Terror Watch: Cash for Terror Tips

A little-known State Department program that pays rewards for tips about terrorism is facing new scrutiny on Capitol Hill amid allegations that it forked over $5 million to the wrong tipster.

In a private ceremony attended by top U.S. counterterrorism officials last Friday, Clarence Prevost, a former flight instructor at the Pan American International Flight Academy in Minnesota, was given a $5 million check for his help in the case of Zacarias Moussaoui--the convicted Al Qaeda operative who was arrested just three weeks before the September 11 attacks. Moussaoui aroused suspicion at the flight school when he signed up to learn to fly 747 jumbo jets, even though he'd had no previous flight experience. It was the first-ever payment in a domestic-terrorism case under the State Department program called Rewards for Justice.

Prevost, who was Moussaoui's original flight instructor, worked with the FBI in developing the case against the Al Qaeda terrorist and testified during the sentencing phase of his trial. But court testimony also shows that two of Prevost's colleagues at the flight school, Tim Nelson and Hugh Sims, were actually the first to call the FBI and alert agents to Moussaoui's odd behavior. Their two phone calls, made separately on the morning of Aug. 15, 2001, led the bureau to launch an investigation of Moussaoui within 30 minutes and arrest the French-born Islamic militant on immigration charges the next day, according to testimony from an FBI agent in the trial.

Yet, for reasons that remain unclear, Prevost was the only one rewarded by the government in the case. Although the Rewards for Justice program has paid out more than $77 million to more than 50 individuals since its creation in 1984, it has operated in relative obscurity, its deliberations shrouded in secrecy--largely because it chooses as a matter of policy not to publicize its payouts. In this case, the reward to Prevost--which got leaked to the press--has set off intense criticism. One former U.S. immigration official called it "obscene," and some of Prevost's former colleagues publicly questioned whether he did anything substantial enough to deserve such a lucrative payment. Prevost, who now lives in Coral Gables, Fla., did not return a phone call seeking comment. He specifically asked the government not to publicize his reward, according to a Justice Department official familiar with the case who asked not to be identified talking about the matter.

The payout was also questioned today by Coleen Rowley, the celebrated former FBI agent who first went public in the spring of 2002 with a searing memo to FBI Director Robert Mueller in which she criticized the bureau's failure to conduct an aggressive investigation of Moussaoui immediately after his arrest. That failure may have kept the bureau from "connecting the dots" that might have helped thwart the 9/11 attacks. Rowley told NEWSWEEK that Nelson and Sims were key players in the Moussaoui case. "They were ones who had the guts to go against their bosses and pick up the phone," said Rowley, a former FBI legal counsel in the bureau's Minneapolis office who retired in 2004 after a 24-year law enforcement career. "They actually were the whisteblowers in the broadest sense, and I think they certainly deserve credit and a reward."

The payout has also prompted questions from Minnesota's two U.S. senators, Democrat Amy Klobuchar and Republican Norm Coleman, about how the Rewards for Justice program makes decisions about who should receive payments. Klobuchar has written a letter to Secretary of State Condoleezza Rice; Coleman has demanded an FBI briefing. "This whole thing is cloaked in secrecy and $5 million is a pretty large amount," said one congressional staffer, who asked not to be identified talking about sensitive matters. "You have to ask, how does this achieve [the program's] goal?"

In interviews this week, State, Justice and FBI officials all adamantly defended the selection of Prevost, as well as the process by which the Rewards for Justice program makes its selections. "It's been vetted and been approved at the highest levels of the government," said Edgar Moreno, the State Department diplomatic security official who supervises the program. At the same time, Moreno acknowledged that the Rewards for Justice program has been hindered in its ability to explain itself because it keeps confidential the identities of those receiving payouts--a policy decision that critics say undermines the entire purpose of the program. "In some ways, we've been the victims of our own success," said Moreno. "But the program remains vitally important."

Touted on the State Department's Web site as "one of the most valuable U.S. government assets in the fight against international terrorism," the Rewards for Justice program is designed to encourage tipsters around the world to furnish officials with information that "prevents" terror attacks or leads to the arrest and conviction of wanted terrorists. The program's highest advertised rewards, $25 million each, are for information about Al Qaeda chiefs Osama bin Laden and Ayman al-Zawahiri. The Rewards for Justice Web site invites people to "Submit a Tip" about the two men.

The effort hasn't yet produced solid leads about the two Al Qaeda leaders. But the program has quietly doled out tens of millions of dollars in other cases. In 2003, an Iraqi informant was awarded $30 million for information that led authorities to Saddam's sons, Uday and Qusay Hussein. Another $3 million was paid out in 2004 for information about three other figures in the Iraqi regime who were being hunted by the U.S. military. The program also paid $10 million last year to informants who gave details about leaders of the Abu Sayyaf Group in the Philippines. In each case, officials said, the rewards were based on the recommendations of law-enforcement, military and intelligence agencies to an interagency committee that ultimately decides who gets the cash.

In the case of Moussaoui, who ultimately pleaded guilty to six terrorism-conspiracy charges related to the 9/11 attacks, the FBI office in Minneapolis recommended Prevost for the reward because he had worked the most closely with FBI agents in the case. He was the flight instructor who dealt most directly with Moussaoui and testified at his trial. Prevost "worked very closely with investigators for a period of time," said Mike Kortan, an FBI spokesman. "It wasn't just the tip. He [Prevost] pushed everybody else to act based on his suspicions."

But others at the flight school remember matters differently. Moussaoui, an Arabic speaker of French-Moroccan descent, first aroused suspicions at the school when he plunked down nearly $10,000 in cash to learn how to fly a 747 jumbo jet but seemed to know nothing about airplanes and asked odd questions, such as how the doors to the airplane worked. Those and other oddities came up at a critical staff meeting of flight instructors and managers at the school on the morning of Aug. 14, 2001. But some of those present say they don't recall Prevost sounding any alarms. "I never saw Clancy do anything," said Gary Anderson, one of the program managers who attended the meeting. "Tim and Hugh were the ones pushing to contact the FBI."

The reward has clearly rankled Nelson and Sims--both former Air Force pilots. "I'm pissed," Nelson told NEWSWEEK, adding that he's particularly embarrassed because for years he has been telling friends and colleagues that he was the first to call the FBI about Moussaoui. As Nelson recalled it, his supervisor discouraged him from calling the Feds, telling him that the school did not believe in informing on its customers. When he called the FBI anyway the next morning, he told the agent, "I'm sticking my neck out here," Nelson said.

Sims, who made a separate call to the FBI that same morning, said neither he nor Nelson had given any consideration to a possible reward. Now, he added, "we're in a difficult position. If we start whining too much, people will say, 'you're just a bunch of whiners.' What can you do? We're caught in a bureaucratic trap right now."