Financing Al-Shabaab operations
As the forensic experts sift through what’s left of Nairobi’s Westgate shopping mall one question is not being asked: who paid for the attack?
As every journalist knows, the rule is always to follow the money – find the financiers. So who did pay for the atrocity?
There is plenty of evidence of where al-Shabaab gets its money from. This is to be found in the lengthy reports for the United Nations Security Council. They are prepared annually by a team of experts and are a detailed source of evidence. They are very long and – to save time – I have copied the relevant sections from the reports in below. I have not included the footnotes, which is why numerals appear in the text without explanation.
Briefly, these are the sources of funding al-Shabaab draws on. The UN experts believed these are the most important, in descending order when they drew up a lengthy section of their 2011 report. Despite al-Shabaab’s reverses, the categories are probably still valid. They report that the group raised an estimated $70 – $100 million a year.
The UN experts name Ali Mohammed Ali ‘Abdullahi’ as being the key financial officer within al-Shabaab.
Broadly speaking, al-Shabaab’s revenue streams can be categorized as follows, in descending order of importance:
• Taxation and extortion – this has probably declined, as al-Shabaab has lost control of the towns. Aid agencies operating in Somalia have been among those who have been fleeced.
• Commerce, trade and contraband – the tax on charcoal exports should have declined, given the loss of the southern port of Kismayo, but there is evidence that the leader of the area, Ahmed Mohamed Islam (known, like all Somalis by a nickname – ‘Madobe’) – allows the trade to continue.
• Diaspora support – this has also continued, which may explain why Barclays Bank is cutting its money transfer service.
• External assistance – this flows from Kenyan groups like the Pumwani Riyadha Mosque Committee based in Nairobi. As detailed below, businessmen in Saudi Arabia and the Gulf states are also important sources of funds.
[From 20 June 2011 Report]
60. Notwithstanding the military stalemate and putative schisms within its leadership, the economic health of Al-Shabaab is more robust than ever. The movement continues to consolidate its control over multiple sources of revenue, which are used to pay for the salaries of its fighters, and for arms and ammunition and to sustain military operations. The Monitoring Group conservatively estimates that Al-Shabaab generates between $70 million and $100 million per year, from duties and fees levied at airports and seaports, taxes on goods and services, taxes in kind on domestic produce, “jihad contributions”, checkpoints and various forms of extortion justified in terms of religious obligation, or zakat.
61. Broadly speaking, Al-Shabaab’s revenue streams can be categorized as follows, in descending order of importance:
• Taxation and extortion
• Commerce, trade and contraband
• Diaspora support
• External assistance
62. At the same time, Al-Shabaab is evolving from an armed faction into a lucrative consortium of business interests, both within Somalia and abroad, whose members benefit from cartel-style trading practices, tax breaks and mutual facilitation. Moreover, there are indications that Al-Shabaab trading networks may also be used to camouflage charitable contributions from sympathizers in the Gulf States.
Taxation and extortion
63. Al-Shabaab’s taxation system is far more sophisticated and comprehensive than that of any other Somali authority, including the administrations of Puntland and Somaliland. The movement collects detailed information on businesses operating in areas under its jurisdiction, from telecommunications and money transfer agencies, to general merchandise and food stores, agriculture and raising livestock. Al-Shabaab representatives regularly pay visits to those businesses to assess values and to collect taxes. Al-Shabaab taxes are levied in at least six different ways, including:
(a) Enforcement of a consumer tax on goods purchased from general merchandise stores;
(b) Taxes levied on businesses according to size and profitability;
(c) Taxes in kind, in the form of thousands of tons of maize, sesame,
livestock and other products from farmers and pastoralists;
(d) Levy of $10 per cultivable acre from farmers;
(e) Tax of 2.5 per cent on total corporate profits per annum, known as the zakat contribution;
(f) Ad hoc contributions for specific military operations, known as jihad war contributions.34
64. In October 2009, Al-Shabaab won a decisive battle over the Ras Kamboni forces for control of the port town of Kismaayo, which, together with the secondary ports of Marka and Baraawe, has since emerged as the most important source of income for the group. Al-Shabaab generates between $35 million and $50 million per year from port revenues, of which at least $15 million is based on trade in charcoal and sugar.35
65. The vast majority of imports via Kismaayo are not intended to serve the local population, but are destined for other parts of southern Somalia that could be equally or better served by Mogadishu or be smuggled into neighbouring countries as contraband.
66. Taxation of businesses in Bakaara and Suuq Baad markets is estimated from $2.5 million to $5 million per month, or between $30 million and $60 million per year.36 In addition to those taxes on businesses, Al-Shabaab operates a comprehensive web of mobile military checkpoints where transportation operators and passengers are all obliged to pay taxes for free passage. For a more detailed analysis of Al-Shabaab taxation, see annex 3.
67. Although Al-Shabaab officially discourages the practice of qaad chewing, and in some places bans it outright, the movement nevertheless used to allow its import via airports under its control, presumably because of the opportunity it offered to collect additional taxes. Until 16 October 2010, Blue Bird Aviation Limited and Freedom Airlines Express Limited were also operating an average of one flight per day to Mogadishu West airfield, also commonly known as “Kilometer 50” or “K50”.
The airfield, located in an area controlled by Al-Shabaab militias, is owned and was operated by a prominent Somali businessman, Ahmed Du’ale Gelle “Heef”. Although Heef told the Monitoring Group that all the revenue generated by qaad trading through K50 was handed over to the Transitional Federal Government central bank, the Group estimates that between January and mid-October 2010, the value of taxes paid to Al-Shabaab by qaad traders using K50 would have been $500,000.37
68. On 16 October 2010, Al-Shabaab took over K50 facilities,38 reportedly expelling Ahmed Du’ale’s militia and leading Kenyan authorities to prohibit flights to the airfield. According to Kenyan operators, Al-Shabaab made an offer to pursue the cargo activity at K50, which Blue Bird refused, transferring all their flights from that date onward to Mogadishu International Airport.39 Al-Shabaab therefore no longer appears to have access to tax revenues from qaad transported by air. However, it is the assessment of the Monitoring Group that importation of qaad from Kenya by road in Al-Shabaab-controlled areas was continuing at the time of writing.
Al-Shabaab trading cycle: sugar, contraband and charcoal
69. Unlike businesses with fixed assets in Al-Shabaab areas, such as telecommunications and hawalas, import/export traders have the option of alternative ports through which to do business. The Monitoring Group therefore considers many of the major traders and transporters who use Kismaayo to be consciously and voluntarily engaging in commercial transactions that accrue significant financial benefit to Al-Shabaab, a designated entity, and therefore to be in potential violation of Security Council resolution 1844 (2008).
70. Al-Shabaab generates millions of dollars of revenues each month through a coordinated trading cycle built upon the export of charcoal, which in turn finances the import of sugar, much of which is subsequently smuggled across as contraband into neighbouring countries, particularly Kenya. Shipping companies deliver sugar to Kismaayo and collect charcoal for the return journeys. Bank accounts in the Gulf States where the profits of this trade are deposited can be used to launder voluntary contributions to Al-Shabaab through fraudulent invoicing, overvaluing of import proceeds and undervaluing of exports.40
71. This trade cycle is dominated by networks of prominent Somali businessmen operating mainly between Somalia and the Gulf Cooperation Council (GCC) countries, notably Dubai in the United Arab Emirates.41 Al-Shabaab not only attracts their business by imposing lower rates of taxation in Kismaayo than at ports controlled by the Transitional Federal Government but also actively promotes largescale imports of sugar and exports of charcoal by offering preferential access and tax breaks to Al-Shabaab affiliated businesses. Two of the most prominent figures in the network are businessmen with historical linkages to militant Islamist groups in Somalia: Abukar Omar Adaani42 and Ahmed Nur Jim’aale.43 For a more detailed analysis of Al-Shabaab’s charcoal-sugar trading cycle, see annex 3.1.
Mogadishu versus Kismaayo: how the Transitional Federal Government abets
the Al-Shabaab trading cycle
72. Ironically, the Transitional Federal Government is complicit in maintaining the Kismaayo trade corridor that plays such a key role in financing the Al-Shabaab war effort. The Monitoring Group has confirmed that most commercial motor vessels transporting goods to the port of Mogadishu discharge only part of their cargoes in order to deliver the remainder to Kismaayo and collect charcoal destined to GCC countries — with the full knowledge of the Mogadishu port authority.44 The manager of Mogadishu Port, Sayid Ali, is a long-time employee of Abukar Omar Adaani and represented Adaani’s business interests in Kenya until accepting his current assignment.45
73. It is common practice for bills of lading and manifests of vessels heading to southern Somalia to declare Mogadishu as the port of delivery and deliberately avoid making reference to Kismaayo. Informal agreements between transporters and the shippers determine the division of cargoes between Mogadishu and Kismaayo.
74. Elevated import taxes imposed by Transitional Federal Government authorities, believed to be among the highest in the region, serve to aggravate the problem.46 In early 2011, a dispute erupted between the Mogadishu port authorities and the Somali traders who objected to what they perceived to be excessive taxation and inefficiency of the port authorities.47 Consequently, many Somali traders avoid Mogadishu, preferring to discharge their cargoes at Kismaayo or other ports where import taxes are lower. For example, Mogadishu port authorities charge an import duty in the amount of $1,300 on a mid-size vehicle. At Kismaayo, Al-Shabaab charges only $200. Even if the transporter then wishes to deliver the vehicle to Mogadishu, it costs another $200, including driver fees, fuel and miscellaneous expenses, to drive the car from Kismaayo to Mogadishu.48
75. On 1 March 2011, presumably to end that counterproductive practice, the Transitional Federal Government approved a decision to ban any international sea transport heading to and from the ports of Kismaayo, Marka and Baraawe; however, the Monitoring Group has since learned that the Mogadishu port authorities are not enforcing the decision, and import duties and taxes remain uncompetitive.49
76. The viability of the Kismaayo trade corridor depends in large part upon its proximity to Kenya, the remote and porous 682 km border and the profitability of the contraband trade. Furthermore, the Monitoring Group believes that well-organized criminal networks with links to Al-Shabaab are taking advantage of the porosity of the border to smuggle people, commercial goods and weapons. Several of the individuals involved are well-established businessmen and real estate investors in Kenya. An opportunistic and mutually beneficial kind of “pax commerciale” has been established between those criminal networks and Al-Shabaab.
77. On 25, 27 and 28 January 2011 and on 1 February 2011, the Kenya police (Dadaab Unit) captured 450 sacks of sugar and 129 cartons of milk powder smuggled from Kismaayo. The goods were subject to a Kenyan court order and were referred to the Kenya Revenue Authority for duty payment prior to their release. The Kenya Revenue Authority confirmed to the Monitoring Group that most confiscated goods are originated from Dubai (apart from some relief foods) and are transited through Somalia and smuggled to Kenya through the porous border — as the Kenya-Somali border is closed.50
78. In April 2011, Kenyan sugar sold at between KES 4,800 and KES 4,900 per 50 kg sack (approximately $58-$60), while the same amount of sugar smuggled from Kismaayo sold in Garissa at between KES 4,350 and KES 4,450 (approximately $53-$55), even after a mark-up of roughly 20 per cent.51 Not surprisingly, according to a senior Kenyan customs official in North Eastern Province, about 10,000 bags of smuggled sugar may be entering Kenya from Somalia on a daily basis.52 The Kenyan authorities have also discovered light weapons and ammunition concealed in some sugar consignments.53
Diaspora support for Al-Shabaab
79. In its March 2010 report (S/2010/91), the Monitoring Group extensively documented diaspora support networks for Al-Shabaab.54 There is no doubt that many ethnic Somalis living abroad continue to engage in radicalization, recruitment and resource mobilization on behalf of Al-Shabaab, but it has not been possible during the course of the current mandate, to quantify whether that channel of financial assistance has grown in importance or declined.
80. During the course of the mandate, there have been indictments and judicial proceedings involving individuals accused of providing material and financial support to Al-Shabaab in Norway, Sweden, the United Kingdom and the United States. Most of the cases date from the period 2007 to early 2009 and do not shed much light on current trends.
[From the 12 July 2013 Report]
By November 2012, Kenyan forces, Sheikh Ahmed Madobe and his Ras Kamboni forces had unilaterally begun exporting charcoal from Kismaayo in flagrant violation of the Security Council ban and the instructions of the President of Somalia. Thereafter, approximately 1 million sacks of charcoal have been exported from Kismaayo each month, in addition to exports from Al-Shabaab-controlled Barawe and other smaller ports. Overall, the charcoal exports have increased by 140 per cent in comparison to previous years. The charcoal business architecture and trade networks remain intact, with Al-Shabaab maintaining a central role and continuing to benefit significantly. (page 9)
18. The Amniyat is the special clandestine division of Al-Shabaab, under the direct leadership of Ahmed Godane and operational command of Mahad Mohamed Ali, a.k.a. ‘Karate’….
26. The Monitoring Group was also provided with confidential information regarding the preparation at the end of 2012 and the partial execution of a large-scale assassination operation by an Amniyat cell in Mogadishu. The objective was to mobilize a team of 25 Amniyat operatives to conduct a wave of assassinations of national intelligence officers and members of the Federal parliament. To that end, money was collected amongst supporters of Al-Shabaab within the Somali business community in Qatar and sent via Dahabshil, a money remittance company, to Mogadishu, where it was received by the Amniyat Finance Officer in Mogadishu, Ali Mohammed Ali ‘Abdullahi’, and delivered to the Amniyat commander in charge of the operation.20
27. The Monitoring Group had further access to three additional cases in which cash U.S. dollars were collected from the Somali business communities in Saudi Arabia and the United Arab Emirates, and transferred by remittance companies to Mogadishu, with the knowledge and aim of financing terrorist activity in Somalia, and specifically to support Amniyat operations in Mogadishu. In the period October to December 2012, the aggregate amount transferred for the four operations was approximately 100,000 USD.21 In addition to spreading fear amongst the population and government officials, Somali businessmen in the diaspora supporting Amniyat assassinations may serve to achieve ulterior goals, whether clan revenge or elimination of business competitors or political opponents….
Kenyan financial support for Al-Shabaab
34. Over the years, Al Hijra in Kenya and its Somalia-based fighters have proven adept at mobilizing resources for Al-Shabaab activities in Somalia and the region. As detailed previously by the Monitoring Group,13 the Pumwani Riyadha Mosque Committee has played a clandestine role and continues to provide financial support to Al Hijra, particularly its fighters returning from Somalia to Kenya. In some cases, this support has been earmarked for attacks on behalf and in support of Al-Shabaab.
During the mandate, a change was observed in attitude between the Pumwani Riyadha Mosque Committee and Al Hijra as a result of the new Kenya Prevention of Terrorism Act (2012).14 However, information and evidence suggests that funding of Al Hijra activities on behalf Al-Shabaab persists.
35. In addition to the Pumwani Riyadha Mosque Committee as its conventional source of funding, Al Hijra seems to have benefitted from an increasing number of “goodwill donations” from “Makaburi” and other key contributors from the Muslim community in Kenya to carry out attacks on behalf of Al-Shabaab.15 In addition, Al Hijra has received similar financial assistance from overseas.
36. Despite its public and firm denial of funding or assisting recruitment for Al-Shabaab, the Pumwani Riyadha Mosque Committee continues to view its support of Al-Shabaab through Al Hijra as a religious obligation.16 On 31 July 2012, a Committee worker was arrested in Nairobi after collecting a package sent from China at the offices of DHL. The package contained civilian-use items, including car key alarms and laser range finders, which are commonly used in the assembly of improvised explosive devices.17 Such items are stored in the offices of the Pumwani Riyadha Mosque Committee located at the Pumwani Riyadha Mosque before being distributed, including to Somalia for Al-Shabaab attacks. In October 2012, following passage of the Kenya Prevention of Terrorism Act (2012), a Committee official employed at the Kenyan Parliament, Ali Abdulmajid (a.k.a. Ali Bodie), began to encourage and advise the Committee on ways and means of concealing its support to Al-Shabaab through Al Hijra.18
37. Furthermore, the Monitoring Group has learned of the collusion between the Pumwani Riyadha Mosque Committee and Al Hijra’s Nairobi-based “Amir”, Issa Mugai “Carragher”, in supporting Al Hijra fighters sent back from Somalia to Kenya by Ahmad Iman and Al-Shabaab to conduct violent attacks. “Carragher”, a “journalist” with the Dutch-run African Slum Journal in Nairobi, provided material support to these fighters with the financial assistance of the Pumwani Riyadha Mosque Committee.19
38. During an interview on 20 March 2013, “Carragher” denied to the Monitoring Group that he had ever been a member of MYC (Al Hijra) and claimed that the “MYC is dead.”20 However, “Carragher” did admit to being “on the Committee” and attending the MYC-Pumwani Riyadha Mosque Committee shura (meeting) of 28 February 2012. This shura had been arranged to consider the reorganization of the Muslim Youth Centre, in which the Pumwani Riyadha Mosque Committee agreed to continue funding the Centre on condition that it change its name as a security precaution. Furthermore, “Carragher” denied to the Monitoring Group any involvement in Al-Shabaab-related activities, including supporting fighters returning from Somalia to Kenya. When asked about one such case in which Tuwa Ibrahim Jibril “Tafawa” received assistance during an operation in Kenya, “Carragher” conceded that he had met “Tafawa” and members of his cell by chance at a football match.21
39. A detailed assessment of Al Hijra activities on behalf and in support of Al-Shabaab is included in annex 3.1 to the present report (strictly confidential).
Annex 7.2: Diversion and misappropriation of humanitarian assistance
Diversion by Al-Shabaab
1. Few international agencies still work in Al-Shabaab controlled areas for two reasons. First, Al-Shabaab has lost significant ground in the past twelve months and redeployed from major towns to mostly rural areas. Second, Al-Shabaab has banned the vast majority of international organisations from operating in areas under its control. Nevertheless, a few international and national non-governmental organisations (NGOs) are still able to work in some Al-Shabaab strongholds. They face challenges of coordinating with local authorities while trying to ensure that resources do not get diverted from intended beneficiaries.
2. Agencies who have worked or still work in Al-Shabaab areas report similar experiences. To implement a programme they must coordinate with local authorities and ensure their support. Some NGOs described that they had to halt their projects before even beginning since the authorities attempted to influence the targeting of beneficiaries, at times up to half of them, and replace them with their supporters.1 Others have struggled to refuse to pay direct taxes to Al-Shabaab who demanded either a lump sum ‘registration fee’ or a percentage of the value of the project, or both. In addition, Al-Shabaab has occupied the compounds and warehouses of many NGOs they have banned.
3. The payment of taxes to Al-Shabaab is a sensitive issue for humanitarian agencies because of the legal and ethical implications. While most agencies are adamant that they have not paid direct taxes to Al-Shabaab authorities, many admit off-the-record to having reimbursed their national staff when they did, or to having actually increased national salaries to make up for the taxes imposed on them by Al-Shabaab authorities.2 In some cases, beneficiaries were taxed by Al-Shabaab with the full knowledge of local and international agencies responsible for the programmes. Donors, including the European Union and the United States, are fully aware of the price to pay for operating in Al-Shabaab-controlled areas. Yet, they continue to employ the rhetoric of zero tolerance for Al-Shabaab receipt of their funds.3 Doing so results in a tacit “don’t ask, don’t tell” policy between donors and the agencies they fund whereby the agencies ultimately bear the reputational and legal risks of resources leaking to Al-Shabaab.