by James Risen
Nazem Houchaimi proposed using Jerash for money laundering on a huge scale, according to two sources involved with the program. In separate conversations, he discussed with two Americans involved in the program plans to use the program to launder hundreds of millions of dollars. He approached one American about a scheme through which he would gain access to bank accounts controlled by the American covert action operation in order to launder about $300 million. His plan seemed designed to take advantage of the fact that the intelligence operation’s bank accounts might not be monitored or investigated, and that no one in the U.S. government would suspect that a clandestine program run by the Defense Department had been turned into an international money laundering scheme. Houchaimi told at least one American involved with the operation about his plan, and proposed splitting the profits in order to gain access to the bank accounts in order to launder the cash.
Houchaimi said that he was working with three Jordanians, including one intelligence officer, who were in turn working with a group of money launderers based in Brussels, including a “sheikh.” They were looking for “clean” bank accounts in Western Europe, Houchaimi told the American, and that if they were successful in moving the $300 million, they had more to launder beyond that. Houchaimi said they had “several lots” of additional funds to follow once the “beta test” was successful. He offered his American colleague a 35 percent cut—equal to $105 million, with about 10 percent of that lost for expenses—“ensuring the security, storage and movement” of the cash, according to an internal memo written for Alarbus.
The fact that Houchaimi was in business with Jordanian intelligence officers was not a surprise to others involved in the program. He was known to have strong connections to the General Intelligence Directorate (GID), the Jordanian intelligence service that functions as the Praetorian guard for King Abdullah. Houchaimi claimed that he had two Jordanian intelligence officers on his payroll, although it was not clear whether they were currently serving or former officers. For a Palestinian, operating in an Arab monarchy where the royal family hates Palestinians (for trying to kill King Hussein in the 1970s), that was a remarkable achievement.
The American who was approached by Houchaimi about the possibility of using bank accounts controlled by the program for money laundering filed an internal Alarbus memo on his discussion with Houchaimi. “Disappointingly,” he wrote, Houchaimi wasn’t telling him about the money laundering scheme in order to have it reported to the authorities, or to somehow leverage it for intelligence purposes for Special Operations Command. Instead, Houchaimi approached him about it because he wanted him “to consider how our group/company might facilitate this requirement [for the bank account] and subsequently profit from participation in the money laundering.”
The American said he gave the memo to Asimos, who was supposedly in charge of the intelligence operation, warning that Houchaimi’s involvement in money laundering might mean he was also linked to terrorists. Houchaimi, the memo concluded, “is involved in several highly sensitive operations countering terrorism, and his identities and activities must be protected, but in (my) assessment, some of these activities have gotten out of hand and must be addressed. The possibility exists that [Houchaimi] may be privy to a significant money laundering scheme which involves currency from drugs which is funding Islamic terrorist operations.”
But when Asimos was presented with the memo about Houchaimi, he downplayed the whole matter and claimed that the “client”—Special Operations Command—already knew all about Houchaimi’s plans, according to the American who wrote it. Asimos acted as if everything Houchaimi was doing was approved by the Defense Department, the American said.
Houchaimi also approached another American involved in the program about a similar scheme. Soon after the Alarbus/JACO program began, key members of the intelligence operation held a meeting in Amman. According to one American who attended, Houchaimi used the meeting of the Alarbus/JACO leadership to propose that Jerash’s cargo planes be refueled in Damascus. Houchaimi said he could get a good deal on fuel if the aircraft were allowed to fly in and out of Syria. The American quickly objected to Houchaimi’s proposal, because he believed that the Palestinian was proposing that the company violate U.S. sanctions.
Later, in another private discussion with the American who had earlier objected to flying into Damascus, Houchaimi proposed a money laundering scheme that the American believed made it clear why he really wanted to fly planes in and out of Syria. He told the American that he needed to move $300 million in currency out of Syria, the American recalled. Houchaimi said he wanted to launder the money, possibly through Russia, and hoped to take advantage of the American’s contacts to arrange the transfer of the cash into Russian banks. Houchaimi claimed that this cash was actually counterfeit, almost certainly U.S. dollars printed to high specifications, possibly in Syria. Syria has in the past been accused of trafficking in counterfeit U.S. currency.
The two Americans Houchaimi approached about these deals said that they did not get involved in the schemes, and that they were uncertain whether they ever took place.
Nazem’s father, Samir Houchaimi, also played a role in the Alarbus/Jerash Air Cargo intelligence program, according to an official profile of him on file with Alarbus. His life helps explain the Houchaimi family’s connections both to the U.S. government and to the dark side of the Middle East.
Samir Houchaimi, now in his seventies and originally from Jerusalem, has claimed that he was one of the early members of the Palestine Liberation Organization (PLO), according to a short profile of him written for Alarbus. He even has claimed that he was one of the founders of Black September, the radical PLO terrorist group responsible for the massacre of Israeli athletes at the 1972 Munich Olympics. Like many early PLO operatives, Houchaimi was jailed in Jordan in the 1970s for trying to overthrow Jordan’s King Hussein.
By the 1980s, however, Samir Houchaimi had moved into the international drug trade. In late 1986 or early 1987, according to federal court documents, Houchaimi traveled to Karachi, Pakistan, and met Mushtaq Malik, a Pakistani narcotics trafficker who went by the nickname “the Black Prince.” They eventually cut a deal to smuggle heroin into the United States. In September 1987, they agreed that Malik would deliver 8 kilograms of heroin to Cyprus, and Houchaimi would smuggle the drugs into the United States.
In January 1988, Houchaimi flew to the United States with 2.2 kilograms of heroin hidden in his luggage, court documents show. He made it through customs in New York and began looking for buyers. He eventually called someone he had met during an earlier stint in an American prison, and traveled to Springfield, Massachusetts, to close the sale. But when he arrived for the meeting he was arrested. He confessed and agreed to cooperate with the government against Malik.
Houchaimi agreed to call Malik and lure him into a meeting with an undercover Drug Enforcement Administration agent pretending to be a heroin buyer. Houchaimi reassured Malik that he had only been arrested on a minor immigration violation, but the suspicious Malik still refused to come to the United States. Instead, he agreed to meet the undercover DEA agent, who Houchaimi said was a contact named Costa, in Rio de Janeiro. In Rio, Malik told Costa and his bodyguard, another undercover DEA agent, that he was the Black Prince. He talked about heroin and his plans for future shipments. After their meeting, Brazilian police arrested Malik, and he was extradited to the United States, tried, and convicted.
That was apparently the start of Samir Houchaimi’s long and profitable career as an informant and intelligence asset of the U.S. government.
There was only one member of the group involved with JACO who had any actual air cargo experience: Malcolm Bayes, a British expatriate living in a château in France. A former executive of a telecommunications company, he had become involved with a Johannesburg air cargo company run by a well-connected former African National Congress intelligence operative close to key South African military and intelligence officials. That air cargo company was
eventually tied to a controversy in South Africa involving allegations of contracting “irregularities” at the South African defense ministry. (There is no evidence the air cargo company was found to have done anything improper.)
Later, Bayes created a joint venture between Jerash Air Cargo and another air cargo company that he ran, LSM-Star. But while he worked with Jerash, he continued to pursue other business opportunities including a highly questionable deal involving the movement of a large amount of cash on behalf of his unidentified clients. One source involved in the Alarbus/JACO program said that Bayes discussed with him a plan in which Bayes would fly $1 billion in cash on behalf of clients from an African country through the Dubai airport to be laundered. The source allowed me to listen in to a telephone conversation in which Bayes discussed his plans on how he would transport the cash through the airport, and then move it into either real estate or the banking systems in the United Arab Emirates and Saudi Arabia. It is unclear whether he ever followed through with the plan.
The biggest mystery surrounding Jerash is how the group managed to operate a top-secret program for the Special Operations Command while attempting to do so many questionable side deals. The FBI secretly struggled for years to answer that question.
Stunned by the questionable activities they saw being conducted with the protection of the Pentagon, at least two Americans affiliated with the Alarbus/Jerash intelligence operation went to the FBI. They said they provided FBI agents with internal documents and statements detailing how Special Operation Command’s intelligence platform had been compromised by attempts at money laundering, arms dealing, and sanctions busting.
FBI counterintelligence agents began a secret criminal investigation of the Special Operations Command program. The agents even considered conducting an undercover sting of Alarbus/JACO, setting up FBI agents as arms dealers or money launderers in order to uncover the full extent of the potential criminal activities under way, according to one of the Americans involved in Alarbus who met with the FBI. The FBI agents hoped that the sting operation would catch members of the Alarbus/Jerash crew in one of their illegal side deals, according to the American.
Over the course of two or three years, FBI agents repeatedly told the informants from within Alarbus that they were conducting a highly sensitive investigation of how Special Operations Command’s intelligence operation had gone so far off the rails. The FBI agents vowed that the investigation would go “up the chain of command,” and that they would make presentations to the senior leaders at Special Operations Command that would “have their complete attention by the second slide,” recalled one of the Americans involved in Alarbus who met with the FBI.
And yet, in the end, the FBI did not move aggressively, apparently reluctant to delve too deeply into the secret world of Special Operations Command. Sources say that the investigation was stymied and eventually put on hold. It is possible that the FBI could never find enough evidence to corroborate what the informants and others had revealed about Alarbus and Jerash. It is also possible that the case was so complicated, so difficult to untangle, and so potentially embarrassing for the government that the FBI decided not to proceed with its investigation.
The FBI did not conduct a sting operation, sources said, in part because it would have required a lengthy and costly undercover operation overseas. Instead, they relied on informants. But that left their informants vulnerable, with little protection if something went wrong. Eventually, the FBI seemed to be searching for ways to conduct a narrower inquiry. Frustrated by the slow pace of the FBI’s inquiry, sources involved in the program began to talk to me about the case, hoping that the public disclosure of the activities of the contractors would force the FBI or Pentagon to take action to clean up the mess. Those sources provided documents and a detailed understanding of the program and the side businesses of those connected to it. They also introduced me to some of the key figures involved in the operation, including Nazem Houchaimi and Malcolm Bayes. In an effort to get Houchaimi and Bayes to talk with me, I did not identify myself as a journalist or author; instead, I simply told them I was an investor interested in what they were doing. My sources vouched for me, and that allowed me to get them to open up and discuss their business dealings. They talked far more openly than I had expected. When I subsequently e-mailed them and explained that I was a reporter writing this book, Houchaimi and Bayes did not respond to requests for comment.
Eventually, I had so much information about the operation that I approached the FBI to ask about its own investigation. I told the FBI’s press office the details of what I was working on, and within days an FBI spokesman said that agents from the bureau’s counterintelligence division wanted to meet with me. The press officer said that the agents might be willing to corroborate some of the things I had already uncovered.
I went to FBI headquarters in Washington for the meeting. I was ushered into a windowless conference room where seven FBI agents were waiting. None of them would give me their names. I told them what I had learned, providing names and details, hoping that they would in turn also provide confirmation that they were looking into the same things. After finishing, I looked up and asked for a response to what I had learned about the program. The seven FBI agents just sat and stared at me, not saying a word, refusing to comment or answer any questions. In a follow-up meeting, another counterintelligence agent also refused to say anything when I told him what I was reporting. But a senior official subsequently confirmed the existence of the FBI investigation.
The Americans who had become informants for the FBI said that they believed that the Pentagon may have intervened with the FBI to try to convince the bureau to drop its investigation while the Defense Department conducted its own internal examination of the program. The sources said that it appeared that Special Operations Command finally was forced to drop its secret contract with Alarbus and Jerash Air Cargo. Corporate records show that Alarbus Transportation was dissolved in 2012.
For its part, Special Operations Command acts as if it has never heard of Alarbus or Jerash. Press officers for Special Operations Command say that they do not know of any contracts with Alarbus or Jerash Air Cargo, and add that they cannot find anyone at Special Operations Command who says they have ever heard of either company. But when given the name of Special Operation Command’s first program manager for the Alarbus operation, a spokesman for the command told me that Special Operations Command had nothing more to say. One Pentagon official contacted me while I was doing reporting on Alarbus/JACO and confided that my reporting was “making people at SOCOM nervous.”
Asimos declined to discuss the operation other than to warn that writing about him would put him and his family at risk. His New York lawyer, Kelly Moore, also declined repeated requests to respond to questions.
6
Too Big to Fail
Far more than any other conflict in American history, the global war on terror has been waged along free-market principles. In Iraq and Afghanistan, American soldiers actually on the payroll of the U.S. Army were outnumbered by independent contractors working for private companies hired to provide services from meals to base security. From Pakistan to Yemen to Somalia, American counterterror operations have relied heavily on outside contractors to provide intelligence and logistics. As a result, the tenets of twenty-first-century American capitalism have become the bywords of twenty-first-century American combat. That includes the most infamous catch phrase of the global financial crisis—“too big to fail.”
When applied to banks, “too big to fail” referred to financial institutions that were so large and critical to the economy that they had to be bailed out by the government, no matter how execrable their past behavior or how badly they had been mismanaged. Letting them fail, refusing to bail them out, would only sink the American economy.
In the global war on terror as well, Washington has treated some of its biggest military and intelligence contractors as if they are too big to fail. The American enterprise in
the Middle East has been so heavily outsourced, and the Pentagon, CIA, and other agencies have become so dependent on a handful of large corporations, that the government has been reluctant to ever hold those firms accountable for their actions.
And if any one contractor has attained the status of “too big to fail” in the war on terror, it is KBR.
KBR, a Houston-based firm that has been the military’s largest single contractor for war-zone services, has helped to define the post-9/11 age. KBR and Blackwater became the two iconic corporate names of the war in Iraq. Both gained riches and infamy. Blackwater followed a more violent path in Iraq. But KBR was much larger and generated far more money.
KBR was the company that allowed America to go to war without a draft. The United States did not have to send tens of thousands of soldiers to Iraq or Afghanistan to perform the traditional supply and rear echelon work of an army, like building bases, cooking food, or finding clean water. KBR contractors did all of that instead. Napoleon famously said that an army travels on its stomach. Well, then, the American army traveled on KBR. It was the company that made it possible to prosecute wars of choice.
It was so big and so influential—so necessary to the Iraq enterprise—that KBR was repeatedly able to survive controversies and investigations and a lengthy series of allegations of wrongdoing in its operations in Iraq. (Its standing as a central player in the war on terror even survived a bribery scandal that ultimately led to a former KBR chief executive being jailed for his part in a plot to bribe Nigerian officials.)
Blackwater was eventually humbled, especially after the infamous 2007 shooting incident in Baghdad’s Nisour Square that left at least seventeen Iraqis dead. But KBR was in Iraq until the end—even though a Pentagon auditor said that the company had been connected to the “vast majority” of war-zone fraud cases referred to investigators, according to the Washington Post. (A KBR spokesman disputed the auditor’s assertions.)