Somali banking under scrutiny

In this seaside capital, dozens of people are crowded inside the main branch of Dahab Shiil, a money-transfer company, their ears pressed to the holes in the teller windows for word of money from relatives.

On a normal day, Dahab Shiil would serve some 300 customers in Mogadishu, with transfers totaling $60,000 to $70,000. But ever since the US closed down this company's main competitor, Al Barakaat, in part of its campaign to freeze terrorists' funds, business has more than doubled, with an additional $100,000 in transactions every day.

"I am not happy with the closure of Barakaat, but this is a business," says Ali Jama Ahmed, the general manager of Dahab Shiil.

Earlier this month, the US government accused Barakaat of funneling millions of dollars to Osama bin Laden and his Al Qaeda network, an accusation the company denies.

The business - known traditionally as hawala - is coming under scrutiny since the Sept. 11 attacks. Hawala is a system of transferring funds through the use of promissory notes. It is used throughout the Islamic banking industry because it is in line with Islamic principles. A Somali taxi driver working in Seattle can pay a fee to deposit his paycheck at a local office, and a relative in Somalia can withdraw the funds.

Some observers argue that shutting down remittance companies will cut the legs out from under a meager Somali economy, reduce the government's tax revenue at a time when it's trying to bring stability, and ultimately drive people into the arms of terrorist groups out of anger over their economic hardship.

But the US Treasury Department says Barakaat has been exploiting the system, funneling some $25 million a year from customer fees to Mr. bin Laden's network. On Nov. 7, police raided Barakaat offices in five US states with high Somali populations, seized their records, and froze their assets. Officials in Canada and the United Arab Emirates - where Barakaat is based - did the same, with help from the US.

US officials say they have strong evidence of a long-running link between Barakaat and Al Qaeda, but under new counterterrorism legislation have yet to make their evidence public.

Barakaat is Somalia's largest company and the closest thing to a conglomerate. It is a telecommunications provider and postal service, and it's even building a Pepsi bottling plant. Barakaat's biggest source of remittances is Somalis in the US.

Barakaat officials say their financial operation is merely a system for Somalis working overseas to send money to relatives, a kind of Western Union for a nation without a functioning central bank. They deny accusations that the company's Somali founder, Ali Ahmed Nur Jumale, knows bin Laden personally.

"One hundred percent, we have nothing to do with that," says Barakaat spokesman Mahmoud Mohamed. Terrorist groups "are transferring millions, and we don't have that kind of system."

Barakaat officials say their business competitors may have fed misinformation to the US, but they refuse to name any competitor. "We believe that sooner or later, the United States will realize this was misleading information," says Mr. Mohamed.

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