By Matthew Rosenberg
It appears so. At the end of 2010, al-Qaida found itself suddenly flush after securing a $5 million ransom, and the group had to decide what to do with its windfall. At a time when the financial uncertainty of the Great Recession made gold a hot investment, bin Laden turns out to have been as bullish about the precious metal as any Ron Paul devotee, Tea Party patriot or Wall Street financier.
In a letter translated from Arabic that he wrote in December 2010, bin Laden instructed al-Qaida’s general manager to set aside a third of the ransom — nearly $1.7 million — to buy gold bars and coins. The letter was part of the trove of intelligence seized by Navy SEALs in the raid on bin Laden’s compound in Abbottabad, Pakistan, in 2011 that was declassified last month by the Central Intelligence Agency. It offers a glimpse into how al-Qaida sought to manage its finances and what militant groups have tried to do with the money they raised.
“The overall price trend is upward,” bin Laden wrote to Atiyah Abd al-Rahman, the al-Qaida general manager. “Even with occasional drops, in the next few years the price of gold will reach $3,000 an ounce.”
Bin Laden may have lacked investing acumen — gold peaked at $1,900 an ounce five months after his death in 2011 — but he seems to have had a keen sense of the financial zeitgeist. His belief in gold’s bright future was shared at the time by many Americans and a number of financial luminaries, including George Soros and John Paulson, both whom were investing heavily in the precious metal. Demand was so high that in 2010, JPMorgan Chase reopened a long-closed vault used to store gold under the streets of downtown Manhattan.
It is probably safe to assume that if al-Qaida bought gold — US officials could not say whether bin Laden’s instructions were followed in this case — the militants did not hand it over to JPMorgan for safekeeping. But U.S. officials believe that the group had previously relied on gold as a safe haven and an alternative currency to the dollar. Al-Qaida would also have had access to gold brokers in Pakistan’s tribal areas and the loosely regulated gold market in Dubai, United Arab Emirates, at the time bin Laden wrote his letter.
“There was always speculation about how al-Qaida kept excess capital,” said Juan C. Zarate, a deputy national security adviser during the George W. Bush administration who led U.S. efforts to track the militants’ assets after 2001. “They grew worried that we were able to do things with the dollar that influenced their ability to access it, to demand things of financial institutions.”
Like al-Qaida, other Islamist militant groups have wrestled with how to avoid the reach of the Treasury and international blacklists. Their wealth management strategies have varied, and some have proved more adept at making money than investing it.
The Islamic State, for instance, has become perhaps the wealthiest militant group in history by wringing cash from the people it rules, looting bank vaults and smuggling oil. Yet its success appears to have left it vulnerable: It has taken in so much money that it has had to resort to physically stockpiling cash in warehouses, 10 of which have been struck by US warplanes since the summer.
The Haqqani network, a Taliban faction that is especially close to al-Qaida, is believed to have poured money into real estate in Afghanistan, Pakistan and the United Arab Emirates. A European official, who spoke on the condition of anonymity to discuss intelligence, said the Haqqanis are believed to have been hit hard by the real estate crash in Dubai, United Arab Emirates, a few years ago.
Still, despite the occasional bursting bubble, real estate appears to have been a relatively safe investment, particularly in South Asia, where there is little regulation.
“You can show up with a suitcase full of cash and buy a house,” said Gretchen Peters, who runs the Satao Project, a consulting firm that focuses on organized crime and terrorism. “It’s not like there is an IRS money-laundering unit that’s going to come for you.”
At the time bin Laden wrote the letter to his general manager, the two had been discussing the $5 million ransom, which was paid by the office of then-President Hamid Karzai of Afghanistan to free an Afghan diplomat that al-Qaida had been holding. Unknown to the al-Qaida bosses, about a fifth of the ransom was inadvertently provided by the CIA, which bankrolled a secret fund for the Afghan leader with monthly cash deliveries to the presidential palace in Kabul.
Al-Qaida had the money in hand by the time bin Laden sat down to write his general manager in December 2010. Bin Laden clearly wanted nothing to do with U.S. dollars, which many Islamist militants fear could expose them to the long reach of American justice.
“As for the ransom money for the Afghan prisoner, I think you should use one-third of the money to buy gold and another third to buy euros,” he wrote.
The remainder, bin Laden said, should be used to buy Kuwaiti dinars and Chinese renminbi, also known as yuan, with about a third kept in local currencies to cover day-to-day expenses. “When you do spend this money, use the euros first, then the dinars, the yuan, and then the gold,” he wrote.
Bin Laden had specific instructions for how to acquire the gold. It should be bought in coins or bars, which he referred to as “10 tolas,” a common denomination for gold bars in South Asia. Coins “are minted in several countries,” he wrote, naming Switzerland, South Africa and the United Arab Emirates.
But bin Laden was nothing if not paranoid by then — at one point, he feared that an Iranian dentist had implanted a tracking device in one of his wife’s teeth — and he stressed in the letter that “the broker you deal with should be trustworthy.”
He also suggested buying a small amount of gold and reselling it to make sure the broker was honest.
Done right, though, bin Laden appears to have believed that investing gold was nearly a sure thing.
“Right now it is $1,390 an ounce, but before the events in New York and Washington it was $280 an ounce,” he wrote.
He added, “If the price of gold reaches $1,500 or a little over before you get this message, it’s still all right to buy it.”
If al-Qaida bought gold when bin Laden advised, it was a bad bet. The day his letter was dated, Dec. 3, 2010, gold closed at $1,414.08 an ounce. Today, the price is hovering around $1,230 an ounce.