9/22/14, "Arab Bank Liable for Supporting Terrorist Efforts, Jury Finds," NY Times, Stephanie Clifford
"A
federal jury on Monday found Arab Bank liable for knowingly supporting
terrorism efforts connected to two dozen attacks in the Middle East, the
first time a bank has ever been held liable in a civil suit under a
broad antiterrorism statute.
Arab
Bank, a major Middle Eastern bank with $46 billion in assets, was
accused of knowingly supporting specific terrorist acts in and around
Israel during the second Palestinian uprising of the early 2000s.
The verdict is expected to have a strong impact
on similar legal efforts to hold financial institutions responsible for
wrongdoing by their clients, even if the institutions followed banking
rules, and could be seen as a deterrent for banks that conduct business
in violent areas.
The
plaintiffs in this case, about 300 victims of the 24 terrorist attacks,
said the acts had been carried out by Hamas, and accused Arab Bank of
supporting the organization by handling transfers and payments for Hamas
members.
“Terrorist
organizations are dependent on the financial system to operate,” Gary
Osen, a plaintiffs’ lawyer, said after the verdict. “They’ve been able
to thrive largely because folks like Arab Bank and others have turned a
blind eye.”
Damages
will be decided in a separate trial, which has not yet been scheduled.
The plaintiffs have not asked for a specific amount.
The
burden of proof in the trial, held at Federal District Court in
Brooklyn, was high: The plaintiffs had to prove that the terrorist
attacks were indeed conducted by Hamas, and that the bank’s support of
Hamas was the “proximate cause” of the events. In addition, the
plaintiffs had to demonstrate that their injuries were “reasonably
foreseeable” as a consequence of the bank’s acts.
Several
similar lawsuits are pending; one case, filed by victims of terrorist
attacks against the National Westminster Bank, was reinstated on Monday
by a federal appeals court.
“What
this has done is it’s made the effects of American law felt in far-off
places, and that is significant,” said Jonathan Schanzer, vice president
for research at the Foundation for Defense of Democracies and a former
terrorism finance analyst for the Treasury Department. “I don’t think
any country, any bank, would want to be cut off from the U.S. financial
sector, and they’re going to start thinking very carefully about whether
they accept financial transactions” even from people or groups who are
not on designated terrorist lists.
Shand
S. Stephens, a lawyer for Arab Bank, said he was confident that the
Second Circuit Court of Appeals was “going to reverse” the jury’s
decision.
The
case focused on transactions Arab Bank handled during the second
Palestinian uprising. The plaintiffs accused Arab Bank of handling
transactions for a number of well-known terrorists, and helping to route
transactions for a charity called the Saudi Committee. That charity,
the plaintiffs argued, paid suicide bombers’ families.
Arab
Bank holds that of all the accounts and transactions it processed in
that period, only a few are in question, along with the large number of
payments it processed for the Saudi Committee. It said the Saudi
Committee is a legitimate charity
that was never listed as a terrorist organization by the United States.
And it said it properly checked all accounts and transactions against
the appropriate blacklists, and any transactions that did go through
were because of errors, such as different renderings of names in Arabic
and in English.
Even
if the terrorists were not on the relevant blacklists, the plaintiffs
argued, Arab Bank employees should have known that the people were
terrorists.
Mr.
Stephens countered that designating terrorists is the government’s job.
“The proposition that’s being floated here,” he told the jury, is “that
private businesses, including banks, are supposed to make up their own
lists of terrorists. Imagine, actually, what that would do, if a bank
did that.”
The
jury, which returned a verdict after two days of deliberations, was
apparently unpersuaded. One juror who agreed to speak to the news media,
Jill Rath, echoed the plaintiffs’ arguments, saying that “the money and
the financing is the oxygen for the terrorists.”
Even before the case went to trial, it had drawn the attention
of the Obama administration and the Supreme Court, and led to rulings
that Arab Bank says hampered its ability to tell the jurors about its
efforts to identify transactions connected to terrorists.
The
bank refused to turn over a large number of the requested documents in
the case, citing the privacy laws of the countries where it does
business. As a result, a judge who oversaw the case issued sanctions,
including one that prevented Arab Bank from telling the jury why it
withheld those documents, though the plaintiffs were free to tell the
jury that the documents had been held back.
The
bank then asked the Supreme Court to overturn the sanctions. The Obama
administration was split: The State Department pushed for Supreme Court
intervention; Jordan, where the bank has its headquarters, is a loyal
ally, officials there said. Others wanted the court to stay out of it:
Tax and treasury officials did not want banks to hide behind foreign
bank-secrecy laws in their investigations, and other justice divisions
felt that the department should not be intervening against American
victims of terrorist attacks.
The
Supreme Court declined to hear the case, and it went to trial with a
version of the sanctions in place. Along with the sanction about
document withholding, those sanctions specified that jurors “may, but
are not required to, infer” that the defendant provided financial
services to Hamas, and that the defendant did so knowingly, according to
instructions from the judge, Brian M. Cogan.
In
their closing arguments, the plaintiffs’ lawyers made a point of Arab
Bank’s withholding of documents. “Why are they doing those kinds of
tactics? Because they don’t have a defense. Because they are caught
red-handed. Because the documents that show they are doing business with
Hamas are all over their files,” said Tab Turner, one of the
plaintiffs’ lawyers, asserting that the bank had come up with a way to
“twist and distort and hide, hide the documents, conceal the documents.”
Mr.
Stephens, the bank’s lawyer, said after the verdict that “evidence this
thin would never have resulted in a verdict unless there were errors in
the admission of evidence, errors in the instructions, and errors in
imposing a sanction that the United States has already told the Supreme
Court was improper.”
In
a statement released after the verdict, Arab Bank said that “any
proceeding conducted under the district court’s improper sanctions”
would be “nothing more than a show trial.”"
.
No comments:
Post a Comment