Royal Bank of Scotland, Barclays, HSBC and Standard Chartered are being sued by wounded Iraq war veterans from the US armed forces who blame them for allegedly processing the Iranian funds that paid for the attacks.
The British banks are being sued under the US Anti-Terrorism Act, which allows victims to bring private lawsuits against the alleged moneymen behind militant operations.
The claim is being brought on behalf of more than 200 veterans and, in the cases of those killed in the attacks, their families.
They allege the UK banks processed Iranian banks’ money and that the Iranian banks then funnelled more than $100m to Iraqi militants operating under Iranian instruction. It is the latest dramatic result of US government cases brought against the banks for handling money in breach of sanctions on Iran, Libya and Cuba.
The banks settled those cases, along with Credit Suisse, agreeing to pay more than £3bn to the US in so-called deferred prosecution agreements. These keep cases out of the criminal courts in return for a big fine and a promise not to reoffend.
The banks all declined to comment, but analysts said it will be key to their respective defences that there was no alleged connection between the banks’ handling of Iranian cash and the funnelling of funds to Iraqi militias.
Patrick Farr, a California-based litigant whose son Clay was killed by a roadside bomb, told Reuters the legal action had given him “a sense that I was able to do something, hold someone accountable for his death.”
The case is brought by the same lawyers, Gary Osen and Tab Turner, who used the Anti-Terrorism Act to sue Arab Bank earlier this year. A jury in that case found the bank liable for financing 24 Hamas attacks in Israel and Palestine.
Unlike the case against the European banks, the legal team linked Arab Bank directly to transfers of cash to alleged Hamas leaders. That case, like this one, was filed and heard in Brooklyn, New York.
Instead, it says the banks indirectly financed the attacks by masking US dollar wire transactions sent through the US. Osen told Reuters: “Each defendant understood that their conduct was part of a larger scheme engineered by Iran.”
They were, he said “deliberately indifferent” at the least. For Standard Chartered, the case reopens embarrassing old wounds of the time when its former finance director Richard Meddings allegedly said:
“You fucking Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?”
The company has said it does not recognise the quote, but it highlighted a view taken by some in the banking industry that the US was extending its reach too far.
Osen claims that he has established a file on attacks whose financing can be traced back to Iran, including a January 2007 incident when attackers dressed as American soldiers killed five US military in a compound in Kerbala.
Charlotte Freeman, whose husband Brian was one of them, joined the case and said: “Even if the case doesn’t get that far, at least the story is told. It needs to be exposed.” All of the banks named in the case declined to comment.
by JIM ARMITAGE AND ALISON FRANKEL