The Magazine

Follow the Money...

...But don't hold your breath.

Oct 8, 2001, Vol. 7, No. 04 • By JAMES HIGGINS
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Every one of the alleged hijackers and publicly identified suspects is a male Arab Muslim who is young or in early middle age (and, by the way, white). This is a fact, not a myth arising from bigotry. It is also a fact that many of them appear to come from Egypt and Saudi Arabia. Osama bin Laden and his henchmen, not law enforcement agencies, are the ones doing racial profiling here in selecting recruits. Hitler himself was not as rigorous in choosing only accomplices of one ethnic, racial, and religious identity. Until politicians in this and other civilized countries realize that the bin Ladens of the world flunked diversity training, there will be little point in following the money because any evidence of wrongdoing will be buried in irrelevant data collected in the interest of "fairness."

Much attention has, appropriately, been paid to increases in the volume of short sales on certain airlines and reinsurance companies just before September 11 and to some really startling increases in the volume of puts—options to sell at a specified price—on UAL (United Airlines) and AMR (American Airlines). Under normal circumstances such activity would soon have come to the attention of exchanges and regulators, not because they might indicate for-profit terrorism but because they might hint at, horror of horrors, insider trading.

Trading securities on U.S. exchanges is not something done with hawalas and cash. It is all documented, and it is possible to find out whose pockets those profits went into. Such a search will very likely require the cooperation of previously unhelpful governments, many in small island countries, whose competitive advantage in the world economy is effective bank privacy statutes. But in this special case the United States might get cooperation from governments who have heard President Bush say we will not distinguish between terrorist groups and those who harbor them, governments that have no wish to end up like Manuel Noriega or the Grenadian junta. The United States and the Organization for Economic Cooperation and Development in recent years have, unfortunately, sought to punish such money havens for competing on the basis of financial laws. Making it clear that our interest is in hunting terrorists, not destroying local economies, might result in more cooperation.

But keep in mind the technical and psychological sophistication of the September 11 attacks. Whoever planned the attacks apparently knew not only what problems a jet fuel fire would cause the World Trade Center, but also how U.S. airline pilots would react to knife attacks on flight attendants. Such a mind was certainly capable of setting up a false trail by giving a "friendly tip" to, say, a fellow Muslim fundamentalist over a lap dance and beer (the recreation of choice for some of the hijackers) about the money to be made buying puts on certain U.S. carriers because of—wink, wink—a big event coming up. The tippee would wind up with the profits and the entire military and law enforcement apparatus of the United States chasing his scalp. The tipper would walk off to plan the next murder of innocents. And that is only one conceivable scenario.

There is a reason that the world of counterespionage is called the "Wilderness of Mirrors." Welcome to the Wilderness.

James Higgins is a partner in a private equity firm based in New York and is an Adjunct Fellow at the Claremont Institute for the Study of Statesmanship and Political Philosophy.