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. Last Updated: 07/27/2016

The Buck Starts Here

Seen from the Damascus highway as you come down from the high passes of Mount Lebanon, the Bekaa valley shimmers in the heat haze, a patchwork of fields and scrubby grass. Beyond, rising from the fertile plain, are the foothills that mark the border of Syria, glowing innocently pink in the afternoon sun. But somewhere among the isolated hamlets and remote ravines of this valley lies the key to one of the great criminal enterprises of the decade and probably the greatest forgery case in history: the still unsolved mystery of the supernote.


As early as 1990, when William Ebert, then head of the U.S. Secret Service's counterfeit division, brought back samples of high-quality Middle Eastern counterfeit $100 bills, rumors began circulating in the American intelligence community that these forgeries were of such exceptional quality that even sensitive detection equipment could not identify them. These bills were dubbed the "superdollar." Since then, mounting evidence of industrial-scale production of fake $100 notes somewhere in the Middle East has sent tremors though the world's confidence in the dollar and galvanized the U.S. Treasury into introducing a long-delayed radical redesign of the $100 bill.


But even after heavy Congressional pressure and six years of investigation, the U.S. Secret Service, the agency responsible for presidential security and the integrity of the U.S. currency, has produced no conclusive proof of the provenance of the supernotes. Though the Secret Service estimates that only one hundredth of one percent of all dollars in circulation are forged, Russia, the largest holder of cash dollars in the world after the United States itself, is reportedly awash with forged money. By one Russian Central Bank estimate, subsequently retracted under alleged State Department pressure, 15 to 20 percent of the dollars in circulation in the CIS are counterfeit. And though the new $100 bill, designed to put an end to the problem, is packed with much-vaunted anti-counterfeit measures, even U.S. government departments are asking whether the new dollar is really proof against counterfeiters of this calibre and elusiveness.





The trail of the supernote begins in Iran in the mid 1970s, when America, anxious to make the Iranian rial the dominant currency of the region, supplied the pro-Western Shah (deposed by the Islamic Revolution of 1979) with $5 million state-of-the-art intaglio presses of the kind used to make dollars. In 1992, a House Republican task force on terrorism and unconventional warfare chaired by Orlando congressman Bill McCollum produced a report blaming Iran for the production of "almost perfect" $100 bills, designed and manufactured since 1990 by Iranian engravers and chemists trained by America in the '70s. It charged Mashhadi Ahawashi, a senior Iranian intelligence official and former Iranian ambassador to the 1992 disarmament talks in Geneva, with being responsible for procuring suitable paper for the counterfeit dollars. From the Central Bank Print Installation on Shohana Street, Tehran, said the report, the bills were trucked to the airport and loaded on a flight to Damascus, Syria, where they were slipped into circulation through various Syrian-sponsored money-laundering and drug routes.


Iran described the report as "the wild hallucinations of the extreme right," but the fact remains that the Iranians do have the technology to produce excellent-quality dollar bills on an industrial scale. Iran's status as America's whipping boy in the region notwithstanding, the temptation and political will to undermine the economy of "the Great Satan" by counterfeiting its currency on a huge scale is undoubtedly also present.


But what is provable, as opposed to merely likely, about Iran's involvement with the supernote is the long-standing links between Iran, its ally Syria, and Hezbollah, the fundamentalist Shiite Moslem Lebanese militia responsible for the suicide bombings of the U.S. marine headquarters in Beirut in 1983 and ongoing guerrilla activities against the Israeli-occupied "security zone" in south Lebanon.


Since the foundation of Hezbollah in response to the 1982 Israeli invasion of Lebanon, Iran has supplied the militia with arms and money. The major supply line of Hezbollah is via Syria, an arrangement that allows Syria to keep tabs on Hezbollah and exploit its control over them as a bargaining chip in any future peace deal with Israel.


A former Lebanese economics minister, contacted by The Moscow Times last month as part of a two-month investigation conducted in Lebanon, Cyprus and Russia for this report, confirmed that the counterfeiting and smuggling of U.S. currency in and through Lebanon was not only being carried out on a huge scale, but also involved high-ranking members of the Lebanese government and the Syrians, who hold nominally independent Lebanon in tight thrall.


High-quality counterfeit dollars produced in Iran and locally in Lebanon are being smuggled via drug routes into Turkey, Eastern Europe and Africa, said the ex-minister, who requested anonymity. But by far the largest market was Russia and other countries of the CIS.


"This is the hottest problem in Lebanon now, and it's bigger than the [Lebanese] government," he confided. "People in power, deputies and ministers are caught up in this affair. It's Iran and its friends. There is no doubt."


The ex-minister unequivocally named the Syrians and the Iranians as the sources of the supernote. He also said that Syria was in a position to stop its Lebanon-based supply and production at will.


"As soon as the Syrians drop their friends in Hezbollah, there will be no more forged money in Lebanon," he said. "Lebanon has always been the victim of others meddling in its affairs. When Syria decides to participate in the peace process, they will stop the forged money, just as they stopped the drugs in 1993," after a U.S. Drug Enforcement Agency-sponsored initiative to clear the Bekaa of drug crops.


"The U.S. wants to make the Syrians and Israelis happy in the interest of their peace process," he said. "It would amaze me if the Americans don't know exactly what is happening, if they listen to the Lebanese police. But America wants to fight it secretly, not in public."





The scenario is plausible. Fifteen years of civil war and near anarchy spawned a vast network of criminal activity in Lebanon, in which Syrian involvement is well documented. Drugs and arms smuggling were classic moneyspinners both for private criminals and various militias, the former because of the high demand for military hardware in Lebanon itself and the latter because the Bekaa valley is one of the world's best growing regions for hashish and opium. The Bekaa is the stronghold of the Iranian-funded Hezbollah and the area of Lebanon most directly under Syrian control since its first military intervention in Lebanon in 1976. It is also the area that Lebanese government sources say is the major center of Lebanon's counterfeit dollars.


If the logic of "once a thief, always a thief" is applicable, the Syrian link with the drug trade can shed some light on the supernote connection. After a U.S. Drug Enforcement Agency initiative was coupled with diplomatic pressure on Syria in 1993, the Bekaa was cleared of drugs in an unsuccessful attempt to get Syria off the U.S. State Department's list of terrorist states, on which Syria has figured prominently since 1979.


But since the demise of the lucrative drug racket, the argument goes, the same people have turned their hand to the equally profitable but more discreet business of counterfeiting money. There is certainly strong evidence that the Syrians were involved in drug trafficking during and after the civil war. A 1992 U.S. Congressional report on drugs named several senior members of the Syrian government who were allegedly involved, including President Hafez Assad's brother, Rifaat. When a member of the Lebanese Parliament was indicted last year for involvement in the drug trade, he publicly named Ghazi Kanaan, head of Syrian security and effectively Syria's viceroy in Lebanon, as a conspirator.


Lebanese joke that Syria's control over Lebanon is so tight that billionaire President Rafic Hariri calls Kanaan for permission to go to the bathroom. With 40,000 Syrian troops and an unknown number of mukhabarrat, or secret police, currently stationed in Lebanon, the joke has a chilling resonance. The key point is that very little goes on in Lebanon without the Syrians' knowing, and if there is indeed a major trade in false dollars in Lebanon, it is inconceivable that the Syrians do not at least know about it.


The ex-minister's claims also tally with the Secret Service's first big lead on the supernote. In the spring of 1992, two Lebanese drug traffickers, Gebran Hanna and Peter Kattar, were caught in Massachusetts with a consignment of hashish from the Bekaa valley. In return for a commutation of their sentences, they gave evidence to Massachusetts federal prosecutor Paul Kelly of a multimillion-dollar counterfeiting operation in Lebanon. In addition to providing samples, they testified that counterfeiting operations were begun in the mid 1970s by the Christian Phalange militia but were subsequently taken over by the Syrians. The two men knew of three printing facilities in Lebanon.


The quality of the bills Hanna and Kattar provided was superb. They were printed on intaglio presses (as opposed to offset presses of the kind used to produce this newspaper), which gives real $100 bills their distinctive, embossed feel. The paper was indistinguishable from the 75 percent cotton, 25 percent linen paper with embedded blue and red fibers produced for the U.S. government by Crane and Co. of Dalton, Massachusetts since 1879. On the front of real bills, the black ink, particularly the heavily printed letter and seal to the left of the portrait that identify the issuing Federal Reserve bank, contains ferrous oxide, creating a magnetic field that can be measured by anti-counterfeit machinery with great accuracy. The machinery at the Federal Reserve Banks is so finely tuned that it rejects 99 real bills for every one that is subsequently found to be forged. Yet prosecutor Paul Kelly, who obtained samples in 1992, said in an interview with The New Yorker that the Secret Service confirmed that "the bills [provided by Hanna and Kattar] went right through those machines."


In 1990, the Federal Reserve introduced two new anti-counterfeiting measures to $50 and $100 bills: a polymer security thread and microprinting around the portrait. Despite the fact that Crane and Co. spent four years developing the technology required to put security threads in the notes, the supernote has both of these features, putting it in an entirely different league from the run-of-the-mill, locally produced counterfeits the Secret Service had previously come up against. "The quality is very, very high," said one senior Lebanese police source of the supernote. "They are so good that they almost don't exist."


Operations by the Lebanese security forces have confirmed that counterfeiting has been and is being carried out on a colossal scale. Lieutenant Colonel Samir Franjieh, head of the Lebanese Judiciary Police's counterfeit department, arrested 10 counterfeiters in 1995, mostly around Beirut. A Lebanese businessman, Ghassan Matraji, is currently on trial for his life in Beirut, with one Syrian and seven Lebanese co-defendants for the large-scale forgery and smuggling of U.S. dollar bills, as well as arms trading and drug trafficking. The indictment says that Matraji traded the counterfeit money from the eastern Bekaa valley to Turkey and Africa in 1990. The Lebanese anti-counterfeit police, however, think that the Turkey deal for which Matraji was arrested was only the tip of the iceberg. Franjieh said that Matraji alone sent over $1 billion in forged $100 bills to Africa and $2 billion to Russia.


But the Lebanese police are seriously compromised in their freedom to act against forgers. In a brief and tense meeting held for security reasons in a private car away from the source's office in East Beirut, one of Lebanon's top-ranking policemen confided that he knew of at least two major counterfeiting operations in Lebanon that "we can't attack." When asked whether it was because of Syrian involvement in the operation, he replied, "Please, ask me no more questions. You know very well the situation in our country ... I am sure that the Syrians are doing their job." This was presumably a reference to the ever-present mukhabarrat secret police. He terminated the interview in some distress.


This policeman named the locations of the two installations, one in the Bekaa and the other in south Lebanon, but subsequently requested that they not be revealed to protect his identity. He also confirmed Kattar's and Hanna's evidence that the counterfeiting was begun by the Phalange militia on a small scale in the 1970s but was continued in earnest by Hezbollah in the Bekaa using Iranian-supplied technology. Unspecified Palestinian groups and businessmen were circulating the money through business contacts in Cyprus, he said, a claim that seems to tally with evidence of Iranian financial support for Palestinian terrorist groups. In an otherwise unconfirmed twist, he added that there was evidence that the Israeli-funded South Lebanese Army of Antoine Lahd was being paid in forged dollars.





The Hezbollah connection is worth examining more closely, if only because Hezbollah is the classic scapegoat for American and Lebanese conspiracy theories alike. Hezbollah is the only Lebanese militia not to have been disarmed after the 1991 Taif peace accord, which ended the Lebanese civil war, largely because of its nuisance value to the Syrians against the Israelis. The "Party of God" is clearly receiving substantial funding from somewhere, because it runs basic social services in the poor southern suburbs of Beirut, the impoverished Bekaa valley and the south, and fights a costly war of attrition against the Israeli-occupied "security zone" along the border.


Hezbollah's public relations initiative has come some way since the suicide-bombing days of the early 1980s. Its switchboard plays an electronic rendition of "The Entertainer" as it transfers you to the Hamas information office, with which it appears to share office space in south Beirut, and it runs special -- and spectacular, if dangerous -- press trips to the front line so that journalists can witness Katyusha missiles being fired at the Israelis. Hezbollah was not particularly forthcoming, however, on the issue of the supernote.


"This is the first time I have heard of such a thing," said Samir Alami, the Manchester United-supporting Hezbollah Southern Command press officer, sitting in a dingy office above the Jamal Bank in Nabatieh, south Lebanon, when asked whether he knew anything about counterfeit money. He paused for thought before elaborating. "In any case, if America invaded England, what would you do, fight back or capitulate?"


Not the most impassioned of denials, perhaps, especially bearing in mind Alami's denial of the well-documented Hezbollah involvement in drugs during the civil war, on the grounds that "drugs are considered sinful in the Koran." His attitude was reminiscent of that of a Hezbollah fighter interviewed by journalists in the Bekaa in the late 1980s about drugs. "They sell the Israelis guns to kill us," he said, with impeccable Middle Eastern logic, "And we sell drugs to kill them."


"We are proud to receive help from Iran, because Iran is the father of the Revolution," said Alami when asked where Hezbollah's money came from. "But we do not depend on Iran. Our Moslem brothers send us money from abroad, and we have our own businesses. But most of all, God helps us in our struggle." "In God We Trust,"