A five-car convoy opened fire on a compound 30 miles south of Baghdad, a sneak attack that killed four American soldiers in one of the deadliest days in the Iraq war. A roadside bomb struck a United States military vehicle, severing part of a soldier’s head. And a militant group kidnapped and killed an American journalist, dumping him in the street after firing three shots into his chest.
Those acts of terrorism occurred a world away from Wall Street at the height of the Iraq war. But they now underpin a lawsuit against some of the world’s biggest banks, injecting a human element into the complex and shadowy world of international finance.
More than 200 people, primarily American service members or family members of soldiers killed in Iraq, filed the lawsuit on Monday in federal court in Brooklyn. Citing more than 50 attacks on American citizens stationed or working in Iraq during the war, the lawsuit accuses the banks of helping to finance the violent activities through their ties to Iran.
The banks — HSBC, Barclays, Standard Chartered, the Royal Bank of Scotland and Credit Suisse, European institutions that all have a major presence in New York — did not deal directly with the militants. But they have acknowledged transferring billions of dollars on behalf of Iran, which has long been suspected of funding and training the terrorist groups that carried out attacks against Americans in Iraq.
The lawsuit is not the first to link Wall Street to Iran. In suing the five banks, the plaintiffs are taking their cue from federal prosecutors, who accused those same banks of transferring money on behalf of Iran in violation of United States sanctions. The banks settled the cases over the last few years, paying hundreds of millions of dollars in fines and admitting to wrongdoing. Those admissions are now serving as a template for the private lawsuit.
But the lawsuit filed on Monday reaches far beyond the government’s claims, painting Wall Street as a sort of middleman of terror. The lawsuit blames the banks for terrorist attacks that they did not actually finance, a strategy that hinges on an elaborate and indirect link: The banks happened to do business with Iranian financial institutions that have separately financed Hezbollah, the Shiite militant group and political party suspected of aiding attacks in Iraq, as well as Iran’s Islamic Revolutionary Guard Corps-Qods Force “and other instruments of Iranian state-sponsored terrorism.”
“The defendants provided Iran with the means by which it could transfer more than $150 million to the I.R.G.C.-Q.F., Hezbollah and Special Groups, which were actively engaged in planning and perpetrating the murder and maiming of hundreds of Americans in Iraq,” the lawsuit said.
The case, which aims to show the human cost of something as impersonal as a wire transfer, represents the latest phase of a strategy among plaintiffs’ lawyers to pin blame on banks for acts of terrorism. It comes on the heels of a successful action against Arab Bank, which in September was held responsible for supporting Hamas. Similar lawsuits are pending against the Bank of China, Natwest and Crédit Lyonnais.
While collecting damages from individual terrorists would present a logistical nightmare — it is hard to imagine holding, capturing and trying a terrorist for the sake of a private civil suit — the banks that help finance illegal activity are an easier target. And so plaintiffs’ lawyers are looking at banks that may have handled tainted transactions, suing them under the Anti-Terrorism Act and arguing that they provided terrorist groups with material support. The cases are particularly lucrative because any damages awarded under the act are automatically tripled.
The lawsuit against Arab Bank offered a test case of the strategy, arguing that the bank had knowingly financed terrorists. The plaintiffs’ lawyers, some of the same lawyers who filed the case on Monday, represented the American victims of 24 Hamas attacks in and around Israel.
Arab Bank, which is based in Jordan, countered that it had properly checked all the transactions against the appropriate government blacklists, like the United States Treasury’s Office of Foreign Assets Control, which lists designated terrorists. Yet in a startling verdict that seemed to open the floodgates to similar cases, a Brooklyn jury found Arab Bank liable for supporting the terrorist attacks.
That trial was for liability, not damages. The presiding judge, Brian M. Cogan, of United States District Court, is determining how to proceed with the damages portion of the trial.
The lawsuit filed on Monday faces a unique hurdle. Gary M. Osen, one of the lawyers who filed the lawsuit, acknowledged that it was unclear whether Wall Street banks could be held liable for moving money to Hezbollah, or whether only those Iranian banks that technically made the transfers were legally responsible. (One of the Iranian banks, Bank Saderat, is also named as a defendant.)
“Does it matter whether a particular bank was the physical conduit of the transfers to the terror apparatus, or is it enough that they were in a conspiracy which made that possible, and that they were, as a legal matter, deliberately indifferent to that result?” he asked.
The lawsuit cites a series of emails and conversations taken from the banks’ settlements with federal prosecutors that offer a lens into the banks’ flagrant disregard for sanctions against Iran. Among them is a reply by an executive for Standard Chartered, the big British bank, to concerns raised by an employee in New York. Referring to Americans, he reportedly said, “Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?”
The most powerful elements of the lawsuit, however, are the stories of the victims of the Iraq war.
The sneak attack on the compound outside Baghdad in January 2007, the lawsuit said, was the work of a terrorist group “trained and armed by Iran’s Qods Force with Hezbollah’s assistance.” Once inside the compound, the group sprayed bullets and lobbed grenades, killing several American soldiers, including 20-year-old Johnathon M. Millican, who jumped on one of the grenades. Mr. Millican’s widow and father joined the lawsuit, along with the families of three other soldiers killed in that attack and a surviving soldier who suffers from post-traumatic stress disorder.
The journalist, Steven Vincent, was kidnapped and shot in August 2005. His widow, mother and father are plaintiffs in the lawsuit.
Christopher M. Hake was on his second tour of duty in Iraq in March 2008 when an Iranian-manufactured explosive device went off near his vehicle and killed him in 2008.
“We knew there was a risk involved, but, of course, everyone thinks it’s not going to happen to you or your family,” said Kelli Hake, his widow. Their son, now 8, was 1-and-a-half when his father died.
When the plaintiffs’ lawyers approached her about the terrorism-financing lawsuit, she said, “It made me think about it: who’s financing it and who made it happen.”
Source: The New York Times / Nov. 11, 2014