VIENNA -- Last September, European police backed by anti-terrorist squads
raided the office here of a seemingly obscure organization, the Third World
Relief Agency, headed by a one-time Sudanese diplomat named Elfatih
Hassanein.
Since then, poring over several van loads of documents, they have pieced
together one of the untold stories of the Bosnian war: how Bosnia's
Muslim-led government evaded a United Nations arms embargo and purchased
hundreds of millions of dollars worth of black-market weapons.
In the documents and in the bank accounts of the Third World Relief
Agency, Austrian investigators have tracked $350 million they say flowed
from Muslim governments and radical Islamic movements to Bosnia. At least
half was used to purchase weapons illegally and smuggle them to the Bosnian
government army, according to Western intelligence estimates.
The agency has operated several civilian projects in Bosnia since 1992,
including a chicken farm, a news agency and a women's sewing collective,
and has purchased some equipment for the government, including satellite
telephones. But Western officials say Hassanein, who studied medicine in
Yugoslavia and set up the Third World Relief Agency in 1987, apparently
turned it into the chief broker of black-market weapons deals by Bosnia's
Muslim-led government and the agent of money and influence in Bosnia for
Islamic movements and governments around the world.
A Western banker in Austria referred to Hassanein as the "bagman" of
Bosnian President Alija Izetbegovic. "If the Bosnian government said we
need flour, he ran after flour. If they said we need weapons, he ran after
weapons."
The story of the Third World Relief Agency, reconstructed from documents
and interviews with police, banking officials and intelligence sources,
makes clear how much the Bosnian government depended on outside aid to
obtain and pay for desperately needed weapons. It also shows how the
embargo drove the Muslim government into alliances with some of the world's
most radical states, as well as terrorist movements -- contacts that
continue to haunt the U.S.-led Balkan peace process.
The agency took funds and support for Bosnia from wherever it could find
it, and the bulk of the cash originated in the Middle East: Iran was a big
contributor, as was Sudan, which like Iran is on the U.S. State
Department's watch-list of countries that support terrorism. Saudi Arabia
was the largest contributor, according to banking officials and
intelligence sources, and donations also came from pro-Western countries
like Pakistan, Turkey, Brunei and Malaysia.
But militants in the terrorist underworld are also believed to have used
the relief agency to get money to the Bosnian government, including the
wealthy Saudi Arabian emigre Osama Binladen, a suspected sponsor of
militant Islamic groups around the Middle East. Binladen, a resident of
Sudan until last year, is reportedly now in Afghanistan, where he has
issued statements calling for attacks on U.S. forces in the Persian Gulf.
Investigators say the agency also had ties to Sheik Omar Abdel Rahman, a
radical Egyptian cleric who was convicted of planning several terrorist
bombings in New York and is linked to the group that carried out the World
Trade Center bombing in February 1993. Intelligence agencies say they have
tapes of telephone calls by Rahman to the agency's office, during which he
discussed its commitment to sell the sheik's videotapes and sermons in
mosques around Europe.
Hassanein, identified by Western sources as a member of Sudan's ruling
National Islamic Front, built his arms smuggling operation with Islamic
activists from Bosnia who, like him, had ties to Izetbegovic, the Bosnian
president. Several of these men now hold senior positions in the Bosnian
government and, according to U.S. officials, they form the core of a
radical Islamic movement that has resisted U.S. attempts to exert influence
over the army and security services.
A senior Western diplomat in the region said the Clinton administration
knew about the Third World Relief Agency and its activities beginning in
1993. Still, the United States took no action to stop its fund-raising or
arms purchases, in large part because of the administration's sympathy for
the Muslim government and ambivalence about maintaining the arms embargo.
"We were told [by Washington] to watch them but not interfere," the
diplomat said. "Bosnia was trying to get weapons from anybody, and we
weren't helping much. The least we could do is back off. So we backed off."
He acknowledged that the Clinton administration, now that it is trying to
bring peace to Bosnia, is troubled by the influence gained by Bosnian
Muslim hard-liners through their work with the agency. "That is a major
downside," he said.
Austrian and German authorities also refrained from shutting down the
agency. Austrian officials said they did not act because it is not illegal
to negotiate a weapons deal on Austrian soil as long as the transaction
takes place elsewhere. The Austrian officials, speaking on condition of
anonymity, also acknowledged that public pressure to support Bosnia's
Muslims allowed them to turn a blind eye to the agency's activities.
Devout Muslim and Arms Broker
Elfatih Hassanein is a rotund man in his fifties with a salt-and-pepper
beard. He is impeccably polite in his fax transmissions and, according to
people who know him, is a devout Muslim who regularly interrupts meetings
to pray. A banker friend speaks of the man's natural altruism and genuine
interest in Bosnia's Muslims and support for their cause.
In a 1994 interview with Gazi Husrev Beg, a magazine focusing on Islamic
affairs, Hassanein called for the creation of an Islamic state in Bosnia.
"Bosnia, at the end, must be Muslim Bosnia," the magazine quoted him as
saying, otherwise "everything has lost its sense and this war was for
nothing." Hassanein added that war in Bosnia had helped the cause of Islam
by awakening a religious sense among Bosnia's secular Muslims. "However, it
is still not good, and I think that we have to find more suitable methods
to spread the correct teachings of Islam among Bosnian Muslims," he said.
Hassanein agreed to be interviewed for this report but subsequently
failed to respond to numerous phone calls and visits to his office in
Sarajevo.
He met Izetbegovic in the 1970s while attending medical school in the
Yugoslav capital, Belgrade, now the capital of Serbia, one of two regions
comprising Yugoslavia. Izetbegovic, then an Islamic scholar, visited
Belgrade frequently and met there with Muslim intellectuals. In a 1983
trial in Sarajevo, Izetbegovic, who was under indictment for fomenting
Muslim nationalism, said in his testimony that Hassanein was a good friend,
according to case documents.
Hassanein founded the Third World Relief Agency in 1987 with his brother,
Sukarno Hassanein. Western officials say the original purpose of the
organization was to encourage the rebirth of Islam in Eastern Europe and
the then-Soviet Union. It is not clear if Sudan formally backed the agency,
but Western intelligence officials say Hassanein is believed to have been
responsible for the Sudanese Islamic Front's policy in Bosnia, Afghanistan
and Pakistan.
When war broke out in Bosnia, Elfatih Hassanein was ready to play his role.
His agency received the official backing of the Bosnian government and by
late 1992 had opened offices in Sarajevo, Budapest, Moscow and Istanbul --
all key locations for the smuggling and purchasing of arms. In October
1992, Haris Silajdzic, then Bosnia's foreign minister, visited First
Austrian Bank here and vouched for Hassanein's credibility as the financial
representative of the beleaguered Bosnian state, sources said. In 1993,
Izetbegovic wrote a letter again assuring the bank that the Sudanese man
had the full confidence of the Bosnian authorities, the sources added.
Suddenly, money began to pour into the Third World Relief Agency. In one
month alone, July 1992, $20 million entered its account at the First
Austrian Bank. In October of that year, one Saudi Arabian government
official strolled into the bank's staid headquarters in downtown Vienna
with two suitcases filled with cash. He deposited $5 million. From 1992 to
1995, $350 million passed through the agency's hands, bank officials said.
In what may have been an attempt to facilitate his new work, Hassanein
acquired a diplomatic passport in March 1992 and became a Sudanese cultural
attache. The move allowed him to transport large amounts of cash through
Austria and into Croatia and Slovenia without being subjected to police
checks, Western officials said.
The agency's first large operation came to the attention of Western
intelligence agencies in September 1992, when Soviet-built transport planes
began arriving in Maribor, Slovenia, from the Sudanese capital, Khartoum.
While the cargo was marked humanitarian aid, it contained more than 120
tons of assault rifles, mortars, mines and ammunition, intelligence sources
said. Investigators say the arms originally came from surplus stocks of
Soviet weapons stored in the former East Germany and were probably
purchased by the Bosnians in Europe. It is not known whether Sudan played a
role in the deal other than as a point of transport.
Chartered Russian helicopters ferried some weapons to the
Muslim-controlled towns of Tuzla and Zenica in Bosnia. The choppers
refueled in Croatia's Adriatic port of Split. Investigators said a
Russian-American joint venture called Eco-Trends, an aircraft leasing
business, is believed to have provided the helicopters. An official for the
Moscow-based firm recalled something about the case but added that many
unsavory Russian characters used the name of the firm to win contracts
abroad.
The Maribor weapons deliveries stopped in September 1992 when Croatia
closed arms smuggling routes in apparent preparation for severing an
alliance between its Bosnian Croat proxies and the Bosnian Muslims. The
remaining 10,000 assault rifles, 750,000 rounds of ammunition, rockets and
explosives sat in the warehouse in Maribor until Slovenian officials
revealed their contents almost a year later. Their value was placed at
about $10 million.
Austrian agents earlier had identified the relief agency as the financier
of the deal, police officials said, after discovering it was paying storage
fees for the weapons in the airport.
In 1993, German police got another glimpse of the organization's work
when they stumbled across a weapons deal being negotiated in Germany by
Bosnian Muslims and Turkish arms dealers, according to August Stern, a
prosecutor in the German state of Bavaria. Germany indicted about 30
Bosnians and Turks on weapons and racketeering charges in connection with
the illegal arms deal, which was negotiated on German soil.
While Stern declined to provide information on the deal, Western sources
said it involved $15 million worth of light arms. Stern said the relief
agency was implicated as the financial broker of the deal. Malaysian and
Turkish troops who were participating in the U.N. Protection Force then
operating in Bosnia smuggled the arms into the country from Croatia,
several Western sources said. Commanders of the U.N. force, which was
disbanded last year, were unaware of the smuggling, investigators said.
Like the Maribor shipment, the weapons are believed to have come from arms
stocks in Europe of the old Soviet Red Army, Western officials said.
Stern said charges against some of the Bosnians and Turks were dropped
because he had insufficient evidence against them. He said he was still
waiting for evidence gathered by police here in Vienna.
Raid on Vienna Headquarters
German investigators -- and agents from Austria's antiterrorist task
force -- raided the headquarters of Third World Relief Agency as well as
several houses here last September, seizing enough documents to fill three
minivans.
The records showed that over the years it had moved hundreds of millions
of dollars through its account at First Austrian Bank. Documents provided
to The Washington Post show the agency transferring a total of $2.6 million
to accounts in places such as Liechtenstein and Monaco -- locales known for
their loose banking laws. One bank transfer claims the money is for
tractors; another states that the money is for a documentary film.
Bank officials noted that $80 million flowed into the agency's account in
1992; $231 million in 1993; and $39 million in 1994 and 1995. The chief of
a Western intelligence agency estimated that more than half of the $350
million was used to buy weapons for the Bosnian Muslims.
Another Western source said that the organization also was forced to move
large amounts of money to Croatia to bribe Croatian officials to allow the
weapons to cross their country. The price of such passage skyrocketed in
1993 when Croat nationalists launched their own war for a separate state
inside Bosnia. Money also was smuggled into Sarajevo on flights of the
office of the U.N. High Commissioner for Refugees; Bosnian government
officials used the money to buy weapons from both Serb and Croat middlemen
who operated inside Bosnia, the official said.
"Many of Bosnia's weapons came from its enemies. [The relief agency] was
critical to this system because they provided the cash and could bring it
into Bosnia," he said.
By the time police raided its offices, the agency appeared to be winding
down its activities. Western officials said it seemed that most of the
agency's work preceded the opening of a direct weapons pipeline between
Iran and Bosnia that passed through Croatia starting in May 1995. That
pipeline received the tacit approval of the Clinton administration in April
1995 when the Croatian government asked the United States if it opposed
such a link and the United States declined to respond.
Austrian police sources said Hassanein left Austria for Istanbul in 1994
after he learned he was being investigated for money laundering and arms
smuggling. He stopped using a diplomatic passport in 1993 to make it more
difficult for Austrian authorities to expel him, they said.
Despite his departure, a bureau of the agency continued to operate in the
Austrian capital -- manned by Hassanein's brother -- even after the 1995
raid. So far this year, officials said $500,000 has moved through its
account. Neither Hassanein nor his brother has been charged with any crimes
in Austria.
"They did a lot of talking here but as long as they did not move weapons
through our territory, we could not arrest them," one Austrian investigator
said.
Hassanein remains close to Izetbegovic. In August, the Bosnian government
awarded the Third World Relief Agency with a gold medal for its relief work
here. Last month, Hassanein hosted Izetbegovic on a private visit to
Istanbul, where the Bosnian president met other Sudanese officials.
Hassanein traveled to Bosnia this month as a guest of the president.
THIRD WORLD RELIEF AGENCY
ABOUT THE AGENCY
Purpose: The agency, founded in 1987 in Vienna as a humanitarian aid
agency for Muslims, became the financier and broker for the weapons
pipeline into Bosnia in 1992. Bosnia was under an international arms
embargo and desperate for weapons to fight its Serb foes. The agency
received the official backing of the Bosnian government.
Finances: Money flowed into the agency's account at the First Austrian
Bank in Vienna from Saudi Arabia, Iran, Sudan, Turkey, Brunei, Malaysia and
Pakistan. The amounts were:
in millions of dollars:
1992 $80
1993 231
1994/95 39
1996 (until August) 0.5
Frequently the money was laundered through accounts in Liechtenstein and
Monaco.
THE ARMS DEALS
In 1992, Soviet-built transport planes arrived in Maribor, Slovenia, from
Khartoum, Sudan, with a cargo listed as humanitarian aid. In reality the
plane carried light arms, much of it from old Soviet army stocks. Chartered
Russian helicopters carried some weapons to Muslim-controlled Tuzla and
Zenica, with a refueling stop in Split, Croatia. The helicopters came from
Eco-Trends a Russian-American joint-venture firm based in Moscow.
In 1993, 30 Bosnians and Turks were indicted in Bavaria on weapons and
racketeering charges for negotiating illegal arms deals in Germany.
Investigators said $15 million worth of light arms were smuggled into
Bosnia from Croatia allegedly by Malaysian and Turkish troops serving with
the U.S. mission in Bosnia.
In 1995, a direct arms pipeline was opened between Iran and Bosnia via
Croatia. That channel received tacit approval of the Clinton
administration.
© Copyright 1996 The Washington Post Company