Tuesday, March 18, 2008

Saudi wields British law against U.S. author

Billionaire leverages harsher libel rules to suppress unflattering book

By James Oliphant Tribune Correspondent, March 17, 2008

NEW YORK - Rachel Ehrenfeld writes about terrorism for a living. But now she is the one who feels targeted.

Her modest midtown Manhattan apartment is filled to the ceiling with books, most having to do with global terror networks and Mideast conflict. Sitting at her desk, she gazes out at the Hudson River. She says she has a hard time placing her work. She says she has been blacklisted. If she travels to England, she fears she will be arrested.

"I feel like a leper," she said.

Ehrenfeld faces a $225,000 judgment obtained in a British court in a libel suit brought by a former banker to the Saudi royal family, billionaire Khalid bin Mahfouz. "That's the Damocles sword effect. He's holding it above my head to intimidate me and others," she said.

The source of the trouble is Ehrenfeld's book, "Funding Evil: How Terrorism is Financed and How to Stop It," published by Bonus Books. In it, she named bin Mahfouz as a financier of Osama bin Laden and Al Qaeda. Bin Mahfouz responded by suing Ehrenfeld -- not in the U.S., but in England, which is friendlier to libel claims.

Bin Mahfouz maintains Ehrenfeld's statements about him are false and reckless and says she is perpetuating myths that have followed him around the globe, endangering his business affairs.

It isn't the first time bin Mahfouz has been tied to bin Laden -- or the first time he has responded by filing a lawsuit. On his personal Web site, he lists the lawsuits he has filed and corrections and apologies he has obtained from some of the leading newspapers in the world.

Ehrenfeld calls bin Mahfouz a "libel tourist" who has used British law to try to halt her investigative work. She has the support in written court filings of Amazon.com, PEN American Center, the American Society of Newspaper Editors and others who worry that litigants such as bin Mahfouz have a chilling effect on American publishers who sell books globally.

The New York Legislature seems to agree. The state Senate last month passed a bill to enable New York writers and publishers to block enforcement of any British libel judgment. The state Assembly is taking up the legislation.

In court papers, bin Mahfouz's lawyers say the Saudi financier never intended to get at Ehrenfeld's assets in New York and would drop his claims if she would apologize and destroy unsold copies of the book. But when asked by a federal appeals court to waive his right to enforce the judgment in the U.S., bin Mahfouz declined. His lawyers insist that Ehrenfeld is the one who has stoked the controversy to promote book sales.

No 1st Amendment here

Turning to British courts is not new for aggrieved international plaintiffs. England has nothing like a 1st Amendment, which provides constitutional protection for writers in the U.S. Under British law, an author ay have to prove a statement is true.

American actors such as Cameron Diaz and Kate Hudson have used British courts to sue a tabloid. In the wake of the Sept. 11 attacks, wealthy Saudis have chosen Britain as the forum to defend themselves from the writings of U.S.-based authors who have tried to penetrate the opaque realm of terror finance.

Craig Unger, who wrote the best seller "House of Bush, House of Saud," said his publisher, Random House, decided not to publish the book in Britain due to fears of a libel action. It was eventually distributed by another publisher. "I was disappointed with [Random House's] decision, but clearly U.K. libel laws are far more onerous for publishers than are American laws," Unger said.

Bin Mahfouz is one of the wealthiest people in the world, with a fortune estimated in the billions. His father, Salim, built the National Commercial Bank of Saudi Arabia and became banker to the Saudi royal family, a position Khalid inherited. (He has since sold his shares.)

Khalid bin Mahfouz was also an outside director of Bank of Credit and Commerce International, which collapsed in the early 1990s amid allegations of money laundering, fraud, bribery and supporting terrorism. Bin Mahfouz denied any involvement in the bank's day-to-day activities but ended up paying a civil fine in New York of $225 million.

That is the backdrop for attempts by Ehrenfeld and others to tie bin Mahfouz to bin Laden, with Ehrenfeld writing that the Saudi bank he oversaw diverted money to an Islamic charity that funneled money to Al Qaeda.

"Mr. bin Mahfouz has publicly condemned terrorism and vehemently denies that he or his former bank have ever provided financial support for terrorism," said his lawyer in the United States, Timothy Finn.

Bin Mahfouz is a bit player in Ehrenfeld's book, mentioned only on a handful of pages. But that didn't keep him from suing her in London in 2004, saying his reputation in Britain had been damaged. "I saw [the court papers] and thought, 'Bin Mahfouz chose the wrong victim,'" Ehrenfeld said.

While Ehrenfeld may have thought her book safe from the reach of British courts, she was wrong. Because it had sold two dozen copies in England via the Internet, and because some portions had been excerpted on a Web site, a British judge ruled that Ehrenfeld must defend herself across the Atlantic.

Ehrenfeld decided not to appear in England to contest the lawsuit, preferring instead to fight back in other ways. The second edition of her book contained the tag line "The book the Saudis don't want you to read" and a new introduction referring to bin Mahfouz's lawsuit.

This did not pass unnoticed by the British court overseeing bin Mahfouz's case.

Costly judgment

"It appears, therefore, that the defendants are trying to cash in on the fact that libel proceedings have been brought against them in this jurisdiction without being prepared to defend them on the merits," the presiding judge wrote in 2005. The court hit Ehrenfeld with a judgment of close to $20,000 and an order to pay bin Mahfouz's legal bills, which ranged beyond $200,000. It also found that Ehrenfeld's allegations toward bin Mahfouz were false as a matter of law.

Then Ehrenfeld again went on the offensive. She filed a lawsuit in federal court seeking an order to prevent bin Mahfouz from enforcing his British judgment in the U.S. Her cause was supported in a brief filed by a host of organizations.

But the federal court decided it didn't have sufficient jurisdiction over a foreign national such as bin Mahfouz. An appeals court asked bin Mahfouz's lawyers whether they would promise not to enforce the judgment; they declined.

And last month a New York court ruled that state courts could not block bin Mahfouz. Ehrenfeld was surprised by the outcome, which led to the effort in the state Legislature to pass a bill to protect her and other writers from foreign judgments.

"She is the example right now," said state Sen. Dean Skelos, who co-sponsored the bill.

The bill passed the state Senate unanimously but has run into trouble in the Assembly. An advisory committee to the state court administrator opposes the bill, saying it may be unconstitutional.

So Ehrenfeld sits in her apartment and awaits news from Albany.

And if she can force bin Mahfouz into an American court, she will seek the answers she has been chasing for years. "If I get this law, I will ask the court to depose him," she said. "This is really why I started this whole thing."



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