Jordan is ramping up its efforts to protect its biggest bank against lawsuits in New York that claim it helped to fund terrorist operations, The Wall Street Journal reported.

Sources told The Journal that Jordan is intervening directly after several unsuccessful attempts to get the U.S. government to weigh in on it. Top Jordanian officials have repeatedly asked U.S. officials from the State Department, Treasury and the White House National Security Council to intervene in the case, to no avail, the sources said.

The suits, filed in federal court in Brooklyn, are stirring up tensions between the U.S. and one of its chief allies in the Middle East. They allege that the bank knowingly routed compensation payments from Saudi donors to suicide bombers’ families, and the plaintiffs allege the bank helped finance groups such as Hamas and Palestinian Islamic Jihad, which the U.S. has designated as terrorist organizations.

Arab Bank denies the charges, telling the Journal it merely provided “routine banking services” to people it didn’t know were implicated in terrorism.

“Arab Bank has a long history of promoting economic development, stability and security in the Middle East, including in Jordan, one of America’s closest allies, and the territories under the control of the Palestinian Authority,” said Kevin Walsh, an attorney for the bank.

Last month, Jordan backed an appeal from Arab Bank that argued that the U.S. judge hearing the cases is unfairly punishing the bank for failing to turn over what it says are confidential client records. In July, Judge Nina Gerson punished the bank for refusing to hand over the records, ruling that a jury could infer that by not handing over the records it knowingly provided financial services to terrorists.

Under the order, the bank would also be barred from arguing that it didn’t know that people who received payments were terrorists, or that it didn’t intend to commit any offenses—a key defense—because those assertions could conceivably be proved or disproved by the missing documents, the Journal’s report said.

Jordan’s legal brief, calling the order an “affront to the Kingdom’s sovereignty,” said the judge’s actions could ruin the bank because under the judge’s guidelines it could almost certainly find the bank liable. Further, Jordan said, the order would be “potentially calamitous” for Middle Eastern economies and could endanger U.S. foreign policy goals there.

Jordan argued the order could trigger political instability and imperil the Middle East peace process.

The U.S. State Department and the Jordanian embassy in Washington declined to comment to the Journal.

Tension grows between US, Jordan

MIDEAST-PALESTINIAN-ISRAEL

The New York lawsuits allege Arab Bank helped finance Palastinian militant groups such as Hamas. AFP PHOTO/MOHAMMED ABED Source: AFP

JORDAN is stepping up efforts to help its biggest bank fight US claims that it helped fund terrorists.

Lawsuits in New York are stirring tensions between the US and one of its closest Middle East allies, The Wall Street Journal reported Friday.

A set of related US civil suits filed in federal district court in Brooklyn against Arab Bank PLC allege the bank knowingly routed compensation payments from Saudi donors to suicide bombers' families.

The suits' plaintiffs also allege the bank helped finance groups such as Hamas and Palestinian Islamic Jihad, which the US considers terrorist organisations. Arab Bank denies the charges.

Jordan has taken the rare step of intervening directly on behalf of Arab Bank, following a series of what people familiar with the matter say were unsuccessful attempts to get the US government to weigh in on the case.

In a brief last month, Jordan backed an Arab Bank appeal that argued that the US judge hearing the cases is unfairly punishing the bank for failing to turn over what it says are confidential client records. Jordan's brief said the judge's sanctions could be both ruinous for the bank and potentially calamitous for the economies of the Middle East.

It also suggested that key US foreign policy goals in the region -- such as fighting terrorism or pursuing peace between Israel and the Palestinians -- could be endangered. The matter shows the uncomfortable choices the US government faces as terrorism victims pursue justice in the country's courts.

Following six years of legal wrangling, the first case, involving Americans allegedly killed by Hamas, is winding its way toward trial at the Brooklyn court.

There, in July, Judge Nina Gershon imposed harsh sanctions on Arab Bank after it refused to hand over client records in more than a half dozen related civil cases, citing bank secrecy laws in Jordan and other countries in which it operates. Gershon said Arab Bank should be punished to stop it from gaining an unfair advantage from its recalcitrance to produce the records.

Under the order, the bank would also be barred from arguing that it did not know that people who received payments were terrorists, or that it did not intend to commit any offences -- a key defence -- because those assertions could conceivably be proved or disproved by the missing documents.