Citigroup Laundering Saudi Cash Used to Fund Jihadist Terrorism. Yes, There is an NCLB Connection
Although I first posted this story two years
ago, now that Citigroup is again in the news,
it seems appropriate to post it again. Take a
look at the kind of outfit your tax dollars are
Where does Neil Bush fit into all this? Keep
By Bill Gallagher
DETROIT -- Did Citigroup, one of the most
powerful financial institutions in the world,
help transfer funds into accounts used to
bankroll terrorism? Why do prominent Saudis
involved in funneling money to "charitable"
accounts that end up funding terrorism escape
Why would the FBI, when given evidence of such
conduct, promise to investigate, and then wait
17 months to question the whistleblower? Why
would the FBI then suddenly drop the probe just
two weeks into it?
These questions haunt Leonard D. Wallace, and
the Florida-based financial consultant has
spent more than five years working to expose
and unravel a baffling $5 billion deal
involving Citigroup, a fabulously wealthy Saudi
prince and money transfers bouncing around the
Wallace suspects money shuffling into what the
Saudi government dubbed an Account 98. These
are supposed to be accounts supporting
humanitarian causes, but some of the money from
them has been given to the families of suicide
bombers, honored "martyrs." Saudi money has
enabled and nurtured al-Qaeda and Osama bin
Laden's operations from the get-go. Those funds
and the spiritual inspiration of radical
clerics helped provide bin Laden with the 15
Saudi hijackers of the 19 he used in the 9/11
The Saudi government keeps a tight lid on
Account 98 records and shields them from any
outside examination. Interpol, the CIA and many
other intelligence and criminal investigation
agencies would find a treasure trove in the
trail of international terrorism and who
provides the funding for it with just a peek at
Account 98 records. That's why the Saudis wrap
them in secrecy.
I've written several columns about Saudi money
and the Leonard Wallace story, the last in July
2006, explaining that the FBI had not
interviewed Wallace a year after promising to
investigate his claims.
In June 2005, Barry Sabin, the chief of the
Justice Department's Criminal Division, advised
Wallace that the FBI's Terrorist Financing
Operations Section would review his evidence of
Citigroup's shady dealings.
Wallace's persistence was finally paying off --
or so it seemed. Since the day before the 9/11
attacks, when Wallace realized he was caught in
the crossfire of a series of phony bank account
authorizations -- he has been crying foul,
telling those who should be interested what he
knows and urging them to use their authority to
uncover the full truth.
He's shared his concerns and evidence in
letters to everyone from President George W.
Bush, to Citigroup's CEO and board of
directors, to members of Congress and the Saudi
Embassy. He filed a formal complaint with the
In October, I spoke to Wallace, and we
discussed the status of the FBI investigation.
Nothing had happened. I planned to ask why in a
column. Then, on Nov. 16, Wallace called me,
his voice excited. "Bill, you're not going to
believe this," he said. "The FBI just called
and they want to interview me." Well, that's
progress, I thought, planning to shift the
focus of my next installment in the saga. Dana
Conte, an FBI agent in New York City, was
assigned to the case. The FBI usually says
nothing about ongoing investigations.
Wallace explained to her how representatives of
Citigroup's Singapore office approached him in
September 2001 to help facilitate a series of
business loans and assist the bank in investing
the $5 billion in proceeds into housing and
industrial projects. Wallace, who had done work
like this before, would handle the paperwork
and financial postings to make sure the
transactions were in order. He was to be paid
fees for his services.
Citigroup's Miami branch authenticated the
financial documents, and top officers at the
bank's Park Avenue headquarters in New York
City were fully informed and signed off on the
deal. But then Wallace discovered that
collateral for the loans was based on phony
documents and the real beneficiary for the
money was to be Saudi Prince Alwaleed bin
Alsud, one of the richest men on earth and a
holder of a substantial block of Citigroup
Wallace believed the whole transaction was a
sham used to cloak a deal to funnel funds to a
Saudi Account 98. He wrote to Citigroup's then-
CEO Sanford Weil alerting him of his
suspicions. The deal fizzled, but Citigroup
could never explain to Wallace what was really
going on. A $5 billion deal goes poof, and
nobody is talking.
The FBI's probe of Wallace's claims lasted an
entire two weeks. Wallace says he got a call
last Wednesday from Conte informing him that
she would no longer be involved in the
Citigroup case, saying a level of authority
above her had determined the bank was clean.
Wallace sees the powerful in Washington
protecting their friends: "It took the FBI 17
months to get going with an investigation they
agreed to do in June 2005. Then I learn that
they're ending the investigation by saying that
Citigroup didn't commit any crimes funding
terrorism and that it wouldn't have been a
crime even if they had transferred funds into a
Saudi Type 98 Account. Doesn't it look more
than ever that Citigroup is still getting a big
pass from the Justice Department?" Wallace was
also told Citigroup's prior misdeeds and
egregious corporate behavior had no bearing on
whether the investigation would proceed. The
bank's rap sheet reads like that of a thug in a
The Securities and Exchange Commission slapped
Citigroup with a $120 million fine for helping
Enron disguise loans as cash in order to
defraud investors. The bank came to a $2.65
billion settlement with WorldCom investors
after it was learned that Citigroup's research
department failed to reveal obvious problems
with the company before it filed for
bankruptcy. Citigroup was WorldCom's lead
Citigroup is under investigation for its role
in the failure of Italian dairy giant Parmalat.
There are other probes involving Citigroup in
Japan, Argentina and Great Britain. Citigroup
has to be in every lineup of the usual suspects
for any international money-laundering and
financial chicanery. But don't tell that to the
As for our friend Saudi Prince Alwaleed, he's
off on another investment binge. The prince
found a hot company involved in the
instructional software industry, and that's
where he's putting some of his money these
The company sells high-tech equipment to use in
the classroom for the endless tests kids must
now take under the federal No Child Left Behind
Act. Bush's big education reform is better
labeled No Testing Company Left Behind.
The shrewd prince sees great promise in a
company that produces computer-projector
displays known as COWs, "curriculum on wheels."
The expensive equipment -- going for $3,800 a
unit -- is selling like hot cakes. The
company's president is delighted with his
entrepreneur vision and keen insight into a
growing business niche.
Ignite! Inc. has sold 1,700 COWs, according to
"Business Week," and Prince Alwaleed's
investment is a winner. The owner of Ignite!
expects 2006 revenue of $5 million.
Neil Bush, the son and brother of the Bush
presidents, says his interest in education
springs from his own struggle with dyslexia.
Neil, the youngest of the Bush boys, earned his
corporate stripes as a director of Silverado
Savings and Loan. When the Colorado bank went
belly-up, U.S. taxpayers picked up the $1
billion bill. Bush should have been indicted,
but federal authorities only slapped him with a
sanction -- he could no longer be involved in
Neil Bush's fondness for teenage prostitutes in
Thailand and Hong Kong was revealed in a sworn
deposition during his divorce proceedings. Bush
said the young women simply showed up, knocking
on the door of his hotel room, and he had sex
with them. He claimed he didn't know they were
prostitutes because they never asked for money
and he didn't pay them.
Typical Bush -- not even a tip for services. He
said of his encounters with the ladies of the
night, "It was very unusual." At the time, Bush
was accepting big consulting fees from Asian
firms for nebulous advice. "Ah shucks, all
these teenage girls mysteriously arriving at my
room every night. I'm just one lucky fella,"
ne'er-do-well Neil must have thought.
Bush acknowledges his name may have helped a
bit with his new business, telling "Business
Week," "I'm not saying it hasn't opened any
doors. It may have helped with some sales."
Bush says his backers like Prince Alwaleed get
no favors from his brother in the White House:
"Not one of our investors has ever asked for
any kind of special access -- a visa, a trip to
the Lincoln Bedroom, an autographed picture, or
anything." The prince already has that access.
He's just further ingratiating himself and the
House of Saud with their beloved Bush family.
The Brits are on to a Saudi money deal, and the
boys from Riyadh are fuming, even threatening
to sever diplomatic relations with the U.K. The
Serious Fraud Office (SFO) is investigating a
secret slush fund a British defense contractor
allegedly created to fund the extravagant
lifestyles of members of the Saudi royal
BAE Systems has a contract with the Saudi
government to build and deliver 72 Typhoon
fighter jets, often called the Eurofighter. The
deal, worth 40 billion pounds, would safeguard
10,000 jobs in the U.K. for a decade.
Five BAE employees, including the company's
managing director for international programs,
have been arrested in connection with the slush
fund that allegedly provided the Saudi royals
with the kind of goodies they so enjoy.
The London Sunday Times reports the SFO found
the Saudis were given payments "in the form of
lavish holidays, a fleet of luxury cars,
including a gold Rolls-Royce, rented apartments
and other perks." I'll bet the back 40 the
"other perks" included a bevy of those Neil
Bush mystery girls appearing at the doors of
the Saudi princes. I'm sure the ladies did much
more than sip $300-a-bottle single-malt scotch.
The Saudis went ballistic when they found out
that a lawyer working on the investigation
persuaded a magistrate in Switzerland to "force
disclosure about a series of confidential Swiss
bank accounts" the Saudi royals use. In the
Muslim tradition, the worst sin is shirk:
associating anything not God with God. But
among the Saudi royals, there is a sin worse
than shirk -- revealing their financial
That's why they are threatening to sever
diplomatic relations, cancel the jet deal and
even cut off intelligence cooperation with
Britain over al-Qaeda. Any examination of the
flow of Saudi money will lead to paths that
will be more revealing and embarrassing, expose
criminal behavior and show conduits used to
That's why the investigation of Leonard
Wallace's claims about Citigroup and the Saudi
prince got nipped in the bud. It's too close to
Bush family intimates and interests and the
entangled reach of a corrupt banking empire.
The truth must be buried.
"By participating in a coverup that protects
Citigroup and its political business
associates," Wallace said, "the FBI is no
better than Citigroup, government officials and
the Saudis they're protecting."
Maybe when the Democrats take over Congress
someone will have the nerve to ask the Saudis
and their bankers what they planned to do with
that $5 billion.
Bill Gallagher, a Peabody Award winner, is a
former Niagara Falls city councilman who now
covers Detroit for Fox2 News. His e-mail
address is firstname.lastname@example.org.
Niagara Falls Reporter
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