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National Commercial Bank

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951. The Saudi National Commercial Bank (or “NCB”) was founded in 1950 by Salim bin Mahfouz. The Jeddah based bank is now the first commercial bank of Saudi Arabia, with profits of $613 million and assets of $26.5 billion in 2001. After Salim’s death in 1986, his son Khalid bin Mahfouz became President and CEO of the Saudi National Commercial Bank until 1999, and its principal shareholder with control over more than 50% of the bank’s capital. The NCB has several wholly-owned subsidiaries, including SNCB Corporate Finance Ltd. in London, SNCB Securities Ltd. in London, and SNCB Securities Ltd. in New York City.

952. The National Commercial Bank was involved between 1986 and 1990 in the fraudulent schemes and practices of the Bank of Credit and Commerce International (or “BCCI”) after NCB Chairman Khalid bin Salim bin Mahfouz became Chief Operating Officer and major shareholder of BCCI. A 1992 United States Senate report on the BCCI affair detailed the role played by the National Commercial Bank in hiding assets and in the cover-up and obstruction of the Senate investigation. The National Commercial Bank was used by Osama bin Laden and al Qaeda as a financial arm. The NCB was operated as a financial conduit for Osama bin Laden’s operations. As a former CIA counter-terrorism expert explained:

How does the al Qaeda organization fund its worldwide network of cells and affiliated groups? Several businessmen in Saudi Arabia and in the Gulf contribute monies. Much of the money is paid as ‘protection’ to avoid having the enterprises run by these men attacked. There is little doubt that a financial conduit to Bin Laden was handled through the National Commercial Bank, until the Saudi government finally arrested a number of persons and closed down the channel. It was evident that several wealthy Saudis were funneling contributions to Bin Laden through this mechanism. Now, it appears, that these wealthy individuals are siphoning off funds from their worldwide enterprises in creative and imaginative ways.

953. Defendant Khalid bin Salim bin Mahfouz was born in Hadramaut, Yemen, on September 12, 1928, Khalid bin Salim bin Mahfouz is the son of Salim bin Mahfouz, who emigrated in Saudi Arabia in or about 1930. His father founded in 1950 the first commercial bank of Saudi Arabia, the National Commercial Bank (NCB), based in Jeddah. The National Commercial Bank is today kingdom’s largest bank.

954. The bin Mahfouz family businesses are organized through a series of holding companies, including a conglomerate, Saudi Economic and Development Company LLC (Sedco), founded in 1976 and based in Jeddah, and a petroleum company, Nimir Petroleum, chaired by Khalid bin Mahfouz’s son.

955. Between 1986 and 1990, Khalid bin Salim bin Mahfouz was Chief Operating Officer of the Bank of Credit and Commerce International (BCCI). After several fraudulent practices were discovered, Khalid bin Salim bin Mahfouz was indicted on July 1, 1992 on charges of participation in a Scheme to Defraud in the First Degree in violation of New York Penal Law § 190.65, in connection with certain of defendant's acts and omissions relative to BCCI Holdings and certain related entities. The indictment alleges a series of misrepresentations, sham loans, and fraudulent conduct in failing to disclose the status of defendant's interest in BCCI.

956. Under Khalid bin Salim bin Mahfouz, the BCCI was also implicated in supporting terrorism, as reported by the United States Senate.

In the course of targeting BCCI for laundering drug money, the CIA learned of BCCI's involvement in manipulating certain financial markets, in arms trafficking, and in supporting international terrorism, including handling the finances of Sabri al-Bannah or Abu Nidal, and his terrorist organization.

957. The 1992 Senate investigative Report detailed the initial involvement of the BCCI in terrorism financial support.

BCCI's support of terrorism and arms trafficking developed out of several factors. First, as a principal financial institution for a number of Gulf sheikhdoms, with branches all over the world, it was a logical choice for terrorist organizations, who received payment at BCCI-London and other branches directly from Gulf-state patrons, and then transferred those funds wherever they wished without apparent scrutiny. Secondly, BCCI's flexibility regarding the falsification of documentation was helpful for such activities. Finally, to the extent that pragmatic considerations were not sufficient of themselves to recommend BCCI, the bank's pan-third world and pro-Islam ideology would have recommended it to Arab terrorist groups.

958. After Salim bin Mahfouz’s death in 1986, Khalid bin Salim bin Mahfouz became President and CEO of the Saudi National Commercial Bank until 1999 and its principal shareholder with control over more than 50% of the bank’s capital.

959. A bank audit of the National Commercial Bank conducted in 1998 revealed that over a 10 year period $74 million were funneled by its Zakat Committee to the International Islamic Relief Organization, headed by Osama bin Laden’s brother-in-law.

960. The NCB audit report also stressed various irregularities due to “unreported expenses and loans.” It states that “without knowledge of the Zakat Committee, NCB Directors established over the years credit and loans facilities for several charitable organizations, along with banking facilities that were not reviewed by the Committee.” Direct donations were “received through those facilities to the Red Crescent Saudi Committee, International Islamic Relief Organization and Muwafaq Foundation.”

961. The NCB audit report points out a $3 million transfer to Blessed Relief Foundation, a supporter of Osama bin Laden founded by Khalid bin Salim bin Mahfouz. Khalid bin Salim bin Mahfouz was dismissed from the NCB in 1999 soon after the bank’s audit report and placed under arrest in Taif. Former CIA Director James Woolsey testified before the Senate Judiciary Committee that along with the “financial ties” to Osama bin Laden, Khalid bin Salim bin Mahfouz was Osama bin Laden’s brother-in-law by his marriage to bin Mahfouz’s sister Kaleda. Khalid bin Mahfouz set up various charity organizations around the world since 1991. Every of these foundations was linked to al Qaeda and involved in the financing of Osama bin Laden operations.

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