(C) TERRORIST FINANCE: LDI ATTEMPTS TO CLEAR ITS

S E C R E T SECTION 01 OF 03 KUWAIT 000494

SIPDIS

STATE FOR EB/ESC/TFS GGLASS AND NROTHSTEIN
STATE FOR S/CT FOR SFOX; IO/PHO FOR APEREZ
NSC FOR GPETERS; TREASURY GENERAL COUNSEL FOR DAUFHAUSER
TREASURY FOR OFAC DIRECTOR RNEWCOMB; TREASURY FOR JZARATE
TREASURY TASK FORCE ON TERRORIST FINANCING
PARIS FOR PETER KUJAWINSKI AND UZRA ZEYA
TUNIS FOR NATALIE BROWN

E.O. 12958: DECL: 02/03/2014
TAGS: EFIN ECON ETTC PTER PREL KU
SUBJECT: (C) TERRORIST FINANCE: LDI ATTEMPTS TO CLEAR ITS
NAME WITH OFAC

REF: A.) 03 KUWAIT 4840 B.) 03 KUWAIT 958 C.) 04
PARIS 379

Classified By: CDA Frank C. Urbancic for reasons 1.4 (b) and (d)


1. (C) Summary: OFAC Director Richard Newcomb met with
representatives of Kuwaiti charity Lajnat al-Dawa al-Islamiya
(LDI) and its parent organization, the Social Reform Society
(SRS) at the Kuwaiti Ministry of Foreign Affairs (MFA) on
January 19. The group discussed a number of issues
outstanding from OFAC's October 2003 visit to Kuwait (Refs A
and B),including transactions made by LDI and SRS following
LDI's designation by the US and UN as a supporter of
terrorism. During the meeting LDI representatives gave
conflicting responses to questions posed by the OFAC
delegation regarding the presence of overseas offices and
LDI's relationship with SRS. LDI denied the existence of a
US branch even when confronted with US registration documents
listing LDI officials as President and Secretary of the
branch. LDI confirmed that the Pakistan branch of LDI was
headed by Zahed Shaykh Mohammed, brother of 9/11 mastermind
Khalid Shaykh Mohammed. The Kuwaiti delegation, led by
Islamist MP Nasser Al-Sane, mounted an energetic defense of
LDI's activities, and welcomed the opportunity to review any
negative information OFAC could provide them on the charity.
Also present was Ambassador Khaled Maqamis, head of the
MFA,s Follow-Up Department. End Summary.


2. (C) On January 19, an OFAC delegation led by Director
Richard Newcomb met with representatives of LDI (notably LDI
head Abdulatif Al-Hajeri)and SRS, headed by MP Nasser
Al-Sane. (Note: Al-Sane is a member of the Islamic
Constitutional Movement, the political wing of SRS. End
Note.) Al-Sane said he had tried to reach Newcomb regarding
the designation of Kuwaiti charities and other matters
discussed in the October 2003 meeting with OFAC (Ref. A),but
had been unsuccessful in doing so. Al-Sane said he had
double-checked with Kuwait Finance House (KFH) and the
Central Bank of Kuwait (CBK) and confirmed that LDI funds
were frozen in March 2003. (Note: KFH told USG that it froze
LDI accounts February 6, 2003. End Note.) Responding to
questions by Newcomb, Al-Sane said that some of LDI's
beneficiaries had received funds through SRS after the
freeze, and stipulated that the funds were used to continue
ongoing charity works which the freezing of LDI funds had
halted. "The beneficiary has no link with LDI," he added.
Al-Sane stated that LDI is no longer functioning, "period."

Relationship between SRS and LDI


3. (C) Newcomb repeatedly asked Al-Sane for an explanation of
the relationship between SRS and LDI. Al-Sane claimed the
two "coordinated with each other," but were essentially
different entities with independent financing and leadership.
After multiple attempts to get him to further clarify this,
Al-Sane finally admitted that LDI was legally subordinate to
SRS, per Kuwaiti charity law. However, he reiterated, SRS
does not control or give instructions to LDI. (Note: KFH
stated that LDI was not a legal or separate entity, but was
one and the same as SRS. As such, KFH officials inquired as
to why USG had only designated LDI and not SRS. End Note.)

Busted: LDI's 'forgotten' North American branch


4. (C) Al-Sane and LDI head Abdulatif Al-Hajeri began the
meeting by declaring that LDI had foreign branch offices in
Pakistan and Afghanistan only. When asked, they explicitly
denied there was a North American branch. However, when
Newcomb began to read U.S. corporate registration documents
listing members of the Kuwaiti delegation as officers of
"Lajnat al-D'awa, North America Office" located in Colorado
(Al-Hajeri was listed as the President),the Kuwaitis were
hard-pressed for an answer. They acknowledged knowing the
founder of the US branch, Mohammed Abdulrahman, and stated he
had just "used our names" back in 1995 in order to gain
financial backing. They insisted that the group was
"completely unrelated" to LDI in Kuwait. When the Kuwaitis
claimed the group had not been active in the U.S for many
years, Newcomb pointed out that as late as 2000, LDI officers
Al-Hajeri and Al-Jeeran were listed as officers of the US
branch. (Note: At this point, Ambassador Maqamis, who had
remained silent throughout the discussion, left the room for
a brief period of time. We have no way of knowing for what
purpose. End Note.)

On French conversations with LDI and Foreign Minister


5. (C) Al-Sane insisted that LDI had been unfairly accused of
supporting terrorist activities, and argued that the
designation was causing severe damage to an organization
dedicated to charity work. He said LDI had been invited by
Ambassador William B. Taylor to conduct its charity
activities in Afghanistan in November 2002, but subsequently
had had its assets frozen. Responding to a question about
Kuwaiti conversations with the French on LDI's designation,
Al-Sane said FM Dr. Mohammed had raised the matter with
French FM Dominique de Villepin during his recent visit. De
Villepin said he would look into the matter. According to
Al-Sane, the French claim the LDI office in Pakistan was used
to make calls to Al-Qaeda operatives; Al-Sane says the calls
occurred before LDI occupied the office. The French, he
said, claim there are LDI branches in Burkina Faso and
Bahrain; Al-Sane maintains there are not. (Note: In the
October 5, 2003 meeting with Newcomb, an LDI representative
conceded that LDI had a branch office in Russia, after
claiming they only used offices in Kuwait and Pakistan (Ref.
A). End Note.) The French claim 9/11 mastermind Khaled
Shaykh Mohammed was heading up the Pakistan LDI branch; in
reality, Al-Sane said, Mohammed was in Qatar. The French
claim LDI transferred Euros to Libya; Al-Sane says LDI never
used Euros. "We think the French took their claims from
Pakistani newspapers," he added incredulously.


6. (C) Al-Sane said the Kuwaiti and French UN missions are
working closely to resolve the issue, and noted that he had
visited the UN personally in August to unofficially address
members of the committee responsible for the UN designation.
During this time, he also met with the French mission, who
told him France would drop its support of the designation if
Kuwait could get the US to do the same. Al-Sane said Kuwait
has not yet filed a formal petition for de-listing. (Note:
Al-Sane's account sharply contradicts French claims from
January 15, 2004 in Ref. C that LDI's connection to Al-Qaeda
is "rock-solid." The GOF also stated that it is important
for the USG and the GOF to work together to ensure LDI
remains on the UN 1267 sanctions list. End Note.)

Accounts at KFH are frozen


7. (C) The CBK Governor, Shaykh Salem Al-Sabah, Al-Sane and
Al-Hajeri all confirmed that LDI accounts at Kuwait Finance
House were frozen. Additionally, LDI said the organization
had accounts in every major Kuwaiti bank when their assets
were frozen. Al-Sane also stated that SRS continues to hold
active accounts at KFH.

On ties to other charities


8. (S) Al-Sane said that prior to designation, LDI cooperated
with other charities such as Mercy International. Although
LDI and Mercy International shared officers and directors,
LDI claimed the organizations were not related. (Note:
Financial records obtained by USG indicate LDI transferred to
Mercy International at least $950,000 from February 2001 to
January 2003. End Note.) LDI confirmed that the Pakistan
branches of LDI and Mercy International were headed by Zahed
Shaykh Mohammed, brother of 9/11 mastermind Khalid Shaykh
Mohammed. Al-Sane said LDI had no knowledge of the current
whereabouts of Zahed Shaykh Mohammed.


9. (C) Concluding the meeting, Al-Sane said he would welcome
an opportunity to see OFAC's information related to the
designation of LDI to be able to properly respond to any and
all questions about LDI's past activities. He assured
Newcomb that LDI was not involved in terrorist financing
activities and asked for his help in differentiating between
the good works LDI has undertaken, and the deeds of terrorist
organizations.


10. (U) This message was cleared in MemCon format by OFAC
Director Richard Newcomb.
URBANCIC