US court sanctions for Arab Bank

Victims of attacks in Israel make $875m charge against lender.

A US judge has imposed court sanctions on Jordan's Arab Bank for defying requests to produce account records that might show it provided financial services to suspected terrorists. Nina Gershon, a district court judge in New York, ordered that when the six-year-old case goes to trial, jurors could infer Arab Bank "provided financial services to organisations designated by the US as foreign terrorist organisations" and people allegedly affiliated.

Judge Gershon also said jurors could infer Arab Bank "processed and distributed payments on behalf of" the Saudi Committee for the Support of the Intifada al Quds, a fund set up to support the relatives of suicide bombers. The sanctions further allowed jurors to assume the bank had "knowledge and purposeful intent" in providing financial services to named terrorist groups. They also barred Arab Bank from presenting defences at trial that the plaintiffs could have refuted using evidence it refused to provide.

The order was a setback for Arab Bank, which had argued it could not turn over some records as doing so would violate banking secrecy laws in Jordan and Lebanon. "In compliance with the New York court's orders in this litigation, Arab Bank has produced hundreds of thousands of documents and successfully sought waivers from bank secrecy laws in several countries where it operates," the bank said yesterday.

"Where the bank was unable to obtain such waivers from the appropriate authorities in certain countries, it elected not to violate these laws. The bank's actions were taken in good faith. We look forward to exercising all of our legal options regarding the ruling and proving the falsity of the plaintiffs' claims at trial." Brought by victims of terrorist attacks in Israel in 2004, the case is one of the largest of its kind.

The victims, who number in the hundreds, allege Hamas, the Palestinian Islamic Jihad and the Front for the Liberation of Palestine, among other groups designated by the US as terrorist organisations, deposited money from fund-raising activities in Arab Bank accounts in Lebanon and Jordan and transferred it to suspected terrorists and their families. The bank is also alleged to have aided in laundering money for terrorist front groups and maintained accounts from which the Saudi committee distributed funds.

The victims are seeking US$875 million (Dh3.21 billion) in damages under anti-terrorism laws. A trial date has yet to be set. [e-mail]