Pubdate: Tue, 13 Aug 2002 Source: Globe and Mail (Canada) Copyright: 2002, The Globe and Mail Company Contact: http://www.globeandmail.ca/ Details: http://www.mapinc.org/media/168 Page: A1 Author: Colin Freeze CANADIAN DRUGS FUND TERRORISM, OFFICIAL SAYS A top U.S. official says violent Middle Eastern groups are reaping the profits of an illicit cross-border drug trade -- one involving a cold-medication ingredient that is bought legally in Canada before it is cooked up into illegal street drugs south of the border. The head of the U.S. Drug Enforcement Administration, Asa Hutchinson, said a North American methamphetamine racket is financing terror in the Middle-East. "It's the first time we've seen drug proceeds going back [from the United States] to a terrorist organization," Mr. Hutchinson told The Washington Post in remarks published yesterday. In recent interviews, Mr. Hutchinson has singled out Hezbollah, the radical Lebanon-based group responsible for hundreds of bombing deaths, as a prime benefactor. By some accounts, millions of dollars have been moved overseas to fund terrorism. Mr. Hutchinson did not put a precise figure on the amount of money involved in the cold ingredient. Canada figures in the alleged scheme because, compared to the United States, it has relatively lax controls on a chemical called pseudoephedrine. In recent years, huge amounts of the ingredient -- what law enforcement calls a "precursor chemical" -- have been confiscated at the border. U.S. officials said much of the ingredient reaches California and Mexico, where it is mixed with other chemicals to form methamphetamine, also known as speed. In the United States, evidence of a conspiracy involving more than 100 people to import the ingredient to make speed has been outlined in criminal complaints. Mr. Hutchinson said the Middle Eastern men accused of being behind the scheme are funnelling money to Hezbollah. Some observers -- especially defence lawyers -- said Mr. Hutchinson's remarks are inflammatory and way off base. The RCMP said it has not found evidence of such a conspiracy. After intense U.S. lobbying, Canada is reining in the pseudoephedrine trade. The government expects to have stricter controls in place by January, with Health Canada licensing firms that have legitimate interests in producing the substance. The pressure has also affected the private sector. U.S. officials named two Quebec companies, Frega Inc. and Formulex Inc., as major sources of legally bought but illegally imported pseudoephedrine. Contacted yesterday, a spokeswoman for Formulex said the company was unaware of the problem. "We altogether dropped making pseudoephedrine," she said. In January, U.S. officials named Canada as a source of the ingredient while announcing the arrests of dozens of suspects in a methamphetamine investigation called Mountain Express III. At the time, police said many of the charged men were of Middle Eastern origin but were ordinary criminals. By April, Mr. Hutchinson appears to have re-evaluated the situation. He told a Los Angeles Times reporter that some of the methamphetamine money had been sent to the Middle East to support terrorist organizations such as Hezbollah. Defence and prosecution sides in California, where more than 35 men have been indicted in the scheme, have expressed skepticism about terrorist links. Nothing in the formal criminal complaint mentions Hezbollah or the Middle East. Citing unnamed officials, The Washington Post reported yesterday that "Arab gangs in Canada" are said to be responsible for trucking the pseudoephedrine into the United States. A spokesman for the RCMP said yesterday that the force has seen no evidence of this -- not least because the movement of the controversial ingredient is uninhibited. "It's not illegal in Canada. "The illegal activities probably happen at the border or on the U.S. ground," said Corporal Benoit Desjardins. - --- MAP posted-by: Keith Brilhart