High-Tech Terror Ties?

Several dozen federal and local law-enforcement officers, pursing an investigation launched by the National Security Council, late last night searched the Quincy, Mass., office of Ptech Inc., an obscure software consulting firm that has contracts with the FBI, the U.S. military and the nuclear-weapons program of the Department of Energy.

Sources close to the investigation told NEWSWEEK that investigators were looking for evidence tying the company to Yasin Al-Qadi, a Saudi businessman who last year was designated a financier of terrorism by the U.S. Treasury Department.

Law-enforcement sources said the search was performed after a cooperating witness gave investigators access to the property on Thursday night. A warrant had also been obtained by federal prosecutors in Boston, who had prepared a sealed affidavit in which they alleged Ptech may have violated a federal law prohibiting U.S. companies and individuals from doing business with entities designated as terrorist financiers by the United States. Company officials could not be reached for comment. Government sources told NEWSWEEK that the FBI had examined the company's business dealings with the FBI and found no threats to national security.

Sources close to the investigation say questions about Ptech's activities and ownership were first brought to the attention of government investigators shortly after the September 11 attacks last year. Company insiders reportedly approached the FBI with information indicating that Ptech's owners included a Saudi construction magnate named Qadi, who had been added to a list of alleged terrorist financiers by the Bush administration on Oct. 12, 2001. Qadi has also served as a director and shareholder of a controversial Islamic charity with alleged Al Qaeda connections called Muwaffaq (Blessed Relief).

A lawyer for Qadi confirmed for NEWSWEEK that the Saudi was one of Ptech's initial investors and that he had helped attract other investors to the company. The lawyer, who asked not be identified further, said that Qadi sold his interest in Ptech in 1999 but that it is possible a Qadi representative continued to sit on the company's board until recently. The lawyer said that Qadi was never a member of Ptech's board or an officer of the company. He also vehemently denied, on Qadi's behalf, that Qadi had any involvement with Osama bin Laden, Al Qaeda or any other terrorist group, and said that Qadi was a "man of peace."

Sources told NEWSWEEK that company insiders told investigators that they had been summoned to Saudi Arabia about two years ago to brief individuals whom they were told were investors in Ptech on the company's business plans and activities. At the meeting, the company employees were introduced to Qadi, who was described as a Ptech owner.

The FBI conducted an initial round of interviews with company whistle-blowers, sources said, but the investigation then languished for months. It was revived late last summer when a former government official with contacts in the Bush administration told officials at the National Security Council about the Ptech allegations. The White House then instructed the Treasury Department's U.S. Customs Service to open its own investigation into the company, government sources said. Officials say the Customs investigation created friction within the FBI, which tried to muscle its way back into the probe once it became clear that Customs agents were taking the case seriously.

Senior Bush administration officials became concerned that the company's U.S. government contracts and alleged connections to Qadi posed a potential threat to national security, though sources said they are aware of no evidence that has surfaced proving that Ptech has abused its position as a government contractor. Government officials said that the search on Ptech's office was part of a continuing effort to gather information on the company and that no arrests in the case are imminent.

Information posted on Ptech's Web site lists the FBI, the Federal Aviation Administration, the Internal Revenue Service, the NATO alliance, the U.S. Air Force, the U.S. Naval Air Systems Command, the Department of Education and the Department of Energy as among Ptech's customers, as well as prominent U.S. manufacturers and financial institutions. A "case study" of the company's work for the Department of Energy, posted on its Web site, explains that Ptech has been helping redesign the agency's computer systems used at the Rocky Flats nuclear plant near Denver, a controversial facility that had been used to manufacture plutonium cores for nuclear bombs. The plant is now being dismantled.

Ptech may have recently taken steps to play down its possible connections with Qadi. Last month, the company's Web-site biography of the company's chief scientist, Hussein Ibrahim, described him as a former vice chairman of a company called BMI Finance and Investment Group. A Wall Street Journal report recently alleged that Qadi was an investor in BMI, which Qadi's lawyer confirmed. As of today, the reference to Ibrahim's employment with BMI had been deleted from the biography.