The Nexus between “Jihadis” and the Criminal Underground
by Ramtanu Maitra on 14 Jun 2009 0 Comment

In the title of this article, the word jihadis has been put within quotes to indicate that the Afghan Taliban, Pakistani Taliban, al-Qaeda and a slew of other insurgent groups who are waging war against the US and NATO troops, the Afghan National Army and the Pakistani Army cannot be truly called “jihadis.” It is not only that a number of Islamic scholars and members of the Ulema disagree with the appellation. It is these insurgents’ close business relationship with the criminals and murderers who dominate underground activities in the South Asian region that both enables and defines them, rather than any nominal cloak of religiosity.

The leadership of the so-called jihad has joined the drug traffickers, money launderers and arms traffickers - all underground elements - to support their militant activities and their war against sovereign nation-states. 

While an asymmetrical war is ongoing in Afghanistan and western Pakistan by Muslims wearing the garb of an extremely conservative Islam, in Sri Lanka, the Liberation Tigers of Tamil Eelam (LTTE) - better known as the Tamil Tigers - have waged war against the state for more than two decades. It is only very recently that the Tigers were eliminated. In this battle, religion was also an element: the minority Hindu Tamils fought the majority Buddhist Sinhalas.  

And, like the Mujahideen, the jihadi Tigers, over time, developed a worldwide fundraising network that consisted of smuggling out drugs brought in from both Southeast Asia and Afghanistan and bringing in arms from  both West and Southeast Asia, laundering the drug money through the usual routes. 

The “Jihadi” Tigers

In a unique report on the financial operations of the LTTE, the August 2007 issue of Jane’s Intelligence Review wrote that, with financial and procurement structures well organized and strategically positioned around the globe, the group had a profit margin that would be the envy of any multinational corporation - some US$200 to 300 million per year. While some of this amount came from the diaspora of Tamil expatriates, much of it is generated through drug trafficking, gun running, smuggling of contraband items, and even running prostitution rings.

In 2000, the Swiss French-language daily Le Courrier raised questions about LTTE fundraising in Switzerland of nearly 1 million Swiss francs (US$600,000) per month, in addition to using “drug money” to finance its 54 offices throughout the world and to buy weapons. Further elaborating on the far-flung Tiger operation, the article said that the “Tamil Tiger octopus has long tentacles.”

In 1999, a Tamil commando was arrested in New Delhi after a shootout that led to the seizure of 14.5 kilograms of heroin.  Further investigation by the Indian police revealed a network of drug traffickers involving a Mumbai-based drug lord, Ali Khan, and two LTTE members. By then, the LTTE’s credentials as major drug traffickers had already been established. Studies by Indian diplomatic sources indicated the LTTE was operating freely inside Myanmar in the 1990s, making and distributing heroin. Investigations later provided alleged proof of collaboration between a section of the Myanmar military and the Tamil Tigers.

Over the years, Tamil drug smugglers with direct links to the Tigers have been arrested in Sri Lanka, India, Australia, Britain, France, Germany, Switzerland, the United States and Canada. Diplomats have concluded that the Tamil Tigers’ “independence” fight has been overshadowed by its outside businesses - first and foremost, drugs. 

The northern Sri Lankan port of Jaffna, until recently occupied by the LTTE, and a large pirate fleet maintained by LTTE armed forces played a relatively minor role in the anti-Colombo war compared to its role in drug trafficking. The LTTE developed a base in the Indian state of Manipur, located in the northeast, bordering Myanmar. This group of Tigers broke off from the Sri Lankan resistance and joined the militias that bring in guns and drugs from Myanmar and Southeast Asia, selling them to various militant secessionist, ethnic, and jihadi groups that operate in northeastern India and Bangladesh.

Drug money also played a major part in keeping the Tiger militia armed. There are many reports of the Tigers using drug money to purchase sophisticated weapons and ammunition, either directly from the Indian traffickers or from their contract people in Southeast Asia and the Middle East. Besides the submachine guns purchased from Israeli arms dealers, the LTTE is said to have gotten supplies from Afghanistan (US and Soviet ground-to-air missiles), Ukraine (explosives), Cambodia and Myanmar.

In the Afghan Theatre

Long before it was drawn to the world’s attention, a nexus had been formed between the drug warlords and the so-called Mujahideen (“Mujahideen” is an Arabic word which can be translated as “struggler”) in Afghanistan, who were involved in the protracted warfare against the Soviet Red Army during the 1980s. One of the two most prominent members of this drug warlord-plus-Mujahideen group is Gulbuddin Hekmatyar, who is now actively battling the US and NATO troops based inside Pakistan along the undemarcated Afghan-Pakistan border.

Hekmatyar, who heads his faction of the fundamentalist Hezbe Islami Party, had fought against another Mujahideen leader to get control of the most fertile poppy cultivation areas in the southern Afghan province of Helmand during the 1980s. By the end of the Soviet occupation of Afghanistan in the late 1980s, Hekmatyar reportedly invested in the establishment of heroin manufacturing labs along the Afghanistan-Pakistan border, working closely with Pakistani smuggling networks. In those days, according to available reports, all major Afghan drug traffickers belonged to the Hezbe Islami Party. Incidentally, at that time Hekmatyar was a major beneficiary of US largesse to help the Mujahideen fight the Soviet military presence in Afghanistan.

The other major drug warlord-Mujahideen was Yunus Khalis.  He headed his own faction of the fundamentalist Hezbe Islami Party and operated along the borders of eastern Afghanistan.  His objective as a Mujahideen leader was to get control of Nangarhar province in east Afghanistan, where poppy had been grown for centuries.  Like Hekmatyar, Khalis battled other Mujahideen fighters to gain control of the poppy fields and heroin labs in Nangarhar province.

In those days, however, drug production in Afghanistan was around 1,500 tons annually. It shot up to 4,400 tons in 1999, almost three years after the Taliban got control over Kabul and 95 percent of Afghanistan. But large as it was, opium production in 1999 was dwarfed in 2007, when Afghanistan produced 8,200 tons of the drug, according to United Nations figures.

Although both Hekmatyar and Khalis relied on the opium-generated money to become powerful, they carefully confined their interaction to local drug traffickers who would pay them cash and carry the stuff away. In the late 1990s, when Taliban supremo Mullah Mohammad Omar took control of Afghanistan and brought in the al-Qaeda jihadi group, Osama bin Laden, exploiting his extensive contacts in the Gulf Emirates, developed a powerful link with the international drug cartel, gun traffickers and underground money-laundering network.  

One of the first moves that Osama bin Laden made to link up his jihadi group with the sleazy international underground  was to take control of the Afghan national airlines, Ariana Airlines.  As a former NSC official told a reporter, Ariana Airlines became a “key node in Al Qaeda’s infrastructure. The network used Ariana to move everything that was useful - money, personnel and materiel.”  

Soon enough, Ariana Airlines changed its character from being a passenger airline to a cargo airline. “The planes would come back from the UAE loaded with weapons,” said Julie Sirrs, an Afghanistan specialist at the US Defense Intelligence Agency during the Clinton administration. “It was mostly Soviet weapons, small arms - Kalashnikovs [rifles] and RPG-7s [shoulder-fired antitank rocket launchers].” While the weapons would come in from Dubai, and later from Sharjah, the planes carried tons of opium back to Dubai. Agents of al-Qaeda there would take control of the drugs, contact the drug trafficking network, and purchase weapons using some of that money.   

Ariana's schedule became “something of a hit-and-miss proposition,” a former NSC official told the media. “They would take off 30 minutes before schedule. They canceled flights. It gave them the flexibility they needed” to move illicit cargo. A frequent stop was Sharjah, one of the Emirates. Sharjah International Airport, former US and Afghan officials said, became a hub for drug and arms smuggling by al Qaeda. The emirate, 20 miles from Dubai, is run by a fundamentalist Islamic regime. Sharjah’s airport is studded with numerous “fly-by-night” cargo operations willing to take on any comers, US analysts point out.

The Russian Arms Dealer

In Sharjah, al-Qaeda’s benefactor was the notorious Russian mafiosi and gun-runner, Victor Bout. Bout, who was arrested recently in Thailand, developed contacts with the Taliban in August 1995, when Taliban was in opposition to the then-President Burhanuddin Rabbani’s government in Kabul. One of Bout’s planes flying under the banner of the Trans Aviation Network (TAN) from Albania via Sharjah and transporting small arms and military equipment to Rabbani was intercepted by a MiG-21 and forced to land in Taliban-controlled territory, according to the International Consortium of Investigative Journalists (ICIJ) investigation.

According to UN and intelligence reports, in March 1995 Bout and a Frenchman, Michel-Victor Thomas, founded the Trans Aviation Network Group (TAN). Between 1995 and 1997, TAN’s operating base was Ostend, in Belgium, an airport frequently cited by human rights groups for hosting companies and individuals involved in arms trafficking. TAN also opened offices in Sharjah, one of the Gulf Emirates.

It is reported that Bout’s company delivered at least 40 tons of weapons from Ostend to Afghanistan; but Bout left Belgium after details of the shipments were reported in the local media, including that he paid $10,000 to the pilots for each trip. The Belgian intelligence document noted that pilots got an extra $1,000 "per landing."

The Ilyushin-76 used to deliver weapons to Afghanistan belonged to Aerostan, a company based in Tatarstan, but was leased by Transavia, one of Bout’s companies operating out of the UAE. Transavia had started making cargo flights to Kabul, Kandahar and Jalalabad in May 1995 at the behest of Afghani traders in the Emirates, according to the French news agency Agence France Presse.

Intelligence agencies suspect that between 2000 and 2001, arms supplies were transported on an airline run by one of Bout’s business associates. The airline, Flying Dolphin, operated scheduled flights from the UAE into Taliban-ruled Afghanistan between October 2000 and Jan. 21, 2001, according to reports in the UAE media. It is to be noted here that the UAE, Saudi Arabia and Pakistan were the only three countries that had recognized the Taliban regime in Afghanistan.

Flying Dolphin is owned by Sheikh Abdullah bin Zayed bin Saqr al Nayhan, a former UAE ambassador to the United States and a member of the ruling family in Abu Dhabi who has been described by the United Nations as a “close business associate of Bout.” According to the Dec. 20, 2000, UN report, Zayed’s company is registered in Liberia, but its operations office was in Dubai. The United Nations gave Flying Dolphin permission in October 2000 to operate weekly flights from the UAE to Kandahar on condition that no cargo would be allowed on the plane, only the passengers’ personal belongings.

According to the United Nations, almost all of Bout’s companies operate out of the United Arab Emirates. Companies registered in Swaziland, the Central African Republic, Liberia and Equatorial Guinea use Sharjah airport as an “airport of convenience.” In early 2001, Bout relocated from Sharjah to neighbouring Ajman, where he set up an office in the Chamber of Commerce and Industry building. The UAE is a major financial centre and crossroads for east-west trade. With its large volume of transiting cargo, its bank secrecy laws, and its bustling free trade zones, it is a perfect base for arms and drug dealers.

The Mumbai Drug Trafficker

In addition to Bout, who would supply arms for cash, the Taliban needed an underground kingpin to sell the drugs and launder the receipts - if not all, some of it. Dawood Ibrahim, mafia don in Mumbai, India, in the 1980s and early 1990s, was always a gold and drug trafficker. He fled India for Dubai following the March 12, 1993, bombings of the Bombay Stock Exchange, which killed hundreds of Indians and injured over a thousand more. It is said that Dawood’s syndicate, under control of the Pakistani Inter Services Intelligence (ISI), has consistently aimed to destabilize the Indian government through inciting riots, acts of terrorism, and civil disobedience. 

What is interesting about Dawood, who has been designated a terrorist by the Office of Foreign Asset Control (OFAB) in the US Treasury and many other governments, is that he is a pioneer in the criminal-terrorist-jihadi nexus. For many years he has provided the criminal links that al Qaeda, the Taliban and Pakistani terrorist groups needed to move money, personnel and equipment. Despite how well known his activities are, he has never been apprehended.

The US Treasury Department’s description of Ibrahim says, in part, that his criminal syndicate “is involved in large-scale shipments of narcotics in the UK and Western Europe. …  The syndicate’s smuggling routes from South Asia, the Middle East and Africa are shared with Osama bin Laden and his terrorist network… Successful routes established over recent years by Ibrahim’s syndicate have been subsequently utilized by bin Laden. A financial arrangement was reportedly brokered to facilitate the latter’s usage of these routes. …In the late 1990’s, Ibrahim travelled in Afghanistan under the protection of the Taliban… Information, from as recent as Fall 2002, indicates that Ibrahim has financially supported Islamic militant groups working against India, such as Lashkar-e-Tayyiba (LeT).”

It is evident that Dawood Ibrahim provided his support network in Mumbai, and elsewhere in India, to the terrorists who attacked two top Mumbai hotels, an orthodox Jewish community’s office-cum residence, and the main Mumbai railroad station in late November last year. The Indian investigation showed that the LeT, which the US Treasury had identified as one of Dawood’s beneficiary terrorist groups, operating within, and from, Pakistan, were among the lead terrorists involved in the Mumbai incident.

But Dawood’s usefulness to the terrorists does not end with his ability, or willingness, to finance them directly. More importantly, Dawood Ibrahim brings a lot of drugs over to Dubai by means of his “mules,” protected by the intelligence agencies and his beneficiaries. It is said that the containers that carry large equipment sent to Dubai from Kandahar and elsewhere in southern Afghanistan for “repair” also contain drugs. 

The drugs are converted to cash in Dubai, where Dawood maintains a palatial mansion, similar to the one he maintains in Karachi. Dubai, sitting at a strategic crossroads of the Persian Gulf, South Asia and Africa, is a tax-free island-city and a major offshore banking centre. The most common reason for opening an offshore bank account nowadays is the flexibility that comes with such an account, and expatriates can particularly benefit from an offshore bank account, as it will likely allow them to manage their international financial commitments with ease.

With the development of the Dubai International Financial Centre (DIFC), the latest free-trade zone there, flexible and unrestricted offshore banking has become big business. Many of the world’s largest banks already have a significant presence in Dubai - Abbey National Offshore, HSBC Offshore, ABN Amro, ANZ Grindlays, Banque Paribas, Banque de Caire, Barclays, Dresdner and Merrill Lynch all have offices there. And as drug production continues in Afghanistan and bankruptcies take place worldwide, more banks will surely “find” Dubai.

Dubai is also important to the jihadi-terrorists for another reason. Exempt from international reporting requirements for financial transactions, gold is a favoured commodity in laundering money from drug trafficking, organized crime and terrorist activities. “Gold is a huge factor in the moving of terrorist money because you can melt it, smelt it or deposit it on account with no questions asked,” one senior US law enforcement official investigating gold transactions told the media. Dubai, one of seven sheikdoms that make up the United Arab Emirates, has one of the largest and least-regulated gold markets in the world, making it an ideal place to hide.  

Following the US invasion of Afghanistan in 2001, Pakistani financial authorities said that $2 million to $3 million a day was usually hand-carried by couriers from Karachi to Dubai, mostly to buy gold. By late 2001, that amount had increased significantly as money was moved out of Afghanistan. Pakistani and US officials estimate that about $10 million from Afghanistan was taken out by courier over three weeks in late November and early December of that year. The Taliban fled Kabul, the capital, late on Nov. 12 and abandoned Kandahar on Dec. 7.

One of the couriers of cash and gold was reportedly the Taliban consul general in Karachi, Kaka Zada, who took at least one shipment of $600,000 to Dubai in the last week of November, according to two Pakistani sources who witnessed him carrying the money.

The Money-Launderers

Besides Dubai, most of the offshore banks are located in former British colonies. Exceptions include Cyprus, Switzerland, Liechtenstein, Dominica, Cape Verde and the Turkish Republic of North Cyprus. But the vast majority are situated in former British colonies, and all are involved in money laundering: legitimizing cash generated from drug-sales and other smuggled goods for the “respectable banks” is the watchword of these offshore institutions.

Arguably the most important of the Caribbean offshore financial centres is the Cayman Islands, a British Overseas Territory run by a royal governor appointed by Queen Elizabeth II. The Caymans are mainly a mail drop and regulation-free zone, a place where hot money is welcome and few questions are asked.

On Oct. 10, 2001, John Henley of the Guardian of London, reporting from Paris, pointed to a French parliamentary report that said up to 40 companies, banks and individuals based in Britain can legitimately be suspected of maintaining direct or indirect relations with Osama bin Laden. “The convergence of financial and terrorist interests, apparent particularly in Great Britain and in Sudan, does not appear to have been an obstacle with regard to the objectives pursued [by Bin Laden],” the report concluded. “The conjunction of a terrorist network attached to a vast financing structure is the dominant trait of operations conducted by bin Laden.”

The report, titled The City of London, Gibraltar and the Crown Dependencies: Offshore Centers and Sanctuaries for Dirty Money, said criminal organizations “have been able to exploit to their profit the reckless financial deregulation of the 1980s,” which Britain has failed to accompany with “the security measures demanded for all too long by the battle against money laundering and financial crime.”  Between 1986 and 1998, only 357 money-laundering cases came to trial in London, compared with 538 in Italy and 2,034 in the United States in 1995 alone. 

In addition, the drug money in South Asia is moved through what is known as the hawala system. The following example of how the hawala system works is taken from a book, The Mechanics of the Hawala System, by Edwina A Thompson.

1. A drug payment arrives in Peshawar, Pakistan, by Telegraphic Transfer from the UK.
2. The payment is fragmented, and part of it is transferred to a hawala operator in Helmand province.
3. The profits are then used to finance imports from Dubai through Herat.
4. The settlement process could take several weeks to complete.

One step removed from this process there is likely to be an Afghan drug trafficker, based in southern Afghanistan, who determines the flow of funds and goods. In this scenario, he instructs a hawala dealer in Helmand to purchase the imports on his behalf. And after receiving the goods that enter Afghanistan via Herat, he is then provided with the option to sell them on for a further profit.

Dubai (UAE), China, Japan and Germany are the main sources of imported goods for Afghan traders, while cities in Pakistan, UAE and Saudi Arabia are the main transaction centres for the Afghan hawala markets. Dubai operates as the central “clearing house” for transactions. Major financial centers further afield, such as London and New York, host fewer hawala dealers but are responsible for sending some of the largest amounts of money related to drugs. Although most drug hawala dealers in Kandahar and Helmand identified London as their main source of drug orders, the payments are often routed to Afghan partners in UAE and Pakistan, where the money is reinvested or used to settle other transactions. 


It is evident to me that the South Asian jihadis are now a part of the underground. While many of the fighters, who are actually involved in the dangerous warfare, are either committed to restoration of an Islamic Caliphate, particularly those who are committing suicides, or paid mercenaries. On the other hand, those who are leading these dangerous fighters have joined fully with the underground drug traffickers and money launderers. They may mouth their commitment to their religion from time to time, their objective is to gain political power, using religion to recruit, train and arm individuals. At the same time, the same leaders are interacting closely with the murderers and thugs in order to bring in the cash to finance their political movement.

It would be therefore unwise, and downright foolhardy, to engage these terrorists in a religious discourse. The objective should be to eliminate them physically, and as well by denying them what keeps their jihad-hearth aglow. It is important to destroy, or reduce drastically, the production of  opium, deny entry into Afghanistan from outside the chemicals precursors required to convert opium into deadlier, and more-expensive heroin,  search and destroy heroin-manufacturing labs and stashes of heroin, opium and all other drugs, such as hashish. 

It is not an easy task to accomplish. But it is much easier, and more of a possibility, than to debate, and convince, the jihadis that they were working against their religion. It is so because the drug-and-gun clutching jihadis are not jihadis at all.

[This paper was presented at the annual event of the Academy of Philosophy and Letters, a conservative Republican Party group headed by former Ambassador  and current  Professor of the University of Virginia,  David Jordan, on May 30]

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