OFFICIALS STRUGGLE WITH TANGLED WEB OF FINANCING FOR SOMALI MILITANTS

By JEFFREY GETTLEMAN and NICHOLAS KULISH

NAIROBI, Kenya » Illicit ivory, kidnappings, piracy ransoms, smuggled charcoal, extorted payments from aid organizations and even fake charity drives pretending to collect money for the poor — the al-Shabab militant group has shifted from one illegal business to another, drawing money from East Africa’s underworld to finance attacks like the recent deadly siege at a Nairobi shopping mall.

Now officials here and in the West are redoubling efforts to defeat or at least contain the group — with a watchful eye on its hydra-headed sources of money — before its fighters can strike again in Kenya or even the United States.

For years, U.S. officials have been deeply worried about the Somali militant Islamist group, which claimed responsibility for killing more than 60 men, women and children in the mall attack. But despite comprehensive multiagency efforts to shut down its sources of money, the group still controls lucrative smuggling routes in southern Somalia, extracts protection money from a variety of Somali businesses and has raised hundreds of thousands, if not millions, of dollars abroad.

Somali elders say al-Shabab employs a team of accountants — essentially white-collar militants — who have devised elaborate taxation schemes in Somalia, for instance $500 per farm per year or $2 for every sack of rice that passes through their checkpoints.

“They calculate your income, they do the math,” said Mohamed Aden, a former president of Himan and Heeb, a partially autonomous region of central Somalia near al-Shabab territory. “And then you have to obey. Otherwise they kill you. That’s just how it is.”

The group has also proved adept at mixing its financing activities with Islamic charities. According to several Somali elders, al-Shabab steals money from mosque-building projects and schools.

But al-Shabab members are also known as savvy businessmen. After the group seized the port of Kismayo in southern Somalia, some car dealers as far as Mogadishu preferred importing vehicles there, instead of using the main government port, saying al-Shabab ran a tighter operation with lower fees.

Though African Union forces have pushed the group out of Kismayo, its fighters still control the scratchy, sandy hinterland around the port, and Somali elders say it continues to tax items like T-shirts, sugar and soap.

“They have a diversified income stream,” said Jonathan Schanzer, a former counterterrorism official at the U.S. Treasury. “Sort of a perfect cocktail that created this nightmare scenario.”

Somalia’s perennial chaos makes al-Shabab’s tendrils even more difficult to remove. Militant groups around the world dabble in the felonious, but the long history of anarchy in Somalia, whose central government imploded in 1991, creates the ideal environment for war profiteers.

Al-Shabab militants are able to extract extortion fees, kidnap Western aid workers along the Kenyan border, collude with Indian Ocean pirates and then retreat to their strongholds with no worries about being arrested or prosecuted because law enforcement is virtually nonexistent in Somalia.

The country’s extreme poverty is another complicating factor. When the U.S. designated al-Shabab a terrorist organization in 2008, setting off sanctions on material support for the group, aid agencies complained bitterly that the rules were making it impossible to distribute lifesaving aid in al-Shabab-controlled areas. The U.S. government relaxed the enforcement of some of these rules in 2011, when a famine swept through southern Somalia, to ensure that assistance got to the millions of Somalis who needed it.

While al-Shabab controls far less territory than it did a few years ago, many people in this region remain terrified of its network of assassins and its continued ability to stage large-scale attacks on civilians, like the massacre in the Kenyan mall or a suicide bombing in Uganda in 2010 that killed scores of people. And as al-Shabab morphs from a guerrilla movement that once aspired to rule Somalia and fielded a large army of young fighters (Shabab means “youth” in Arabic) to a leaner and more mobile terrorist organization, its costs will go down.

Schanzer said the attack on the Nairobi mall probably cost “close to $100,000,” calculating the price of the automatic rifles, bullets and grenades that were used, along with training costs and possibly rent for a store in the mall that has been suspected of being used as a weapon depot before the attack.

Over the weekend, Kenya’s major newspapers reported that the country’s intelligence services had information about a potential strike on the mall but failed to act. U.S. officials said that the warning had been based on fragmentary information and that they had no “actionable” or specific intelligence about the attack.

Many analysts had long believed that Nairobi might be spared because it is one of al-Shabab’s logistical hubs, with the Somali enclave of Eastleigh serving as the financial capital for the group.

“That’s where the money transaction companies are,” said Ken Menkhaus, a professor of political science at Davidson College. “That’s where business can be done undetected.”

Menkhaus said Eastleigh also served as a center for recruitment and fundraising, and was even used by al-Shabab fighters looking for a place to recuperate after being wounded on Somalia’s battlefields.

Just about all the institutions in Somalia collapsed under the weight of 20 years of anarchy, including the banking sector, giving rise to a lightly-regulated money transfer business. Western officials have struggled with how to prevent the estimated $1.3 billion per year that flows into Somalia, often from small storefronts in London or Minneapolis, from reaching militant groups without punishing the countless Somalis who rely upon these remittances to survive.

In May, two Minnesota women, both naturalized U.S. citizens from Somalia, were sentenced for providing material support to al-Shabab after going door to door with others to raise money for the group, often pretending the donations were for the poor.

A United Nations investigative team reported this summer that Somali businessmen in Qatar had raised money and wired it, using a money transfer service, to an al-Shabab hit squad to finance “a wave of assassinations.”

The British bank Barclays, one of the few to work with the Somali money transfer companies, has begun severing ties with them, fearing that it could run afoul of laws meant to stem terrorist financing.

President Hassan Sheik Mohamud of Somalia said in an interview that his country desperately needed to replace its informal money transfer business with a proper banking sector, but that it needed more time. The sudden shutdown of financial transfers could be disastrous, he said, especially now, when Somalia is struggling to recover from years of chaos and needs infusions of investment to keep the momentum going.

If anti-Shabab measures are too broad, Mohamud said, they could backfire. For instance, cutting off the ability of Somali expatriates to send back money to relatives could make many people poorer and drive more jobless, disillusioned youths into al-Shabab’s ranks.

“We need to break that vicious circle of generations losing hope,” Mohamud said.

As long as large areas of Somalia remain violent and ungoverned, as they do today, al-Shabab will have plenty of opportunities to do business. The group has cashed in on the Chinese demand for illicit elephant ivory, training fighters to sneak across the Kenyan border and slaughter elephants for their tusks, businessmen in Kismayo say. Al-Shabab fighters have also extorted access fees from some aid groups, Somali elders say, often getting tens of thousands of dollars to allow humanitarian aid to be distributed in their zones.

But perhaps nothing has been more lucrative for al-Shabab than the underground charcoal trade. Known as black gold, the charcoal made from burning Somalia’s acacia forests is highly prized in the Arabian Peninsula. The export of charcoal was banned under the dictatorship of President Mohammed Siad Barre, but it roared back to life in the chaos that followed his ouster in 1991.

Before Kenyan forces captured Kismayo, the charcoal trade earned al-Shabab more than $25 million a year, according to U.N. investigators. The loss of Kismayo was a huge setback for al-Shabab, and the U.N. Security Council passed a resolution last year banning imports of Somali charcoal.

But al-Shabab has shifted the business to other ports still under its control, continuing to export millions of sacks of charcoal per year.

“They have less money, but they don’t need a lot of money,” Menkhaus said. “You can still do an awful lot of damage with not that much money.”

© 2013 The New York Times Company