Saudi Cash Scrutinized by U.S. for Terror Ties

Even as they nurture a partnership with Saudi Arabia to smash Al Qaeda, U.S. officials are quietly investigating whether funds disbursed by the Riyadh government have helped finance the spread of international terrorism.

Counter-terrorism officials involved in the highly secretive effort, which has included the subpoenaing of Saudi government bank records here, said it is one of their most pressing and politically sensitive priorities: tracing as much as $4 billion a year that the Saudi government has spent worldwide, partly in an effort to gain support for its strict brand of conservative Islam, known as Wahhabism.

The investigation involves efforts to determine not only where the money went, but also whether Saudi officials -- knowingly or unwittingly -- helped bankroll terror cells and their support network through official donations to radical Islamic leaders, mosques, schools, cultural centers and other projects, senior U.S. counter-terrorism officials said.

The FBI and Treasury Department are also seeking to trace Saudi money spent on ambitious efforts to recruit Wahhabi followers, possibly including inmates in federal prisons and within the U.S. military, as well as tracking the financial aid given to tens of thousands of Saudi students here, including many attending flight school and other activities that one senior U.S. official termed “suspicious.”

So far, the investigation has found no evidence of intentional wrongdoing by Saudi officials, nearly all of whom are ranking members of the Saudi royal family.

“Most of it appears to be for legitimate purposes,” one senior U.S. counter-terrorism official said of the funding. “But we are looking beyond that to the accounts that are questionable ... to determine where all the money went ... and can we link it to support of terrorism and terrorist activities.”

A senior Saudi official vehemently denied that the government has knowingly given money to help finance terrorism. The official, who spoke on condition of anonymity, said Riyadh was working closely with U.S. officials, particularly in trying to determine whether any of the government’s money ended up in the wrong hands.

The Saudi official confirmed that the subpoenas had been issued but said, “We would have given them voluntarily if they had asked.”

In the United States, FBI and Treasury Department agents are focusing on tracking what they say is as much as $300 million a year in Saudi funds disbursed through the Persian Gulf kingdom’s embassy in Washington and regional consulates, as well as through Riyadh-sponsored charities.

Overseas, the CIA and National Security Agency are pursuing far larger sums of money that the Saudi government has spent on thousands of Wahhabi projects in nations across the world. The overall investigation is supervised by a special counter-terrorism coordinating committee of the National Security Council, the officials said.

In the past, U.S. officials have confirmed that they were investigating whether Al Qaeda’s rise to global prominence was funded, in part, through contributions by wealthy Saudi businessmen, possibly funneled through charities and relief organizations.

The current probe, however, marks the first time U.S. law enforcement officials are investigating the actions and expenditures of the Saudi government itself, several senior U.S. officials said.

The senior officials said they were particularly concerned by a wealth of anecdotal evidence indicating that the decades-long Saudi effort to spread Wahhabism has underwritten some of the world’s most militant Islamic religious and political figures, many of whom openly support terrorism.

Most of the money was doled out here and overseas by “Islamic affairs” officials in Saudi embassies with much independence to promote Wahhabism, U.S. authorities believe.

On at least two occasions that have been disclosed publicly, such Islamic affairs officials have been linked to the Sept. 11 hijackers and other terrorists. A congressional review found that at least one official in Los Angeles had a closed-door meeting with a Saudi national just hours before he met two of the hijackers. The Saudi national later gave the two money and logistical help while they were living in San Diego.

In Germany, a Saudi Islamic affairs official left the country in March after German authorities suspected him of working with extremists now accused of plotting terrorist attacks against Western interests. German authorities found a business card of the Saudi official, Mohammad J. Fakihi, in the apartment of a since-convicted accomplice of the Sept. 11 hijackers.

Wahhabism, on which the Saudi theocracy is based, is a puritanical form of Islam that its supporters say is nonviolent. But Wahhabism has also been invoked by Saudi-born Osama bin Laden, his Al Qaeda network and other terrorist organizations as religious justification for all devout Muslims to force Western interests out of Islamic countries by violent means if necessary.

U.S. officials believe it is likely that a significant amount of Saudi government money has ended up in the hands of Al Qaeda and other terrorist operatives who are still at large and could be planning attacks. Some of those officials said they have come to believe that the sheer volume and repetition of Saudi contributions, even if made unwittingly, could constitute some form of “willful ignorance” that borders on official policy.

“It is a problem we have discussed with the Saudis directly,” said a second senior U.S. counter-terrorism official. “They have to realize that funding Wahhabi institutions has formed a base for Al Qaeda to operate. It allows them to recruit based on the ideology, to fund and to execute.”

Despite Saudi assistance in some aspects of the investigation, much of it is being conducted independently by the United States.

Even if no direct link between Saudi money and terrorism is found, potentially hundreds of millions of dollars have gone to influential Wahhabi religious and political leaders who could be recruiting legions of future terrorists and anti-U.S. agitators, officials said.

The most extreme outcome of the investigation, the officials said, would be a recommendation to the Bush administration that Saudi Arabia be the eighth nation blacklisted as an official state sponsor of terrorism, which would prohibit any U.S. agencies or businesses from doing business with it.

That scenario, which has been floated by some members of Congress, is extremely unlikely, particularly given Saudi Arabia’s recent efforts to cooperate more fully in U.S. counter-terrorism efforts, investigators said.

“I don’t know that we’ll ever be able to make that statement, but the bottom line is that money from them goes to a radical element, for radical purposes,” the first senior U.S. counter-terrorism official said.

Representatives of the FBI, CIA, Treasury Department and National Security Council all refused to comment on the investigation.

The senior Saudi official said Riyadh has spent only $17 million on projects in the United States in recent years, and that it has given out far less money for Wahhabi causes throughout the world than U.S. officials believe.

“We have nothing to hide,” the official said. “If it turns out that some of these people [who received Saudi money] are evil, we would like to know that.”

He said any link between Saudi officials, and the Wahhabist faith in general, and terrorism is guilt by association.

“It has become very simplistic to say that Saudi Arabia equals Wahhabism equals terrorism, but that is not the case,” the official said. “Our religious doctrine is very conservative and orthodox. But is it violent? No.... We have crazy religious radicals who are nut cases, but they are not part of the religious establishment.”

The current investigation has been underway for some time but has intensified in recent months, U.S. authorities said, in part due to calls for such a probe by several lawmakers in the aftermath of a scathing report by a joint congressional intelligence committee.

The committee, formed to investigate the Sept. 11 attacks, concluded that suspicious ties between Saudi Arabia and the attacks “obviously raise issues with serious national implications” about the United States’ relationship with the world’s largest oil producer.

In its report, it urged the FBI and CIA to aggressively investigate those ties.

Several U.S. lawmakers have called for an investigation into Saudi disbursements. Sen. Jon Kyl (R-Ariz) said the Saudi government’s support of Wahhabism “provides the recruiting grounds, support infrastructure and monetary lifeblood of today’s international terrorists.”

Sen. Charles E. Schumer, (D-N.Y.), has called for the Saudis to fire their chief law enforcement and counter-terrorism official, Prince Nayif ibn Abdulaziz, contending that he has helped, not hindered, Al Qaeda and other terrorists -- a charge Saudi officials have repeatedly denied.

Saudi officials have repeatedly insisted that they have doled out huge sums of money without requiring information on who ultimately received the money and what it was used for, U.S. officials complain.

“We’ve been adamant that we make them accountable, and they have danced around it,” said the first counter-terrorism official.

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Times special correspondent John Goetz in Berlin contributed to this report.