Exclusive: Federal Grand Jury Set To Indict Sheikh

When the news of Wall Street Journal reporter Daniel Pearl's brutal murder was revealed last month, Bush administration officials promised justice--on American soil. Federal prosecutors began feverishly working to make a case against the chief suspect in the case, Ahmed Omar Saeed Sheikh. And U.S. diplomats and law-enforcement officials worked behind the scenes to persuade Pakistan to hand Sheikh over to the United States. Now, the Justice Department is about to take a first important step toward prosecution. In the next few days, NEWSWEEK has learned, a federal grand jury in New Jersey is expected to return a multi-count indictment against Sheikh for his alleged role in the kidnapping and execution of Pearl.

Sheikh will likely be charged with offenses short of murder--such as kidnapping or conspiracy--while prosecutors continue to assemble additional evidence, the sources say. The indictment is designed to "stake a claim" to the case, says a knowledgeable U.S. official--and put pressure on the Pakistanis to extradite Sheikh.

The indictment may give voice to American outrage over a vicious act of terrorism. But some Justice Department officials are worried that the charges could be little more than a symbolic victory. Sheikh, they fear, may not be extradited to the United States soon, if ever. Pakistani officials have said they plan to put Sheikh on trial, a bid to show the international community that the country's justice system fairly and efficiently handled the case. The Pakistanis then could argue that prosecuting the London-born extremist in the United States would amount to double jeopardy.

In this mounting battle over the Pearl case, the Justice Department is contemplating another important tactical move. Sources tell NEWSWEEK that federal prosecutors in Washington may soon unseal a November indictment of Sheikh by a Washington grand jury. That indictment charges him with hostage taking for a 1994 kidnapping plot of Western tourists--including one American--in India.

Administration officials began pressuring Pakistan to hand over Sheikh immediately after the grand jury moved against him. And on Jan. 9, U.S. Ambassador Wendy Chamberlin met with Pakistan's foreign minister in Islamabad, to plead the U.S. case.

One issue: Pakistani president Pervez Musharraf feared an extradition of Sheikh would inflame passions among groups opposed to his regime. So the Americans even laid out an elaborate plan to offer Musharraf cover. It involved having FBI officials arrange a snatch of Sheikh, allowing the Pakistanis to claim a measure of deniability.

But it was too little, too late. Pearl, was abducted off the streets of Karachi on Jan. 23, after being lured to a restaurant allegedly by Sheikh himself.

Bush administration officials have not given up hope prosecutors will be able to try Sheikh in the United States. But they are increasingly counting on behind-the-scenes diplomacy to get him here. Meanwhile, Sheikh sits in a Karachi prison, biding his time. In interviews with FBI agents working the case, Sheikh seems confident, even cocky. He has told his interrogators that he is "sure" he will not be extradited to the United States. And he says he does not expect to serve any more than "three or four years" in prison in Pakistan.

Sheikh may have good reason to feel secure. For a convicted terrorist, he has led a charmed life. He first caught the attention of U.S. law enforcement for his role in the 1994 Indian kidnapping plot. That plan was foiled by Indian police and he was imprisoned. Five years later, Sheikh was set free in a hostage swap after some of his comrades hijacked an Indian airliner, threatening to kill the 155 passengers unless Sheikh and another militant were set free.

Sheikh then traveled to Pakistan, where he lived openly--and opulently--in a wealthy Lahore neighborhood. U.S. sources say he did little to hide his connections to terrorist organizations, and even attended swanky parties attended by senior Pakistani government officials. His open defiance of Pakistani authorities contributed to speculation by American law-enforcement and intelligence officials that Sheikh has been a "protected asset," of Pakistan's shadowy spy service, the Inter-Services Intelligence, or ISI. But when FBI agents questioned Sheikh earlier this month about his relationship with the ISI, Sheikh's answers were elliptical. "I will not discuss this subject," one source quoted him as saying. "I do not want my family to be killed."

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