Homeland Security

DATE=4/22/2004

TYPE=CORRESPONDENT REPORT

TITLE=ASIA COUNTERFEITS TERROR (L-O)

NUMBER=2-315257

BYLINE=KATHERINE MARIA

DATELINE=HONG KONG

CONTENT=

VOICED AT:

INTRO: A risk assessment agency in Hong Kong says counterfeit goods sold at high margins in Southeast Asia and the rest of the world can be traced to terrorist groups like Jemaah Islamiyah, Islamic extremists linked to the al-Qaida terror network. Reporting from our Asia News Center in Hong Kong, Katherine Maria reports.

TEXT: Money made selling fake or copied D-V-D's, designer bags, and brand-name cigarettes can end up in the hands of terrorists.

The Hong Kong risk assessment firm Hill and Associates says counterfeit products not only damage corporate sales and tarnish brand names, the illegal trade also threatens regional security.

The company's brand director, David Fernyhough, spoke at the Foreign Correspondent's Club in Hong Kong.

/// FERNYHOUGH ACT ///

Terrorist networks need money to function because they do not hold down regular jobs. Where the counterfeiting comes in is because it's very high return, very low risk. that money is untraceable and therefore. attractive.

/// END ACT ///

On a computer-generated chart used to track criminals, Mr. Fernyhough points to Jemaah Islamiyah's suspected terror boss, Riduan Isamuddin also known as Hambali. The chart shows the likely links between Hambali and others involved in the 2002 terrorist bombing of a Bali nightclub, which killed more than 200 people. He says the chart also suggests how traders in fake products filtered funds to Jemaah Islamiyah.

He says companies trying to stop counterfeiters should be aware that vendors of fake products are often also involved in drugs, people smuggling, and terrorism.

Mr. Fernyhough says counterfeiters are attracted to brand-name products because of big profit margins.

/// 2nd ACT FERNYHOUGH ///

Products that tend to be involved, where you have organized crime and potential extremist exploitation,. are the high margin goods where you are making a lot of money for very little investment. Name brands sell for far greater than their actual worth.

/// END ACT ///

Mr. Fernyhough says counterfeit goods make up about five-percent of world trade - accounting for hundreds of billions of dollars each year. (SIGNED)

NEB/HK/KM/MH/RAE