trial, had stolen money from Al Qaeda, got caught, went on the run, and approached
the U.S. government in an attempt to save himself and his family. L’Hussein
Kherchtou, a member of the Nairobi team, testified for the government because he
was so appalled at the un-Islamic embezzlement practiced by senior members of his
team. Thus even in the hard case, we see divergent motivations creating agency
problems.
2.1 Game
Fundamentally, the interaction we describe is that between a terrorist boss, who
controls the flow of money and desires some impact from this expenditure, and the
middlemen he hires to perform the logistical support for those who will actually carry
out the operations. Upon first glance, this is simply a standard principal-agent
dynamic, in which the boss principal hires the middleman agent to do a job for him,
though a particularly grisly one. However, this ignores the essential covert nature of
the terrorist organization, in which monitoring is all but completely limited to whether
or not an attack has succeeded. Moreover, contingent payment—the means by which
the principal typically obtains his desired behavior—is either infeasible because
middlemen do not have the capital to finance attacks, or is not practiced.
The general pattern of funds transfer seems to be that leaders provide funding in
either an initial block grant, or on a need-to-have basis. The block grant method seems
to have been used for the three Thai members of Jemaah Islamiyah (JI) who were
carrying $50,000 to support operations when they were arrested in Phnom Penh in
May 2003.
for the 2003 J.W. Marriott bombing in Jakarta, received a substantial bonus following
9
Convention