ON FROZEN ASSETS REF: A. A. STATE 71056 ¶B. B. STATE 160165 Classified by Economic Counselor Scot Marciel for reasons 1.5 (b),(d). ¶1. (S) SUMMARY: Turkish officials could not provide exact dollar amounts regarding the seized assets of NASCO Nasreddin Holding A.S. or Wa'el Julaidan's import-export firm Meram Seyahat. However, they did inform us that the GOT has frozen the assets of the Nasreddin family and that, following the November 2002 designation, the Ministry of Interior deported the Nasreddins (father and two sons) from Turkey. A Turkish Finance Ministry official complained to us that the U.S. and UN have provided a dearth of specific intelligence to assist in their efforts. Furthermore, he complained of a "double standard" in which countries like Britain have not applied the same pressure on designees as the GOT. END SUMMARY. ¶2. (S) Finance Ministry Inspector Hamza Kacar, who is leading the investigations into NASCO and Julaidan, informed us April 9 that assets have and are currently being seized for NASCO Nasreddin but that no assets have been found for Julaidan. (The Finance Ministry takes the lead in investigating such cases, through examination of tax records.) He could not provide an exact amount of NASCO's seized assets, noting that the company is being investigated by tax offices throughout the country and no centralized authority exists to tally the total amount. Kacar said that the investigation could take as long as a year, because NASCO's ownership structure has so many affiliates. Kacar complained that the UN designation was vague, and that he did not know the extent to which the GOT should investigate NASCO's affiliates. (We notified him April 10 that the GOT was only obligated to seize and investigate the assets of the entities within the Nada/Nasreddin Network that were designated by the U.S. and UN last year - ref B.) ¶3. (S) While we do not know the exact amount of frozen assets, the designation has had serious consequences for the Nasreddin family (father Ahmed Idris and sons Abdul Rahim and Saleh),which has filed a lawsuit with the Danistay (administrative court). Kacar said they were deported by the Ministry of Interior shortly after the November designation. According to MFA Deputy Director General for Research Hakan Okcal, NASCO's insurance company, Commercial Union Sigorta As, has stopped insuring and withheld two liability payments -- one for $2,100 and a car damages claim for $4,000. Okcal said that officials were claiming they have been a respectable, tax-paying Turkish company since 1987. "They are saying that because of the decree, their reputation has been marred and they can't deal in the markets anymore," Okcal said. ¶4. (S) Kacar also complained that because the Finance Ministry lacks specific evidence linking NASCO Nasreddin Holding A.S. to terrorist financing, the Nasreddins may win sympathy from the court and have its assets unfrozen. Kacar explained that in the case of Yasin al-Kadi, Turkish courts found in favor of the GOT, not only because of the UN designation but also because al-Kadi had fled the country. Kacar said that in the Nasreddins' case, absent specific evidence, the court is more likely to rule in their favor. (Ref B provides the background information associated with the 14 entities in the Nada/Nasreddin Network. Most of the evidence of terrorist links points to Ahmed Idris Nasreddin and Youssef Nada, who were directors of shell companies in the Bahamas that have since been closed. Many of the 14 designees, including NASCO Nasreddin Holding A.S., are affiliates of those shell companies. However, ref B provides scant direct evidence linking affiliates such as NASCO Nasreddin Holding A.S. with terrorist financing.) ¶5. (S) Finally, Kacar said that following GOT asset freezing, designees such as al-Kadi and the Nasreddins are now residing in the UK. He has received this information from the Nasreddins' partners and from al-Kadi's lawyer. He also said that al-Kadi's lawyer has advised that Yasin al-Kadi has upcoming plans to travel to the United States. Kacar complained of a "double standard" in which the GOT takes strong actions against terrorist financiers only to see them live in comfort in another country. He added that, over the long-term, the GOT may eventually find it more difficult to partake in asset freezing actions if it perceives a lack of uniformity among allies in the war against terrorism. (Kacar, however, did not have evidence that al-Kadi or the Nasreddins were obtaining funds from designated entities in the UK. Furthermore, Econoff advised Kacar that the UN resolution requiring asset seizure does not obligate countries to deport associated individuals.) PEARSON