Commentary Magazine


Can Libel Tourism Be Stopped?

Last spring, legislators in New York State joined with the governor, David Paterson, in passing a law entitled the Libel Tourism Protection Act. The act has a narrow focus. It empowers the state’s courts to invalidate a judgment of libel or defamation against a writer or publisher who resides or does business in New York, so long as that judgment was obtained in a country that affords writers and publishers a lesser degree of free-speech protection than does the First Amendment to the Constitution of the United States.

Though the law does not say so explicitly, it was passed without much controversy because a writer in New York State was in danger of being driven into penury by one of the world’s richest men—a Saudi banker with Irish citizenship who has undertaken to intimidate and silence writers, editors, and publishers daring to examine his role in the murky world of Islamic charitable giving. Over the past decades, Sheikh Khalid bin Mahfouz has become the world’s foremost “libel tourist,” journeying beyond his own country to find a hospitable judge’s ear in Great Britain. According to the late Robert O. Collins—whose 2006 book Alms for Jihad, co-authored with J. Millard Burr, was one of bin Mahfouz’s targets—the tactic has been brilliantly successful. In three dozen cases in which legal action has been either threatened or carried through to trial, bin Mahfouz has succeeded in securing apologies and cash damages. Cambridge University Press, the publisher of Collins and Burr’s study, had every copy of their book put through a shredder and pulped.

The New York State act is thus a rare piece of favorable news in an otherwise dark story about the efforts of a very rich man to suppress public discussion by means of an innovative use of law that, if taken up by others following his lead, could make the dissemination of information about the Islamofascist threat all but impossible.

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Forbes magazine estimates that Khalid bin Mahfouz possesses personal assets of more than $3 billion. In 1953, his father, a native of Yemen, was granted the charter for the first bank in Saudi Arabia, the National Commercial Bank (NCB), which grew to be one of the world’s largest privately held financial institutions. In the 1980’s it was gradually turned over to the son’s management.

In the decades since, bin Mahfouz has been a shadowy player in the world of Islamic finance and charity. It seems that, in 1988, he contributed $270,000 to an organization called the Makhtab al-Khidamat, or “Bureau of Services,” which funded the activities of Arabs choosing to join the fight against the Soviet domination of Afghanistan. The Bureau of Services was the brainchild of Osama bin Laden, and the germ of al Qaeda.

In 1991, bin Mahfouz created the Muwafaq Foundation. Muwafaq (or “Blessed Relief”) was organized as an Islamic charity, one of countless such agencies that proliferated in the volatile mixture of oil wealth and Wahhabism. Alms-giving, or zakat, is one of the five “pillars of Islam.” But, whatever “charity” may connote in the West, there is, to put it mildly, ambiguity regarding what it means in the various interpretations of Islam. It has been known to include everything from health care for the destitute to explosives for jihadists.

The Muwafaq Foundation has had a furtive and at times notorious history. It is now apparently shuttered, though it is difficult to be sure about this because the charity has primarily operated out of Sudan, where there is very little transparency, and the Channel Islands, which are havens of banking secrecy. There is no question, however, that bin Mahfouz bankrolled the institution with millions of dollars, and that his son Abdulrahman sat on its six-member board of directors.

To run the foundation, bin Mahfouz turned to Yasin al-Qadi, a fellow Saudi entrepreneur who had been a trusted aide at the bank. Shortly after the 9/11 attack on the United States, al-Qadi was formally designated as a terrorist facilitator by the U.S. Treasury Department. Both bin Mahfouz and the Muwafaq organization have been tied by government officials to terrorist financing—the organization more assertively than bin Mahfouz. U.S. authorities have linked the charity, virtually from birth, to jihadist groups in Sudan, Somalia, Pakistan, and Bosnia.

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In 1995, Muwafaq was accused by a British newsletter in Africa of having terrorist ties, and a foundation employee was said to have been complicit in a foiled attempt to assassinate Egyptian president Hosni Mubarak in Sudan. This allegation profoundly embarrassed the Saudi regime, and bin Mahfouz decided to sue the publication for libel. Both the timing and the choice of venue were strategic.

Timing: according to the now-pulped Alms for Jihad, the suit against the newsletter was not commenced until after al-Qadi had formally closed down the foundation’s Sudanese operation. This allowed the plaintiffs to claim that any reference to the defunct outfit was defamatory of them in light of their ongoing association with a Channel Island charity that happened to have the same name—even though the evidence indicates that the two charities were, in fact, one and the same.

Venue: bin Mahfouz chose to press his suit in England because British courts present very low jurisdictional hurdles for cases with little connection to the United Kingdom. More important, in stark contrast to American standards, British libel law imposes the burden of proof on the author or journalist to prove the truth of an allegation if an action is brought against him. Facing an opponent with nearly unlimited resources, the newsletter ultimately withdrew its accusations and apologized.

It is doubtful in the extreme that such a thing could have happened in the United States. Modern American defamation law is controlled by the Supreme Court’s landmark 1964 decision in New York Times v. Sullivan. It imposes the burden of proof on the public figure who claims to have been libeled. To prevail, moreover, he must demonstrate that an author or reporter was not merely wrong but recklessly or maliciously so.

Virtually all other nations are substantially less generous to the working order of a free press in its coverage of public figures. Notable in this regard is Great Britain, which has no First Amendment and boasts an abiding veneration of personal reputation. Indeed, and again in contrast to the United States, Britain has a long tradition of subordinating speech to other values. There are, for example, significant restrictions on public comment about ongoing legal proceedings—inhibiting not only the litigants but the press. It is also a simpler matter to suppress so-called “hate speech” in England than in the United States, where such speech may not be criminalized absent indications of a clear and imminent threat of serious lawlessness.

Add to all this the fact that British courts require a case to have only the most attenuated connection to Britain for it to be heard, and one has all the ingredients necessary for libel tourism. American journalists or authors who do not even attempt to disseminate their work in the UK can nevertheless find themselves hauled into a British court—and, worse, unable to vindicate their First Amendment rights in American courts, where higher hurdles make it difficult to countersue.

Bin Mahfouz, it is clear, scours the international media for mentions of Saudi support of terror in general and allegations about himself in particular. When he finds them, he routinely threatens the offending writers and publications with legal action in England if swift retractions and other curative actions are not forthcoming. The strategy has worked like a charm, as the tale of bin Mahfouz’s efforts against Alms for Jihad confirms.

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In nearly 300 pages of text, Alms for Jihad addresses or otherwise mentions bin Mahfouz about a dozen times. Some passages offer background information, for example on the rise of his family bank and its involvement in the huge financial scandal surrounding the Bank of Credit and Commerce International (BCCI) in the late 1980’s. Here the book makes no mention of a terrorism connection. A few other fleeting citations tie bin Mahfouz and his family to financial institutions and Islamic charities. The most substantive treatment focuses on the Muwafaq Foundation, and there, in the main, the action revolves around its director, al-Qadi, with bin Mahfouz portrayed as the hovering background figure—perhaps pulling the strings, perhaps an innocent dupe.

To be sure, the book’s self-proclaimed significance lies in its being “the first,” as the authors claimed, “to piece together, from a vast array of sources, the secret and complex financial systems that support terror.” Its thesis is that financial institutions and Islamic charities, especially those based in Saudi Arabia, form the backbone of these systems. Bin Mahfouz is plainly depicted as one of the vertebrae. Yet, as Collins maintained before his death earlier this year, “We were careful when writing Alms for Jihad not to state explicitly that Sheikh Mahfouz was funding terrorism.”

Indeed, compared with what U.S. government officials have said for public consumption about bin Mahfouz and Muwafaq, Alms for Jihad is mild. Thus, even before Yasin al-Qadi was formally named a “specially designated global terrorist” by the Treasury Department, an FBI affidavit had already accused this aide of bin Mahfouz of funneling $820,000 to Hamas. On October 12, 2001, in connection with its formal designation, Treasury issued an official press release describing al-Qadi as “head of the Saudi-based Muwafaq Foundation, which transferred millions to Mr. bin Laden.” The charity itself was also called “an al-Qaeda front that receives funding from wealthy Saudi businessmen.” Al-Qadi, who like bin Mahfouz admits knowing bin Laden and supporting him during the anti-Soviet jihad, denies promoting al Qaeda and claims the Hamas transaction was merely a loan to a friend.

Like bin Mahfouz and Muwafaq, al-Qadi has never been actually charged with a terrorism crime. Nevertheless, shortly after designating al-Qadi a terrorist, Treasury issued a letter to Swiss authorities contending as follows:

The Muwafaq Foundation provided logistical and financial support for a mujahideen battalion in Bosnia. The Foundation also operated in Sudan, Somalia, and Pakistan, among other places. A number of individuals employed by or otherwise associated with the Muwafaq Foundation have connections to various terrorist organizations. . . . The Muwafaq Foundation also provided support to Hamas and the Abu Sayyaf organization in the Philippines.

Elaborating still further, Treasury claimed that Muwafaq “also employed and served as cover for Islamic extremists connected with Makhtab al-Khidamat”—the forerunner of al Qaeda—offices of which were also designated as terrorist entities. In sum, U.S. officials concluded that the foundation forged by bin Mahfouz fit the pattern of other Islamic “relief” organizations known to have been complicit with terrorists, all this providing a “reasonable basis to believe that they have facilitated terrorist activities.”1

Of course, the fact that bin Mahfouz created and bankrolled a charity said to have aided Islamic militants would not necessarily mean he knew such aid was being extended. But such connections certainly invite robust inquiry. Presumably, that was what Cambridge University Press believed when it accepted Alms for Jihad for publication.

The book, released in both the United States and Great Britain, went through an extensive editorial process. As Collins wrote, “I had previously warned the editor . . . that some of this material could prove contentious, and in March 2005 [the publisher’s] legal advisers . . . spent a month vetting the book before going into production and finally its publication.” Upon being served the anticipated threat of legal action by bin Mahfouz, Cambridge requested and received from Burr and Collins mounds of back-up information to support their claims.

But then it quickly capitulated. In order to convince bin Mahfouz to quash his pending suit, the press issued an apology accepting that “there is no truth whatsoever in these serious allegations” (emphasis added). Nor did Cambridge leave it at that. “To emphasize their regret,” the publishers declared, they had “agreed to pay Sheikh Khalid substantial damages and to make a contribution to his legal costs.” In addition, boosting bin Mahfouz’s public image, Cambridge evidently felt compelled to stress publicly that all such moneys were going to be donated by “Sheikh Khalid” to UNICEF. Finally, Cambridge reclaimed unsold copies, urged libraries the world over to remove Alms for Jihad from their shelves, and destroyed all existing stock.

This was not, it appears, undertaken out of conviction. As Collins told a writer for the Weekly Standard, “Cambridge, frankly, came to us and said, ‘There’s no way we can win this case.’ And I had to agree with them. . . . It’s probably the cheapest way out.” In effect, Collins wrote in an online posting, Cambridge University Press

was not prepared to embark on a long and very expensive litigation it could not possibly win under English libel law in the English High Court, known to journalists as the “Club Med for Libel Tourists.” [Bin Mahfouz’s counsel] was quite candid. “Our client . . . chose to complain to [Cambridge] about the book because the book was published in this jurisdiction by them” where he had previously threatened to “sue some 36 U.S. and UK publishers and authors” and in which Sheikh Mahfouz had previously won three suits for the same charges of his alleged financing of terrorism.

Collins and Burr did not participate in the settlement. They did not pay or apologize. But, of course, their book and the years of work it represents have disappeared. Except for the stray clandestine copy that snakes about the land of the First Amendment like a product of samizdat, it is unavailable for purchase or perusal.

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Even before his triumph against Alms for Jihad, Mahfouz had targeted another author: an Israeli-born expert in terrorist financing named Rachel Ehrenfeld, who published a book in 2003 entitled Funding Evil: How Terrorism Is Financed—And How To Stop It. Echoing the Treasury Department’s aggressive tone (and many of its assertions) in the immediate aftermath of 9/11, Ehrenfeld was less equivocal about bin Mahfouz in her book than Burr and Collins would be in theirs. She declared, for example:

The former chairman of the National Commercial Bank (NCB) in Saudi Arabia, Sheikh Khalid bin Mahfouz, . . . is alleged to have deposited tens of millions of dollars in London and New York directly into terrorist accounts—the accounts of the same terrorists who were implicated in the 1998 bombings of the U.S. embassies in Kenya and Tanzania, in which 224 people were killed, including twelve Americans, and more than 4,000 were injured.

Ehrenfeld did repeatedly qualify such assertions by stipulating that bin Mahfouz “denie[d] that he has funded terrorism” and insisted, to the contrary, that his beneficence was directed to good-faith charity. But she described him as the force behind a banking conglomerate responsible for transferring, in the aggregate, over $70 million to Muwafaq and to the International Islamic Relief Organization (IIRO), which in turn allegedly funded al Qaeda and its affiliates.2 Sketching the bigger picture, Ehrenfeld portrayed the Saudis as making a practice of funding terrorism by diverting millions of dollars that course through ostensibly charitable institutions.

In a second edition of Funding Evil (2005), Ehrenfeld went on to describe the experience of being stalked by bin Mahfouz’s battalion of lawyers. It began with a letter insisting that “contrary to allegations reported in this book, bin Mahfouz does not have now and never had ‘any involvement or association with the sponsoring of al-Qaeda,’ nor has he ever ‘knowingly financed terrorism of any description and vehemently den[ies] this.’” The lawyers proceeded to demand:

An undertaking to the High Court in England not to repeat the same (or similar) allegations.

The immediate withdrawal from circulation and destruction and/or delivery up of all unsold copies of the book.

A public letter of apology.

A donation to a charity agreed to by bin Mahfouz.

Payment of the legal fees involved.

Unlike Alms for Jihad, Ehrenfeld’s book had not been released in the UK. But through the Internet, about two dozen copies of Funding Evil were purchased in England. For bin Mahfouz’s sympathetic British court, that small hook was enough to trigger jurisdiction. Ehrenfeld, who lives and works in New York City, initially indicated she would answer the case, but finally decided to default in light of the time and expense of litigating in a foreign country where the legal deck was stacked. The British court promptly ordered her to repudiate her statements about bin Mahfouz, destroy copies of her book, refrain from “publishing, or causing or authorizing the further publication” of her assertions, apologize to bin Mahfouz publicly, and pay him over $200,000 in damages and legal costs.

Ehrenfeld ignored this order, and fought back. Her attorneys filed a creative suit against bin Mahfouz in a Manhattan federal court, seeking a declaratory judgment that he could not prevail on a libel claim under federal and New York state law and that the British judgment was therefore unenforceable in America. Bin Mahfouz, who exhibits no compunction about dragging American writers to a tribunal thousands of miles from their homes, responded that because he neither resides nor does business in New York (at least not since his bank here was closed), it would violate the U.S. Constitution for a court to exert jurisdiction over him.

At first, Ehrenfeld suffered a series of setbacks. Because Mahfouz had made no move to collect on the British judgment, a federal district judge rejected her effort to bring him before an American court and subject him to the kind of searching discovery entailed by U.S. civil litigation. An appellate panel, however, was sensitive to the professional harm that bin Mahfouz’s strategy portended for journalists in general: even if he did not seek to collect, it ruled, the implicit specter of additional lawsuits and damages was sure to scare off potential publishers and sponsors, making it difficult for a writer to work. But then the state’s highest court, when asked to weigh in by the appeals panel, ruled that this consideration made no difference: bin Mahfouz did not have sufficient ties to New York to be sued there.

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Fortunately, this was enough to jolt New York State’s rancorous legislature out of its usual paralysis, and the Libel Tourism Protection Act became law on May 1 of this year. Reversing the result in Ehrenfeld’s case, the act also means to protect future publishers by declaring unenforceable those judgments in foreign courts that appear to abridge the free-speech rights of New York businesses and individuals.

More relief may be on the way. Congressman Peter King, a New York Republican, has introduced federal legislation, the Free Speech Protection Act, to combat libel tourism, and the initiative has upper-chamber support from Senators Joseph Lieberman, Arlen Specter, and Charles Schumer. Beyond a declaration that a foreign judgment is unenforceable in the United States (which bin Mahfouz already knows and does not care about), the federal proposal would allow countersuits for money damages against libel tourists who scheme to suppress free-expression rights.

This is urgently needed. Bin Mahfouz and others like him will not be dissuaded unless they face the prospect of losing assets and of facing lawsuits against them that could trigger a process of civil discovery—to say nothing of seeing their terror ties featured in news stories.

There has been another hopeful sign in the UK. In 2006, Britain’s Law Lords broke salient new ground in the case of Jameel v. Wall Street Journal Europe, shifting British defamation law closer to American standards. It is not a complete alignment by any stretch, and its scope must still be tested by litigation. But established journalists accused of publishing falsehoods will now enjoy a “qualified privilege” when they have reported responsibly on matters truly in the public interest.

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In the end, the story of libel tourism—like that of unofficial speech codes, official attempts to purge our lexicon of references to terms like jihad and Islamofascism, and human-rights commissions that, under the guise of policing “hate speech,” exercise a chilling effect on the telling of inconvenient truths—concerns far more than the personal interests of those directly targeted. There is an urgent public interest at stake: the need to understand and address financial support systems that invigorate the terror networks targeting Americans for mass murder.

If the libel tourist is not brought to heel, journalists will hesitate to write about the central national-security challenges of our time. The story of Saudi support for Islamic terror will not be told, and the enablers of jihad will have succeeded in shaping the parameters of public debate. If, on the other hand, the tide is truly turning against them, the passage of New York State’s law will prove to have been a significant victory in the ongoing battle to allow Americans to speak openly and honestly about the threats facing their nation and the world.

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Footnotes

1 Chicago prosecutors have also submitted to a federal court a document, dating back to al Qaeda’s founding, that lists about twenty top donors referred to by bin Laden and other insiders as “the Golden Chain.” The list includes a “bin Mahfouz,” without a first name. Assuming that this is Khaled bin Mahfouz, the question is whether the list represents what bin Laden was hoping for on the basis of a past contribution or expecting on the basis of an ongoing relationship.

2 IIRO is a major Saudi non-governmental organization with branch offices throughout the world. In 2006, the U.S. Treasury Department formally designated its Philippines and Indonesia branches, as well as one of its chief Saudi executives, as terror facilitators.

About the Author

Andrew C. McCarthy directs the center for law and counterterrorism at the Foundation for Defense of Democracies. In somewhat different form, this article will appear in his book, Willful Blindness: A Memoir of the Jihad, soon to be released by Encounter Books. Copyright 2008 by Andrew C. McCarthy.




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