US gov’t to reveal position to Supreme Court on Arab Bank terror-financing case

Case alleges Arab Bank facilitated transfer of funds to Hamas leaders and institutions, and to families of imprisoned Hamas members and suicide bombers.

April 23, 2014 18:21
4 minute read.
US Supreme Court

US Supreme Court.. (photo credit: REUTERS)


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After an extended internal debate between American agencies, the US solicitor-general is expected to tell the US Supreme Court the government’s position on the Arab Bank terror-financing case in the coming weeks, sources close to the case said recently.

The solicitor-general – the government’s formal representative and litigator before the Supreme Court – is in the unusual position of refereeing a dispute between the US State Department on one side, and the US Justice and (reportedly) Treasury departments on the other side, about how to handle the case.

The case, which has been featured on CBS News’s Sunday Morning program, involves allegations that Arab Bank facilitated massive transfers of funds to Hamas leaders and institutions, as well as to the families of imprisoned Hamas members and suicide bombers, via Saudi Arabia and Hezbollah’s al-Shahid Foundation, mostly between 1998 and 2004.

The plaintiffs allege that Arab Bank knew the funds related to terrorists and terror groups, and is thus civilly liable for wrongful death damages resulting from terror attacks perpetrated using the transferred funds.

However, the Jordan-based bank – the largest in that country and one of the largest in the Middle East – has said there is lack of proof that the funds went to terrorists, that the funds contributed directly and sufficiently to terror attacks and that the bank had any knowledge of any possible connection to terror attacks.

The case, which has been going for around a decade, had been set for a January 2014 trial.

However, in June 2013, Arab Bank appealed for the US Supreme Court to intervene, which has, as of now, pushed the trial off until this August.

The current issue is the government’s opinion on whether the US Supreme Court should reverse a lower-court ruling that penalized Arab Bank for non-production of documents, which the bank said it could not produce due to Jordanian and Lebanese bank secrecy laws.

The lower court said it would instruct the jury at the expected trial that essentially jurors could infer negative judgments against the bank regarding any documents not produced.

Arab Bank has asked the Supreme Court to reverse the ruling, to validate its defense that it was prohibited from producing the documents and to allow the trial to go forward without the documents and any negative instructions to the jury.

The Justice and (according to reports) Treasury departments, as part of their fight against bank-secrecy laws shielding global terror financing, have supported a tough line with Arab Bank on the non-production of documents and want the Supreme Court to stay out of the case.

But the State Department would like the court to intervene on the bank’s behalf in light of the overall foreign policy picture.

Some of the plaintiffs have sent a letter to President Barack Obama, expressing dismay that “any part of the United States government could possibly line up against US victims of terror and instead support an institution” accused of transferring funds to terrorists.

The Jordanian government has taken the unusual step of filing its own legal brief in the case, supportive of the bank’s defense and of the Supreme Court interceding on the bank’s behalf.

Jordan mentioned purportedly disastrous consequences to the whole country if the bank were hit with a damages award that could be in the billions of dollars, citing statistics that the bank accounts for as much as one-third of Jordan’s stock exchange and 15 percent of all pension funds.

The Hashemite Kingdom said the PA could also collapse, as Arab Bank is one of the few institutions providing financial services in the Palestinian territories.

It implied that a major blow to Arab Bank could undermine Jordanian cooperation in the fight against terror, in the use of the country as a base of some military operations and in its ability to be a stabilizing factor regarding the Syrian civil war.

However, the plaintiffs’ letter to Obama said that “siding with Arab Bank now would not only be a slap in the face of every American terror victim,” but it would also “set a poisonous precedent” and “shield terrorists’ financial information” from the US courts.

Arab Bank responded that “a defendant in a civil case should not be penalized harshly by a US court for refusing to breach the laws of the foreign jurisdiction where it operates.”

The bank added that it had “made extraordinary efforts to obtain the permission of foreign governments to disclose documents, which has resulted in its production of hundreds of thousands of records to the plaintiffs.”

Next, it said some governments “prohibited the blanket disclosure of account information in civil litigation, and therefore refused to allow the bank to disclose such information.”

It noted the lower court endorsed Israeli privacy laws as a reason for an Israeli bank to forgo producing its records.

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