By David E. Kaplan Monday Dec. 5, 2005: The first blast struck at 1:25 p.m., shattering the walls of the Bombay Stock Exchange, leaving a grisly scene of broken bodies, shattered glass, and smoke.
Next to be hit was the main office of the national airline, Air India, followed by the Central Bazaar and major hotels. At the international airport, hand grenades were thrown at jets parked on the tarmac. For nearly two hours the carnage went on, as unknown assailants wreaked havoc upon one of the world's largest cities. In all, 10 bombs packed with plastic explosives rocked Bombay, killing 257 and injuring over 700.
What happened in Bombay on that day, March 12, 1993, was a chilling precursor to the 9/11 terrorist attacks, a careful choreography of death and destruction, aimed at the heart of a nation's financial center and intended to maximize civilian casualties. Engineered by Muslim extremists, the attacks were meant to exact revenge for deadly riots by Hindu fundamentalists that had claimed over a thousand lives, most of them Muslim. But more than vengeance was at work in Bombay.
Indian police later recovered an arsenal big enough to spark a civil war: nearly 4 tons of explosives, 1,100 detonators, nearly 500 grenades, 63 assault rifles, and thousands of rounds of ammunition. Within days of the attacks, police had gotten their first break by tracing an abandoned van filled with a load of weapons. The trail soon led to a surprising suspect: not a terrorist but a gangster. And not just any gangster but an extraordinary crime boss, a man known as South Asia's Al Capone.
Virtually unknown in the West, Dawood Ibrahim is a household name across the region, his exploits known by millions. He is, by all accounts, a world class mobster, a soft spoken, murderous businessman from Bombay who now lives in exile, sheltered by India's archenemy, Pakistan. He is India's godfather of godfathers, a larger than life figure alleged to run criminal gangs from Bangkok to Dubai. Strong arm protection, drug trafficking, extortion, murder for hire all are stock in trade rackets, police say, of Dawood Ibrahim's syndicate, the innocuously named D Company.
Dawood, as he is known in the Indian press, is very much on Washington's radar screen today. Two years ago, the Treasury Department quietly designated Ibrahim a "global terrorist" for lending his smuggling routes to al Qaeda, supporting jehadists in Pakistan, and helping engineer the 1993 attack on Bombay. He is far and away India's most wanted man, his name invoked time and again by Indian officials in their discussions of terrorism with U.S. diplomats and intelligence officers. As a result of those discussions, the FBI and the Drug Enforcement Administration each have active investigations into Dawood's far flung criminal network, U.S. News has learned.
Understanding Dawood's operations is important, experts say, because they show how growing numbers of terrorist groups have come to rely on the tactics and profits of organized criminal activity to finance their operations across the globe. An inquiry by U.S. News, based on interviews with counterterrorism and law enforcement officials from six countries, has found that terrorists worldwide are transforming their operating cells into criminal gangs.
"Transnational crime is converging with the terrorist world," says Robert Charles, the State Department's former point man on narcotics. Antonio Maria Costa, the head of the United Nations Office on Drugs and Crime, agrees: "The world is seeing the birth of a new hybrid of organized crime terrorist organizations. We are breaking new ground."
Blood money. Some scholars argue that terrorists and traditional crime groups both now exist on a single, violent plane, populated at one end by politically minded jehadists and at the other by profit driven mobsters, with most groups falling somewhere in between. Mafia groups and drug rings in Colombia and the Balkans, for example, commit political assassinations and bomb police and prosecutors, while terrorist gangs in Europe and North Africa traffic in drugs and illegal aliens. Both crime syndicates and terrorist groups thrive in the same subterranean world of black markets and laundered money, relying on shifting networks and secret cells to accomplish their objectives. Both groups have similar needs: weapons, false documentation, and safe houses.
But some U.S. intelligence analysts see little evidence of this melding of forces. Marriages of convenience may exist, they say, but the key difference is one of motive: Terrorist groups are driven by politics and religion, while purely criminal groups have just one thing in mind profit. Indeed, associating with terrorists, particularly since 9/11, can be very bad for business and while crime syndicates may be parasitical, most do not want to kill their host.
What many intelligence analysts do see today, however, is terrorist organizations stealing whole chapters out of the criminal playbook trafficking in narcotics, counterfeit goods, illegal aliens and in the process converting their terrorist cells into criminal gangs.
The terrorist gang behind the train bombings in Madrid last year, for example, financed itself almost entirely with money earned from trafficking in hashish and ecstasy. Al Qaeda's affiliate in Southeast Asia, Jemaah Islamiyah, engages in bank robbery and credit card fraud; its 2002 Bali bombings were financed, in part, through jewelry store robberies that netted over 5 pounds of gold. In years past, many terrorist groups would have steered away from criminal activity, worried that such tactics might tarnish their image. But for hard pressed jehadists, committing crimes against nonbelievers is increasingly seen as acceptable. As Abu Bakar Bashir, Jemaah Islamiyah's reputed spiritual head, reportedly said: "You can take their blood; then why not take their property?"
The implications are troubling because organized crime offers a means for terrorist groups to increase their survivability. A Stanford University study conducted after the 9/11 attacks looked at why some conflicts last so much longer than others. One key factor: crime. Out of 128 conflicts, the 17 in which insurgents relied heavily on "contraband finances" lasted on average 48 years over five times as long as the rest. "If the criminal underworld can keep terrorist coffers flush," says Charles, the former State Department official, "we will continue to face an enemy that would otherwise run out of oxygen."
The growing reliance on crime stems from the end of the Cold War, when state sponsorship of terrorism largely faded along with communism, forcing groups to become much more self sufficient. Accelerating the trend, analysts say, is the crackdown since 9/11 on fundraising by Islamic radicals from mosques and charities, which has pushed their operations further toward racketeering. "The bottom line is if you want to survive today as a terrorist, you probably have to support yourself," says Raphael Perl, a counterterrorism specialist at the Congressional Research Service. The drug trade, in particular, has proved irresistible for many. Nearly half of the 41 groups on the government's list of terrorist organizations are tied to narcotics trafficking, according to DEA statistics.
Scams. The new face of terrorism can best be seen in western Europe. "Crime is now the main source of cash for Islamic radicals in Europe," says attorney Lorenzo Vidino, author of the new book Al Qaeda in Europe. "They do not need to get money wired from abroad like 10 years ago. They're generating their own as criminal gangs." European police and intelligence officials agree: The Continent's most worrisome cells, composed largely of immigrants from Morocco and Algeria, have in effect become racketeering syndicates. Their scams are as varied as the criminal world: Drugs, smuggling, and fraud are mainstays, but others include car theft, selling pirated CD s, and counterfeiting money.
One enterprising pair of jehadists in Germany hoped to fund a suicide mission to Iraq by taking out nearly $1 million in life insurance and staging the death of one in a faked traffic accident. Some cells are loosely bound and based on petty crime; others, like the group behind the Madrid bombings, suggest a whole new level of sophistication.
The terrorists behind the Madrid attacks were major drug dealers, with a network stretching from Morocco through Spain to Belgium and the Netherlands. Their ringleader, Jamal "El Chino" Ahmidan, was the brother of one of Morocco's top hashish traffickers. Ahmidan and his followers paid for their explosives by trading hashish and cash with a former miner. When police raided the home of one plotter, they seized 125,800 ecstasy tablets one of the largest hauls in Spanish history. In all, authorities recovered nearly $2 million in drugs and cash from the group. In contrast, the Madrid bombings, which killed 191 people, cost only about $50,000.
Similar reports of drug dealing jehadists are coming out of France and Italy. In Milan, Islamists peddle heroin on the streets at $20 a hit and then hand off 80 percent of the take to their cell leader, according to Italy's L'Espresso magazine. The relationship, surprisingly, is not new. As early as 1993, says Vidino, French authorities warned that dope sales in suburban Muslim slums had fallen under the control of gangs led by Afghan war veterans with ties to Algerian terrorists. What is new is the scale of this toxic mix of jehad and dope. Moroccan terrorists used drug sales to fund not only the 2004 Madrid attack but the 2003 attacks in Casablanca, killing 45, and attempted bombings of U.S. and British ships in Gibraltar in 2002. So large looms the North African connection that investigators believe jehadists have penetrated as much as a third of the $12.5 billion Moroccan hashish trade the world's largest a development worrisome not only for its big money but for its extensive smuggling routes through Europe.
Along with drug trafficking, fraud of every sort is a growth industry for European jehadists. Popular scams include fake credit cards, cellphone cloning, and identity theft low level frauds that are lucrative but seldom attract the concerted attention of authorities. Some operatives are more ambitious, however. Officials point to the case of Hassan Baouchi, a 23 year old ATM technician in France. Baouchi told police last year that he'd been held hostage by robbers who forced him to empty six ATMs of their cash about $1.3 million. Investigators didn't quite buy Baouchi's story and soon put him under arrest; the money, they believe, has ended up with the Moroccan Islamic Combatant Group the al Qaeda affiliate tied to the bombings in Casablanca and Madrid.
Another big racket for European jehadists is human smuggling. "North Africa and western Europe are somewhat like Mexico and the United States," says a U.S. counterterrorism agent. "But now imagine if Mexico were Muslim and jehadist cells were the ones moving aliens across the border." Jehadists do not dominate Europe's lucrative human smuggling trade, but they are surely profiting by it. Authorities in Italy suspect that one gang of suspected militants made over 30 landings on an island off Sicily, and that it moved thousands of people across theMediterranean at some $4,000 a head. Particularly active is the Salafist Group for Call and Combat, an Algerian al Qaeda affiliate known by its French acronym, GSPC.
Two years ago, German authorities dismantled another group moving Kurds into Europe, tied to al Qaeda ally Ansar al Islam, a fixture of the Iraq insurgency. A recent Italian intelligence report notes that jehadists' work in human smuggling has brought them into contact with domestic and foreign criminal organizations. One partner in the trade, sources say, is the Neapolitan Camorra, the notorious Naples based version of the Mafia, which operates safe houses for illegal aliens. Italian court records show contact between Mafia arms dealers and radical Islamists as early as 1998.
Prison recruits. The prime training ground for Europe's jehadist criminals may well be prison. There are no hard numbers, but as much as half of France's prison population is now believed to be Muslim. In Spanish jails, where Islamic radicals have recruited for a decade, the number has reached some 10 percent. Ahmidan, leader of the Madrid bombing cell, is thought to have been radicalized while serving time in Spain and Morocco. Prison was also the recruiting center for many of the 40 plus suspects nabbed by Spanish authorities last year for plotting a sequel to the Madrid bombings an attack with a half ton of explosives on Spain's national criminal court. Nearly half the group had rap sheets with charges ranging from drug trafficking to forgery and fraud.
Al Qaeda's leadership, however, has proved more wary about jumping into the drug trade. Holed up in the forbidding mountain refuges of the Pakistan Afghanistan border, Osama bin Laden and his remaining lieutenants have steered clear of the largest horde of criminal wealth in years: the exploding Afghan heroin trade. Press reports of bin Laden's involvement in the drug trade are flat wrong, say counterterrorism officials. Long ago, al Qaeda strategists reasoned that drug trafficking would expose them to possible detection, captives have told U.S. interrogators. They also don't trust many of the big drug barons, intelligence officials say, and have encouraged their members not to get involved with them.
Bin Laden continues to come up with funds raised from sympathetic mosques and other supporters, but the money no longer flows so easily. Pakistan and Saudi Arabia have banned unregulated fundraising at mosques, and western spy agencies now watch closely how the money flows from big Islamic charities. One result: Cash strapped jehadists in the badlands of the border region are staging kidnappings for ransom and highway robberies, Pakistani officials tell U.S. News. "Those people are now feeling the pinch," says Javed Cheema, head of the Interior Ministry's National Crisis Management Cell. "We see a fertile symbiosis of terrorist organizations and crime groups." Some jehadists have joined in wholesale pillaging of Afghanistan's heritage by smuggling antiquities out of the country a trade nearly as lucrative as narcotics.
Among the items being sold clandestinely on the world market: centuries old Buddhist art and other works from the pre Islamic world. Apparently, al Qaeda's interest is not new; before 9/11, hijack ringleader Mohamed Atta approached a German art professor about peddling Afghan antiquities, Germany's Federal Criminal Police Office revealed this year. Atta's reason, reports Der Spiegel magazine: "to finance the purchase of an airplane."
Al Qaeda may be avoiding the heroin trade, but nearly everyone else in the region from warlords to provincial governors to the Taliban is not. The reasons are apparent: Afghanistan's opium trade is exploding.
The cultivation of opium poppies, from which heroin is made, doubled from 2002 to 2003, according to CIA estimates. Then, last year, that amount tripled. Afghanistan now provides 87 percent of the world's heroin. "We have never seen anything like this before," says Charles, the former State Department narcotics chief. "No drug state ever made this much dope and so quickly." The narcotics industry now makes up as much as half of Afghanistan's gross domestic product, analysts estimate, and employs upward of 1 million laborers, from farmers to warehouse workers to truck drivers. And now Afghans are adding industrial level amounts of marijuana to the mix. U.N. officials estimate that some 74,000 to 86,000 acres of pot are being grown in Afghanistan over five times what is grown in Mexico.
Corruption. And if al Qaeda itself is staying out of drugs, its allies certainly are not. The booming drug trade has given a strong second wind to the stubborn insurgency being waged by the Taliban and Islamist warlords like Gulbuddin Hekmatyar. Both the Taliban and Hekmatyar's Hezb i Islami army control key smuggling routes out of the country, giving them the ability to levy taxes and protection fees on drug caravans. Crime and terrorism experts are also alarmed over the corrosive, long term effects of all the drug money, not just within Afghanistan but across the region. The ballooning dope trade is rapidly creating narco states in central Asia, destroying what little border control exists and making it easier for terrorist groups to operate. Ancient smuggling routes from the Silk Road to the Arabian Sea are being supercharged with tons of heroin and billions of narcodollars. Within Afghanistan, drug fueled corruption is pervasive; governors, mayors, police, and military are all on the take. A raid this year in strategically located Helmand province came up with a whopping 9 1/2 tons of heroin stashed inside the governor's own office.
The smuggling routes lead from landlocked Afghanistan to the south and east through Pakistan, to the west through Iraq, and to the north through central Asia. Throughout the region the amounts of drugs seized are jumping, along with rates of crime, drug addiction, and HIV infection. Particularly hard hit are Afghanistan's impoverished northern neighbors, the former Soviet republics of Kirgizstan and Tajikistan. Widely praised demonstrations in Kirgizstan this year, which overthrew the regime of strongman Askar Akayev, have brought to power an array of questionable figures. "Entire branches of government are being directed by individuals tied to organized crime," warns Svante Cornell of the Central Asia Caucasus Institute at Johns Hopkins University. "The whole revolution smells of opium."
Neighboring republics are little better off. Central Asia's major terrorist threat, the Islamic Movement of Uzbekistan, has largely degenerated into a drug mafia, officials say. In Kazakhstan the interior minister tried to investigate corruption by going undercover in a truck packed with 9 tons of watermelons, motoring 1,200 miles from the Kirgiz Republic to the Kazakh capital. His team had to pay bribes to 36 different police and customs officials en route some as little as $1.50. (Others merely accepted their bribe in melons.) The cargo was never inspected. What is happening in Iran, meanwhile, is "a national tragedy," according to the U.N.'s Costa. So much Afghan dope is being shipped into the country that it now has the world's highest per capita rate of addiction. The ruling mullahs in Tehran have taken it seriously; Iranian security forces have fought deadly battles with drug traffickers along their border, losing some 3,600 lives in the past 16 years. But even as their troops fight, the corruption has reached high officials of the Iranian government, who are using drug profits as political patronage, sources tell U.S. News. "There are indications," says Cornell, "that hard line conservatives are up to their ears in the Afghan opium trade."
Nor has Russia escaped the heroin boom's impact. From central Asia, growing amounts of Afghan heroin are entering the south of the country; drug control officials report that large numbers of Russian military are on the take, even trucking the stuff in army vehicles. The level of corruption has, in turn, raised concern over the ultimate black market: in radioactive materials. Russia's "nuclear belt" a chain of nuclear research and weapons sites runs directly along those heroin smuggling routes. How bad are conditions in the area? Bemoans one intelligence expert: "We know so little."
Iraq, too, is starting to see its share of narcotics, but drugs are but a bit player in an insurgency that has also blurred the lines between terrorism and organized crime. Within Iraq's lawless borders exists an unsavory criminal stew composed of home grown gangsters, ex Baathists, and jehadists. "Terrorists and insurgents are conducting a lot of criminal activities, extortion and kidnapping in particular, as a way to acquire revenues," Caleb Temple of the Defense Intelligence Agency testified to Congress this July. Among the biggest cash cows: The insurgents take part in the wholesale theft of much of Iraq's gasoline supply, earning millions of dollars in a thriving black market.
Extortion and protection are also rife, and kidnapping for ransom has ballooned into a major industry, with up to 10 abductions a day. Among those targeted: politicians, professors, foreigners, and housewives. Those with political value may find they've been sold to militants.
The insurgents are also key players in the graft and corruption that have enveloped Iraq. So much foreign aid money has disappeared that two U.S. intelligence task forces are now investigating its diversion to the insurgency, U.S. News has learned. Western aid agencies, Islamic charities, and U.S. military supply programs all have been targeted, analysts believe. Occupation authorities cannot account for nearly $9 billion of oil revenues it had transferred to Iraqi government agencies between 2003 and 2004, according to an audit by a special U.S. inspector general set up by Congress. "Even if a little bit ends up in insurgent hands," says one official, "it doesn't take a lot to build a truck bomb." The implications are troubling: The insurgents may be using America's own foreign aid to fund the killing of U.S. troops.
Back at home, U.S. officials are looking warily at the growing rackets of terrorist groups overseas and voice concern that the trend will grow here. "We see a lot of individual pockets of it in the United States," says Joseph Billy, deputy chief of the FBI's counterterrorism division.
"Left unchecked, it's very worrisome this is one we have to be aggressive on." Federal investigators have uncovered repeated scams here largely involving supporters of Hamas and Hezbollah, and they have traced tens of thousands of dollars back to those groups in the Middle East. "There's a
direct tie," says Billy. The list of crimes includes credit card fraud, identity theft, the sale of unlicensed T shirts even the theft and resale of infant formula. Most of these U.S. rackets have been low level, but some, involving cigarette smuggling and counterfeit products, have earned their organizers millions of dollars.
Foreign fish. The big fish the Indian mobsters, Moroccan hash dealers, and Afghan drug barons are swimming overseas, however, and U.S. law enforcement is starting to train its sights on the worst of them. After being shut out of Afghanistan for two decades, the Drug Enforcement Administration is making progress in going after top Afghan traffickers tied to the Taliban. DEA agents are applying the same sort of "kingpin strategy" that helped to break the Medellin and Cali cartels in Colombia by targeting whole trafficking organizations.
The agency has identified some 10 of these "high value targets," led by Afghans who have amassed fortunes of as much as $100 million, officials say. Two already have fallen this year: In April, agents nabbed a man they've dubbed "the Pablo Escobar of Afghanistan," Taliban ally Bashir Noorzai, by enticing him to a New York meeting.
Noorzai is said to have helped establish the modern Afghan drug trade, and so lucrative were his operations that the indictment against him calls for the seizure of $50 million in drug proceeds. Then in October, the Justice Department announced the extradition of Baz Mohammad, another alleged "Taliban linked narcoterrorist," charged with conspiring to import over $25 million worth of heroin into the United States and other countries. Mohammad,according to an indictment, boasted that "selling heroin in the United States was a 'jehad' because they were taking the Americans' money at the same time the heroin was killing them." He is now awaiting trial, in a New York jail.
The DEA's experience, however, illustrates some of the problems in grappling with the nexus between organized crime and terrorism. Despite post 9/11 calls for cooperation, the DEA's ties to other U.S. agencies are often strained; the drug agency is not even considered part of the U.S. intelligence community. Pentagon officials, worried over "mission creep," routinely refuse to give DEA agents air support in Afghanistan.
Other turf issues still plague the FBI, CIA, Homeland Security, and other agencies, making collaborative work on the crime terrorism issue problematic. The intelligence community, for example, remains leery of seeing its people or information end up in court. "It's the same wall we saw between law enforcement and the intelligence world," says one insider. "Only now it's between terrorism and other crimes."
"We have stovepiped battling terrorism and organized crime," agrees Charles, the State Department's former top cop. "You cannot meet a complex threat like this without a similar response. And we don't have one." Indeed, interviews with counterterrorism and law enforcement officials in a half dozen federal agencies suggest that cooperation across the government remains episodic at best and depends most often on personal relationships. "The incentives are all still against sharing," complains one analyst. "The leadership says yes, the policies say yes, but the culture says no. The bureaucracy has won."
Washington looks like a model of cooperation compared with Europe, however, where the walls between agencies and across borders stand even higher. "If we don't get on top of the criminal aspect and the drug connections, we will lose ground in halting the spread of these [terrorist] organizations," warns Gen. James Jones, head of the U.S. European Command, who has watched the rise in terrorist rackets with mounting concern. "You have to have much greater cohesion and synergy."
For a brief moment in the early '90s, American cops, spies, and soldiers did come together on a common target of crime and terrorism Pablo Escobar and his Medellin cocaine cartel. Escobar's killers were blamed for the murder of hundreds of Colombian officials and the bombing of an Avianca airliner that killed 110. To get Escobar, firewalls between agencies came down, information was shared, and money and people were focused on destroying one of the world's most powerful crime syndicates.
During the 1990s, transnational crime continued to be seen as a national security priority, but it fell off the map after 9/11. Until January of this year, the federal government's chief interagency committee on organized crime hadn't even met for three years. The intelligence community's reporting on the area, although boosted in the past year, remains a near bottom priority. One knowledgeable source called the quality of work overseas on crime "sorely lacking" and said the best material comes from other governments. Domestically, meanwhile, years of neglect by the FBI of analysis and information technology have left the agency without much useful information in its files. "Everyone thinks we've got huge databases with all our materials on organized crime," says one veteran. "We've got nothing close."
Still, the growing criminal inroads by terrorist groups have raised alarms among a handful of tough minded policymakers in Washington, and they are pushing for change. The National Security Council has begun work on a new policy on transnational crime that promises to make the crime terrorism connection a top priority. The CIA's Crime and Narcotics Center is spearheading the work of a dozen agencies in revamping the government's overall assessment of international crime; their report, with special attention to the nexus with terrorism, is scheduled for release early next year.
One program that has caught U.S. attention is underway in Great Britain, where London's Metropolitan Police now routinely monitor low level criminal activity for ties to terrorism, checking over reports of fraud involving banks, credit cards, and travel documents. Similar work is being done by the feds' Joint Terrorism Task Forces in some U.S. cities. And Immigration and Customs Enforcement has prioritized cracking rings smuggling people from high risk countries, with good success.
"Draining the swamp." In some ways, the deeper involvement by terrorists in traditional criminal activity may make it easier to track them. Criminal informants, who can be tempted with shortened prison time and money, are much easier to develop than the true believers who fill the ranks of terrorist groups. Acts of crime also attract attention and widen the chances that terrorists will make a mistake. Take, for example, a case uncovered this July, in which four men allegedly plotted to wage a jehad against some 20 targets in Southern California, including National Guard facilities, the Israeli Consulate, and several synagogues. Prosecutors said the planned attacks, led by the founder of a radical Islamic prison group, were being funded by a string of gas station robberies. The break in the case came not by an elite counterterrorist squad but by local cops who found a cellphone one of the robbers had lost during a gas station stickup.
Getting a handle on terrorism's growing criminal rackets will not prove easy, however. "Draining the swamp," as counterterrorism officials vow to do, may require more than even a seamless approach by intelligence and law enforcement can offer. Many of the worst groups owe their success to a pervasive criminality overseas, to failed states and no man's lands from Central Asia to North Africa to South America, where the rule of law remains an abstract concept. In other places, it is the governments themselves that are the criminal enterprises, so mired in corruption that entire countries could be indicted under U.S. antiracketeering laws. Together, they help make up a criminal economy that, like a parallel universe, runs beneath the legitimate world of commerce.
This global shadow economy of dirty money, criminal enterprises, and black markets has annual revenues of up to $2 trillion, according to U.N. estimates, larger than the gross domestic product of all but a handful of countries. Without its underground bankers, smuggling routes, and fraudulent documents, al Qaeda and its violent brethren simply could not exist. But taking on a worldwide plague of crime and corruption might be more than the public bargained for.
"Ultimately, cracking down means trying to impose order where there's instability, good governance where there's corruption and crime, and economic growth where there's poverty," says the University of Pittsburgh's Phil Williams, a consultant to the United Nations on crime and terrorism finance. "As long as the only routes of escape are violence and the black market, then organized crime and terrorism will endure as global problems."