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CNN Live Saturday

Where Do Terrorists Get Their Money?

Aired April 20, 2002 - 12:33   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: Since September 11, there have been a lot of questions about how terrorists get their money. A senior writer for "Fortune" magazine went to Pakistan to look for answers. While on assignment, he carried a CNN camera and worked with our Allan Dodds Frank. Here's what they found.

(BEGIN VIDEOTAPE)

ALLAN DODDS FRANK, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): Atop this silk market in Quetta, Pakistan's third largest city, posters of Osama bin Laden. In the market, a young boy sells Osama bin Laden cigarettes, and near the market, at the office of the now- banned terrorist group, a leader praises al Qaeda.

UNIDENTIFIED MALE (through translator): God willing, that day is not far when Islamic flags will be hoisted at the top of American buildings.

FRANK: The black market is built on goods imported from Dubai to Afghanistan, then smuggled into Pakistan to avoid high tariffs. That trade greatly profited the Taliban, and government sources say it is still run by people with ties to terrorists. Making it possible is the hanni (ph), as the system of informal money transferring is known in Pakistan.

MOINUDDIN HAIDER, PAKISTAN INTERIOR MINISTER: Of course it is only (UNINTELLIGIBLE) working class, who send $100, $50, small amounts. I don't think that is money used for terrorism. That is money which people earn with their sweat and they sent to their families back in Pakistan.

FRANK: Actually, the central bank is practically powerless to stop the hanni (ph), although in most forms it is technically illegal.

Indeed since 1999, the Pakistan Central Bank has used hanni (ph) dealers to convert rupees into U.S. dollars to prop up Pakistan's dwindling dollar reserves and finance trade deficits. In Pakistan, a private United Nations report estimates, 85 percent of all transaction are in cash. The black market economy is as large as the official economy.

When Richard Behar of "Fortune" magazine visited these money changers in Quetta to inquire about sending money to Afghanistan, he discovered that UNICEF, the United Nations International Children's Emergency Fund, was sending more than $70,000 to Kandahar that day.

RICHARD BEHAR, "FORTUNE": I asked the money changer, how hard would it be to send $30,000 to Afghanistan tomorrow? He said, no problem. He pulled out a file and showed letters from the United Nation authorizing him to do that for many months.

FRANK: The government of Pakistan has joined the United States in blocking terrorist funds. But so far, a U.S. government source says, Pakistan has located only about $300,000, a fraction of the terrorist money U.S. officials believe is there.

One indicator, by the time Pakistan blocked the accounts of this Taliban consulate in Quetta, there was only $323.65 left. And in one account of the group suspected of murdering "Wall Street Journal" reporter Daniel Pearl, just $1.50.

Allan Dodds Frank, CNN Financial News.

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