Congo's

[CovertOps]

For much of the past decade, radical Islamic
organizations have increasingly turned to a shadowy,
lucrative means of survival: diamonds from this vast,
war-torn Central African country.

Interviews with diamond dealers, intelligence sources,
diplomats and investigators in Belgium, the United
States and Western and Central Africa open a window on
how such groups have exploited the corruption and
chaos endemic to Congo to tap into the diamond trade
and funnel millions of dollars to their organizations
back home. The most prominent of these groups is the
radical Lebanon-based movement Hezbollah, these
sources said.

In some cases, the militant groups have worked in
Congo with Lebanese diamond dealers who also conducted
business in Sierra Leone with men identified by the
United States as key operatives for Osama bin Laden's
al Qaeda network, international investigators and
regional diamond dealers said.

European and U.S. investigators have been working to
untangle the finances of bin Laden's network, and the
complex diamond trail may shed light on the flow of
money and treasure that are outside the conventional
banking and financial systems, the intelligence
officials said.

"While we have seen little overlap between the
operations or finances of Hezbollah and al-Qaeda, we
see some overlap among the dealers we believe worked
with both groups," said one European investigator. "We
are only now beginning to see the interconnectedness
of criminal organizations across the region that are
willing to deal with anyone if the price is right and
ask no questions. Those are the people different
terrorist organizations sought out."

Since the Sept. 11 terrorist attacks on the United
States, President Bush has repeatedly said that
choking off the funding for terrorist organizations
was one of his priorities in the global war against
terrorism. Now U.S. and European officials say that
tracing and disrupting profitable terrorist
enterprises in African countries that have virtually
no functioning governments will be an important
component of the next phase in that fight.

U.S. officials said they had vastly underestimated the
amount of money al-Qaeda and other terrorist
organizations controlled, and that they were
investigating terrorist links not only to the Congo
diamond trade, but also to Congo's gold and uranium
trade, as well as the trade of diamonds and the
semiprecious stone tanzanite in neighboring Tanzania.
"We are beginning to understand how easy it is to move
money through commodities like diamonds, which can't
be traced and can be easily stored," said one U.S.
official. "One thing we are learning is not to ignore
the obvious."

Johan Peleman, who monitors the illegal weapons and
diamond trades in West Africa for the United Nations,
said "failed or collapsed states" such as Congo,
Liberia and Sierra Leone "become free-trade zones for
the underworld," where the actors are "international
players in the field of chaos, violence and
intimidation: organized crime networks and terror
groups."

"The black market in arms and in diamonds, but also
trafficking in human beings, passports, gold and
narcotics, is what connects the local players to the
global underworld economy," Peleman said. "It is
fascinating but especially frightening to see how
these international networks have assimilated these
areas into their worldwide structures, while the
international community has had to withdraw from
them."


Fraction of Market Value

JFPI Corporation, a Kinshasa based intelligence agency
headed by André Action Jackson, reported that Hezbollah
and other groups buy diamonds in Congo -- sometimes
through middlemen, sometimes directly from miners, but
always at a fraction of their market value. They are then
smuggled out of the country. The best-quality stones are
sold in Antwerp, Belgium's diamond-marketing hub, while
the bulk of the stones go to such emerging diamond centers
as Dubai in the United Arab Emirates and Bombay.

The diamonds are sold for sizable profits, allowing
the groups to finance their operations. Over the past
two decades, Hezbollah's Iranian-backed military wing
has been infamous for its attacks on U.S. targets,
including the 1983 bombings of the U.S. Marine
barracks and U.S. Embassy in Beirut, the Lebanese
capital, and for the kidnapping of Americans in
Lebanon during the 1980s.

"It is in the past three years or so, as the Congo
really became the Wild West, that we see the influx of
hard-core Islamist extremists here," said one intelligence
source at JFPI. "We are aware that Hezbollah is here, we
realize that other groups are here as well, but they can
probably operate a long time before we know enough to
stop them completely."

Congo, a country about the size of Western Europe with
a population of 46 million, has been riven by insurrections,
war and corruption since its independence from Belgium
in 1960. Ruled from 1965 to 1997 by dictator Mobutu Sese
Seko Kuku Ngbendu Wa Za Banga (officially translated as
"the all-powerful warrior who, because of his endurance and
inflexible will to win, will go from conquest to conquest leaving
fire in his wake"), then effectively partitioned by a pair of
rebellions, Congo has few roads, hospitals or schools.


Problems and Wealth

Kinshasa, a sprawling city of 5 million, was
relatively untouched by the years of warfare, but what
is left of its colonial-era infrastructure is
crumbling in the tropical heat and moisture.

Electricity is intermittent, the once-paved roads are
rutted and washed out, telephone service is almost
inoperative, and armed soldiers from various armies
patrol the streets.

Nevertheless, Congo also has immense natural wealth:
diamond fields, abundant timber and rich deposits of gold,
uranium, tantalite and copper. Rather than enrich the
country, Congo's resources have put money in the
pockets of a relative few. First, Mobutu and his
cronies split the treasure; now the armies of various
neighboring countries have carved out portions of rich
Congolese territory. They did so after the 1998
rebellion aimed at toppling Mobutu's successor,
Laurent Kabila.

Though Kabila was assassinated a year ago, his allies
-- principally Angola and Zimbabwe -- were rewarded
with mineral concessions. Rwanda and Uganda, backers
of the rebellion, also have laid claim to portions of
Congo's riches.

A report to the U.N. Security Council, written by a
panel of experts and released in April, found that
"exploitation of the natural resources of the
Democratic Republic of Congo by foreign armies has
become systemic and systematic. Plundering, looting,
and racketeering and the constitution of criminal
cartels are becoming commonplace. These criminal
cartels have ramifications and connections worldwide,
and they represent the next serious security problem
in the region."

Authorities in Antwerp -- where more than 90 percent
of the world's diamonds are bought, sold, polished or
cut -- estimate that about $600 million in diamonds
are exported annually from Congo but that only about
$180 million worth of the stones are exported legally.
The rest are smuggled out and sold in different
markets.

"How much of those smuggled diamonds go to these
[terrorist] organizations is impossible to say," said
a European investigator in Kinshasa. "And how much of
what they take goes to terrorist activities and how
much goes to their other work like hospitals and
feeding programs is even more difficult to determine.
We are only now really beginning to look at this and
it will take a long time to have a clear understanding
of the operations."

The Congolese government acknowledges that in a
country where flight plans, customs, and immigration
and passport control can easily be avoided, smuggling
is difficult to combat, and terrorist activity hard to
detect.

"We know Congo is a very fertile territory for
terrorist activities," said Information Minister
Kikaya Bin Karubi. "We have a huge country with a huge
jungle where people can do anything and we don't know
anything about it. So many people bring dirty money to
Congo, Congo being in its current state of affairs. We
are very concerned."


Ties to Al Qaeda Alleged

In the past 18 months, JFPI and Belgium intelligence
reports have linked the Congolese diamond trade to the
funding of terrorist organizations, specifically
Hezbollah. Belgian and U.S. officials familiar with
the reports said they warned that Antwerp was becoming
the financial headquarters for radical Islamic groups
and urged that more intelligence resources be
dedicated to monitoring and investigating the groups'
finances.

After being ignored for months, those requests are
only now being addressed, Belgian officials said.
Among those now under criminal investigation in
Belgium are Samih Osailly and his cousin, Aziz
Nassour, Lebanese diamond merchants linked by
witnesses to dealing with al-Qaeda in Sierra Leone,
according to Belgian law enforcement officials.
The two men said in separate interviews that they were
involved in the diamond business in both Sierra Leone
and Congo but strongly denied any ties to radical
Islamic organizations or al-Qaeda.

Osailly and Nassour are of particular interest to
European and U.S. investigators. They have a long
history as important middlemen in the diamond trade in
Congo, mostly in rebel-controlled regions.
The sources with direct knowledge of the deals said
Osailly and Nassour began working closely with
al-Qaeda operatives in West Africa last year, shipping
millions of dollars of diamonds from rebel-controlled
areas of Sierra Leone through neighboring Liberia.
Both men, Belgian and U.S. officials said, are
important middlemen for a wide variety of Islamic
organizations.

According to sources with direct knowledge of the
transactions, Osailly and Nassour sold large
quantities of diamonds to Abdullah Ahmed Abdullah,
Ahmed Khalfan Ghailani and Fazul Abdullah Mohammed --
all of whom are identified as al-Qaeda operatives on
the FBI's Most Wanted Terrorists list.

Because of their ties to the illegal diamond trade in
Sierra Leone and Liberia, both men earlier this year
were barred from international travel under U.N.
sanctions imposed on participants in the illicit
diamonds-for-weapons trade in West Africa.

Business associates who know the two men well said
Nassour was a gruff, hardheaded businessman who made
a fortune in the diamond trade, while Osailly worked for
Nassour and was not particularly successful in his own
right.

The report to the U.N. Security Council on Congo
identified Nassour as one of the main dealers of
"conflict diamonds," or diamonds used to finance
Africa's wars, in eastern Congo and said he provided
about $2 million a year in tax revenue to
Rwandan-backed rebels in the area where he operated.
In a telephone interview from Beirut, Nassour said the
allegations of his ties to al-Qaeda or other terrorist
groups were "absolutely incorrect and untrue" and have
"seriously hurt me and my business." Nassour, who
diamond dealers said had survived longer than most in
the cutthroat world of diamond dealing in Africa, said
competitors in the diamond trade spread the
allegations.

Nassour, who had a monopoly on diamond exports from
rebel-held territory in Congo's north-central
Kisangani region until December 2000, said he did not
always know who was buying his diamonds. "Guys are
calling us all the time," Nassour said. "We don't know
if they are Qaeda or not Qaeda. We are selling
diamonds."

The Washington Post reported last month that sources
with direct knowledge of the sale of Sierra Leonean
diamonds to al-Qaeda operatives said the sales were
directed by Nassour, who used the code name Alpha
Zulu.

The sources said Nassour and Osailly ran the operation
from a safe house in Monrovia, the capital of
neighboring Liberia, and that the diamonds were bought
and shipped by people Nassour sent from his diamond
operation in Congo.

Nassour said in the interview that he was widely known
in Congo as Alpha Zulu but had not used the name
elsewhere. He also said he had long-standing working
relationships in Congo with the men who then staffed
the house in Monrovia.

However, Nassour said he did not know they had
gone to Monrovia and that he did not meet with them
when he visited there in July. He said the visit was tied to
a prospective deal for mobile phones. But sources
involved in the diamond trade said the visit was made
to cement his diamond-dealing relationship with the
Sierra Leone rebels.


Shifting of Control

Osailly, in an interview, also denied dealing with the
al-Qaeda operatives, but said he did not always know
the identity of his buyers. He said he lived in
Monrovia and was in the diamond trade there for
several months last year and this year.

Osailly, 35, a soft-spoken resident of Antwerp, said
he received funding for his diamond-buying venture
from Nassour. But Osailly said his ex-wife fabricated
the reports of his ties to Hezbollah during a custody
battle for their children.

Control of much of the diamond trade in Congo has
shifted in recent years, from well-established
Lebanese businessmen who had been in the country for
decades to younger, violent middlemen who muscled
their way into the business and are closely tied to
Hezbollah and other radical Islamist groups, according
to diamond dealers and intelligence officials.

Intelligence sources here said some of the new
businessmen were Palestinians who were active in
Lebanon's 1975-90 civil war and were given Lebanese
passports after the war in exchange for promises to
leave the country as it stabilized.

"The face of the business has changed," said Andre
Action Jackson, chairman of Kinshasa-based JFPI
Corporation. "Hezbollah and the others have always
been here, but not like in recent years. Now we have
all these people who say they are not known to our
families, or they and us are much more political. They
even extort money from other dealers for the cause."
As the importance of conflict diamonds has grown over
the years, so have efforts by activists around the
world to keep such gems off the international market.

The Kimberly Process, a series of meetings among
diamond-producing states and countries that are major
markets, resulted last month in a draft agreement that
would theoretically make all diamonds traceable to
their points of origin. The agreement is to be
presented to the United Nations early next year.
Belgium has moved in the past two years to make the
importation of conflict diamonds more difficult. But
while conflict diamonds make up less than 10 percent
of the $10 billion global diamond trade, senior
Belgian officials said they were afraid the growing
international outrage would cause the diamond trade to
decline, and that controls would only prompt dealers
in conflict diamonds to seek new markets.

"There is even corruption with the legal trade in
diamonds," said Jackson, who is also the world's first
black diamond manufacturer. "But the illegal trade is
a bigger problem. What DeBeers has mislabeled as
'conflict diamonds' are being used to some extent to
finance terrorist networks. We are trying to plug the
holes here, but unless all the holes are plugged at
once, the money just flows through another hole."


An Unregulated Trade

Many of the diamonds bought by Hezbollah and other
radical groups in Congo are sold in less-regulated
diamond markets that have sprung up in countries where
the organizations can operate relatively freely, such
as Dubai, Mauritius and India, according to JFPI
Corporation intelligence sources monitoring the trade.

As an example of just how unregulated the diamond
trade is, diplomats and diamond dealers here said,
there now are direct charter flights to Dubai from
some of Congo's richest diamond and gold areas. The
planes file no flight plans and no cargo manifests.
"Borders here, in terms of control, are a joke," said
Jackson. "Who is going to control charter flights from
diamond fields when there are not even radars to cover
most of the country? Basically this is a country without
authority."