In December 2020, Lebanon was rocked by a mysterious hack made by a group calling itself SpiderZ. The hackers leaked details of almost 400,000 accounts associated with Al-Qard al-Hasan Foundation Association, a quasi-banking, financial institution that identifies itself as a charity granting loans and operating community chests for the Shia community in Lebanon. The anonymous hackers revealed documents in a dramatic video that shed light on the true activities of the association, and its connection to terrorist organization Hezbollah, stating: "Al-Qard Al-Hasan is not a charitable association, but an illegal Hezbollah bank that operates outside Lebanon’s financial system."
The hackers revealed details about loans, repayment data, personal information about borrowers, and the total budget of the association and its branches for 2019-2020, while promising to reveal more information in the future. According to Lebanese media, the hackers even sent private messages to customers, urging them to withdraw their funds and stop paying their loans, "before it is too late." In addition to ordinary Lebanese citizens, the documents revealed the details of Hezbollah members with deposits in Al-Qard Al-Hasan (AQAH), including the Radwan Force commander Wissam A-Tawil (who was assassinated last month by Israel), the Chief of Hezbollah’s Central Finance Unit Ibrahim Ali Daher, and even the Supreme Leader of Iran Ali Khamenei.
Relating to the hack attack, AQAH executive director, Adel Mansour, a veteran Hezbollah financier, said in an April 3, 2023 show on Mayadeen TV (Lebanon), "This is an attack that we treat as treason, an intelligence attack. I believe this is a foreign intelligence organization." The interviewer then asked Mansour about attacks carried out by Israel against AQAH branches during the Second Lebanon War. "Thank God, amidst the ruins, the Association grew stronger and stronger," answered the CEO.
According to the Meir Amit Intelligence and Terrorism Information Center (ITIC), Al-Qard Al-Hasan (AQAH) was established in 1982 following the civil war in Lebanon which severely damaged the local economy, and first appeared as "The House of Muslim Finance". AQAH was established with the aim of motivating Shia society to support Hezbollah, as well as to encourage relatively small-scale, short-term scale loans for different needs. Although AQAH’s banking activity focuses on the Shia community, it states that it provides service to all factions in Lebanon, including Palestinians.
AQAH reports that its main sources of funding are commissions paid by the borrowers, membership fees, subscription fees, and donations. The amount of funds under management is estimated in the billions of dollars, and it has about 400,000 accounts. In 2016, AQAH was included in the list of sanctions issued by the US Department of Treasury, but its volume of activity has actually increased since then. "The bank houses all of Hezbollah's financial activity, including account management of that organization's operatives, business and charitable activities," says Uzi Shaya, a former member of the intelligence community and an expert in financial warfare.
Experts tell "Globes" that AQAH is Hezbollah's main banking institution. "Just as Hezbollah is a state within a state in Lebanon, so is its financial system," notes Shaya. "The bank holds gold bullion and jewelry that people give as guarantees on loans. The bank’s dealings reveal Hezbollah's financial infrastructure, and the ability of this organization and the Iranians to evade the entire issue of sanctions."
The sanctions bypass route
AQAH does not have an official website. On its Facebook page, is a speech by Hezbollah Secretary-General Hassan Nasrallah praising the association’s activities, and coming out against the oppression by institutional banks. At the same time, Nasrallah disavows the connection between Hezbollah and AQAH. Thus, over the years, Hezbollah has artfully developed an entire network for smuggling money, with the aim of evading US sanctions.
"Hezbollah's financial system is dozens of times bigger than Hamas's," says Shaya. "It’s deployed all over the world, benefits from official state backing by Lebanon, and has a major financier, which is Iran. But it has also developed an independent self-financing capacity, supplied mainly by an array of charitable associations, businesses, a crime network - all of which provide for it financially."
How does the terrorist organization manage to evade sanctions? Dr. Haim Koren of Reichman University, and the former Ambassador of Israel to Egypt, explains that the organization's method of transferring funds is usually carried out using cash and cryptocurrency. "Because Hezbollah controls Beirut airport, it has the ability to control the transfer of cash funds. This is one of Iran's richest terrorist organizations, with an extensive smuggling network in Latin America, with bases in Africa as well. Their contacts have agents who move millions of dollars in cash from place to place, all over the world. These systems work well for Hezbollah: they systematically launder billions of dollars and it's impossible to track it, and they've been doing it, systematically, since the early 1990s."
An article published by Reichman University in 2020 by Dr. Emanuele Ottolenghi, a senior research fellow at the Foundation for Defense of Democracies, claimed that Hezbollah's criminal networks, which generate hundreds of millions of dollars a year to finance its military arm, also stretches through Europe. For years, this crime network has been used to transport drugs from Latin America to remote markets, launder the profits to send back to the cartels. Hezbollah, of course, profits from commissions.
The Lebanese economy
Perhaps more than anything else, the single factor that has helped cement Hezbollah and AQAH's power base is Lebanon’s faltering economy, and the economic suffering of its citizens. The Lebanese economy has snowballed over the years. Orna Mizrahi, a senior researcher at the INSS Israel (Institute for National Security), an expert on Lebanon and Hezbollah, and the former Deputy National Security Adviser for Foreign Policy at the National Security Council Israel, explains that the 2019 economic crisis led to inflation and economic collapse and turned Lebanon into a country where more than 80% of its residents live below the poverty line. The global pandemic and the Port of Beirut explosion in August 2020, also weighed heavy on the Lebanese economy.
AQAH filled the vacuum created at that time. "When the shops were empty, Al-Qard Al-Hasan distributed food stamps, granted interest-free loans, and functioned as a bank for all intents and purposes," says Mizrahi. "A Shiite child born in a Hezbollah hospital, receives medical services from Hezbollah, goes to a Hezbollah kindergarten and school, and grows up with parents who go to a Hezbollah mosque. Very often, taking aid from Al-Qard Al-Hasan is not out of an ideological identification with Hezbollah but because of an economic need the bank can fulfill."
According to ITIC research, "The underlying concept of its establishment is that Hezbollah must engage in intensive social and economic activity within Shiite society in order to turn it into a ‘resistance society,’ i.e., a society that supports Hezbollah and the campaign it is waging against Israel and enlists in the ranks of those participating in this campaign." In his interview with Mayadeen TV, AQAH head Mansour confirmed, "The backbone of the resistance society is its socio-economic situation."
Mizrahi points out that while the difficult economic situation does affect Hezbollah and the Shia residents, the terrorist organization has additional sources of income unrelated to the state. "According to the official data, $700 million of the budget comes from Iran, which enables it to stay afloat. They are greatly affected by the economic situation, but these funding sources allow them to get through the difficult economic period in a better state than the populace."
Maintaining legitimacy
Historically, the Shiite population has been the poorest in Lebanon. "One of the main reasons for Hezbollah’s growth was the need of this population - which always felt discriminated against - for a response. This organization was a fresh seedling that grew on fertile soil. Indeed, the Shiites are the ones who got through the the economic crisis best, thanks to assistance from Hezbollah," Mizrahi says.
The economic crisis in Lebanon did not come out of nowhere, but stemmed from dysfunctional systems and much corruption. For Hezbollah, it served to steer Lebanese politics towards to its interests. Dr. Koren explains that the recent backing of Hezbollah by Lebanese Prime Minister Najib Mikati is based in Nasrallah's control of the country's infrastructure, and the economic power he derives from Iran, in addition to his channeling of funds.
"Nasrallah is proving to the Lebanese that he is capable of maintaining infrastructure - not only taking care of the military side but also the economic side, and therefore the Al-Qard Al-Hasan association is a civil organization," Koren says. "In Muslim cultures it is customary for civil organizations to care for poor populations, like, for example, the Muslim Brotherhood. They do this to maintain their legitimacy in times of war."
According to Koren, the terrorist organization has established its control over Lebanon by using its economic power. "Al-Qard Al-Hasan sets up supermarkets in Shia population centers. It provides cheap food, mainly Syrian and Iranian, sometimes at a 30%-50% discount to the public, when the rest of the Lebanese struggle financially. The same goes for medicine and equipment. This is an entire world designed to preserve the [Shia] heritage, and give them preference over other Lebanese citizens. It’s very efficient. When the Iranians transfer arms and ammunition to Hezbollah, they also transfer money and other goods. This is intended to show Lebanon that they are the power with the ability to bring economic well-being to the country, too."
Koren also adds that AQAH's support for the civilian population is another way to confuse the West regarding its intentions. "When the Europeans look at it, it takes them a while to understand that Al-Qard Al-Hasan is the financial arm of a terrorist organization. There is a difference, from their point of view, and it’s hard to explain the connection. This association has a lot of support in the Arab world and some European countries have accounts with it, despite the American sanctions."
Living in oblivion
During the war against Hamas, an unimaginably vast network of tunnels was exposed whose cost is estimated in the tens of millions of dollars. The discovery highlighted the importance of an economic war on terror.
"We failed. Hezbollah is a completely different type of opponent on the financial front as well," says Shaya. Koren explains that drying up Hezbollah's financial sources is extremely important. "Iran maintains Hezbollah as a highly central component of its strategy because, after all, Hezbollah is Shiite, while Hamas is Sunni. It doesn’t have same connection Hezbollah has."
Dr. Udi Levi, an expert in financial warfare at the Jerusalem Institute for Strategy and Security (JISS), and former head of the Mossad's Economic Warfare Division, says that money is a critical element in Hamas and Hezbollah activities, and claims that, in this aspect, Israel does not put up enough of a fight. "There is no policy against it, but there is no policy to deal with it either. No one is pushing it. These organizations understand that much better than we do," he says.
"When you have an institution that manages Hezbollah’s entire economic and financial system, organizational accounts, activists, supporters, and hundreds of institutions belonging to Hezbollah - it’s absolutely critical," Levi says. "If this entity were frozen, the terrorist organization's ability to function would drop dramatically to zero. Without money, it’s impossible to manage organizations of this kind."
Levi clarifies that, despite the scope of its activities, Hezbollah is very vulnerable in terms of its finances. "It is dependent on Al-Qard Al-Hasan, because its only other option is to keep lots of cash, in containers and underground, the way Hamas does. It has no other way. Unfortunately, our country, and the Americans too, don’t damage or try to damage this system enough. We’re oblivious."
Harming AQAH, however, is no trivial matter. According to Levi, bringing down the Hezbollah economic system means bringing down the entire economic system of Lebanon, as the terrorist organization has dominated it completely. "The Americans won't let that happen, and Israel can't do it alone," Levi says. "It means putting a gun on the table, as part of the negotiation Hezbollah keeps its money in two places: Lebanese banks and underground bunkers. It has no other place to go."
Published by Globes, Israel business news - en.globes.co.il - on February 22, 2024.
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