Reflecting once again on the House Ways and Means Subcommittee on Oversight hearing on tax-exempt organizations, a note of thanks should go out to the Council on Foundations and Representative Bill Pascrell (D-NJ) for addressing an area of great concern. During opening statements, Pascrell commented on Treasury's assertion that charities are a "significant source of terrorist funding," observing that Treasury seems to be "painting the sector with a wide brush." Steve Gunderson, the President and CEO of the Council on Foundations testified at the hearing. Gunderson's written statement submitted for the record states;

In fact, we have seen no evidence to indicate that U.S. charities are a major source of terrorist support. Out of hundreds of thousands of U.S. charities and billions of dollars given out in grants and material aid each year, only six U.S. charities are alleged to have intentionally supported terrorists. Thus far, Treasury has not identified a single case of inadvertent diversion of funds from a legitimate U.S. charity to a terrorist organization. . . . An even larger issue is that, by exaggerating the extent to which U.S. charities serve as a source of terrorist funding, Treasury is fueling an environment in which wary donors may refrain from making charitable contributions.

Following up on Pascrell's opening statement, during questions he addresses Gunderson asking if he agrees with Treasury's claim. Gunderson responds no, and explains the difficulties facing the sector as a whole. Pascrell appears confounded, emphasizing Gunderson's statement that there is no evidence and not a single U.S. charity has been found to redirect funds to a terrorist organization. The fact that these statements were made and will be included in the record is greatly appreciated. Hopefully statements such as this will broaden the attention on the issue.

Four months ago Chiquita admitted it paid terrorist groups $1.7 million in protection money over six years to protect its banana-growing operation in dangerous areas of Columbia. And now, EarthRights International, a human rights group, has filed a lawsuit on behalf of at least six alleged victims seeking unspecified monetary damages for the families. An EarthRights spokesman said that if the case is granted class-action status, several thousand relatives could be represented.

Chiquita Company spokesman Michael Mitchell said; "Suits of this nature are without merit, and we'll certainly defend ourselves vigorously." However, in one case allegations of indirect connections were enough to establish liability. In Boim v. Quranic Literacy Institute, 340 F.Supp.2d 885 (N.D.Ill.,2004) the court held Holy Land Foundation liable for "aiding and abetting" Hamas, based on Treasury's allegations in the 2001 designation and the criminal indictment, even though there was no finding of direct ties to Hamas. For more background, see the OMB Watch report Muslim Charities and the War on Terror. And for more information on the Chiquita lawsuit, see the AP story here.

The New York Times warns readers of the possible implications of the trial that has begun involving the largest Muslim charity in the country. The Holy Land Foundation for Relief and Development (HLF) case has been going on for many years and is extremely complex. In 2001 President Bush announced that HLF was being closed, accusing the charity of funding Hamas. The charity's designation has been challenged, along with the secret evidence used in the case, and many years worth of wiretaps. In February, defense attorneys found that summaries of government wiretap transcripts detailing Holy Land officials' conversations falsely attributed anti-Jewish comments to HLF leaders. A fundamental part of this case will be whether indirect ties can bring criminal prosecution, and if so, non-governmental international funders may decrease grants to troubled areas. The prosecution says the money was channeled through zakat (Arabic for charity) committees, yet none of the zakat committees have been designated.

The case is being closely watched by a large number of charitable organizations, as well as Muslim-Americans, because its outcome might well help determine the line separating legitimate giving from the financing of banned organizations."

The article references Chip Poncy's congressional testimony on May 11 which we have been critical of. Poncy noted that all 44 charities the government has designated as supporting terrorism were engaged in some legitimate charity work, and of those 44 six are either closed or under investigation in the U.S., though not one American charity itself has been convicted of supporting terrorism since the practice started in 2001. HLF says that about $5 million of its assets and charitable donations have been frozen by the Treasury Department.

Kay Guinane of OMB Watch was quoted in the article; The Treasury Department has this 'complete taint' theory, said Kay Guinane of OMB Watch, a Washington group that advocates government transparency. If anyone in a charity is suspected of aiding a terrorist organization, Ms. Guinane said, the entire charity is deemed guilty. Other countries, like Britain, have managed to allow charities under suspicion to continue to deliver aid to the poor, she said, whereas the Treasury Department "disagrees with any approach that says you can separate the real charitable work from the alleged terrorist activity.