Terror Watch: Tangled Ties

Within weeks of the September 11 terror attacks, security officers at the Fleet National Bank in Boston had identified "suspicious" wire transfers from the Saudi Embassy in Washington that eventually led to the discovery of an active Al Qaeda "sleeper cell" that may have been planning follow-up attacks inside the United States, according to documents obtained by NEWSWEEK.

U.S. law-enforcement officials familiar with the matter say there is no evidence that officials at the Saudi Embassy were knowingly financing Al Qaeda activity inside the country. But documents show that while trying to trace a tangled money trail beginning with the Saudi Embassy, investigators soon drew startling connections between a group of Saudi nationals receiving financial support from the embassy and a 34-year-old microbiologist and MIT graduate who officials have since concluded was a U.S. operative for 9/11 mastermind Khalid Shaikh Mohammed.

The microbiologist, Aafia Siddiqui, a mother of three young children, has since fled the country--most likely to her native Pakistan-and is now wanted for questioning by the FBI. But "suspicious-activity reports" (SARS) filed by Fleet Bank with the U.S. Treasury Department, suggest that Siddiqui and her estranged husband, Dr. Mohammed Amjad Khan, an anesthesiologist, may have been active terror plotters inside the country until as late as the summer of 2002.

The reports show that Fleet Bank investigators discovered that one account used by the Boston-area couple showed repeated debit-card purchases from stores that "specialize in high-tech military equipment and apparel," including Black Hawk Industries in Chesapeake, Va., and Brigade Quartermasters in Georgia. (Black Hawk's Web site, advertises grips, mounts and parts for AK-47s and other military-assault rifles as well as highly specialized combat clothing, including vests designed for bomb disposal.)

Fleet accounts associated with the couple also showed "major purchases" from U.S. airlines and hotels in Pittsburgh and North Carolina as well as an $8,000 international wire transfer on Dec. 21, 2001, to Habib Bank Ltd., a big Pakistani financial institution that has long been scrutinized by U.S. intelligence officials monitoring terrorist money flows.

NEWSWEEK first reported, in a June 23, 2003, cover story, that the FBI had identified Siddiqui and Khan as suspected Al Qaeda agents. Internal FBI documents showed that, after his capture in March 2003, Khalid Shaikh Mohammed told U.S. interrogators that Siddiqui was supposed to support "other AQ operatives as they entered the United States." Agents also found evidence that she had rented a post-office box to help another Baltimore-based Al Qaeda contact who had been assigned by Khalid Shaikh Mohammed to blow up underground gasoline-storage tanks. Bureau documents also stated that Khan, Siddiqui's husband, had purchased body armor, night-vision goggles and a variety of military manuals that were supposed to be sent to Pakistan.

The newly obtained SARS documents filed by Fleet shed additional light on the federal government's effort to track Siddiqui and Khan's activities--and raise questions about possible links to other Saudis in the United States. As early as October 2001, long before Khalid Shaik Mohammed's capture, FBI and Treasury Department investigators were alerted to the couple's possible terror links in a series of SARS filed by Fleet. At the time, Fleet's Financial Intelligence Unit was trying to trace $70,000 in wire transfers on the same day, July 10, 2001, to two Saudis in the United States. One, for $50,000 from the Saudi Armed Forces Account at the Riggs Bank in Washington, D.C., went to a Saudi student at Clark University in Worcester, Mass. Two others, totaling $20,000 from the same Saudi military account, went to a Saudi national named Abdullah Al Reshood in Boston.

NEWSWEEK has been unable to locate either Saudi. But a spokesman for the Saudi Embassy in Washington said both wire transfers were consistent with the Saudi government's longstanding practice of providing educational and medical assistance to fellow countrymen living in the United States. The spokesman said the embassy has no reason to believe either Saudi has any connection to terrorist activity.

But Fleet security officers were concerned about the transactions from the start. Immediately after receiving the $20,000 wire from the Saudi Embassy in Washington, Al Reshood wrote a $20,000 check to another Saudi, Hatem Al Dhahri, who five days later wired $17,193 back to an account controlled by Al Reshood at the Al Rahji Bank in Saudi Arabia. "There appears to be no commercial reason nor reasonable explanation for the series of transactions," wrote one Fleet security officer in an Oct. 24, 2001, SARS report. Both Saudis lived at the same address, a high-rise apartment building in Boston's Mission Hill neighborhood that was frequented by Arab nationals. If the purpose of the expenditures was to provide medical expenses for either Al Reshood or Al Dhahri and their families in the United States, as the Saudis claimed, the security officials wanted to know why the money was being wired back to Saudi Arabia. Al Dhahri also listed as his address the same apartment number, 2008, as another Fleet Bank customer--Aafia Siddiqui.

It is still not clear what connection, if any, Al Dhahri had with Siddiqui or whether they shared the apartment at the same time. (The Fleet Bank records suggest that Al Dhahri and Siddiqui's accounts were both active and current in the fall of 2001 and do not indicate a change of address had been filed.) A Saudi Embassy spokesman said that the payments to Al Dhahri were to pay for liver treatments for one of his children in the United States. A Saudi Embassy spokesman said that Al Dhahri has been interrogated by the FBI and has denied any knowledge of the microbiologist.

But the common address prompted Fleet auditors to zero in on Siddiqui, resulting in more "links" that "shocked" the security officers, according to a source familiar with the matter. In addition to the expenditures for high-tech military equipment--items that seemed unusual for a microbiologist--the security officers found that Siddiqui was making regular debit-card payments to one Islamic charity, Benevolence International, that was under active investigation by federal agents for raising funds for terrorist causes. (The charity has since been shut down and its founder jailed.) In addition, Siddiqui was found to be active with the Al-Kifah Refugee Center, another Islamic charity that was ostensibly raising funds for Bosnian orphans but which also was under scrutiny by federal investigators.

A spokeswoman for Fleet, which last week was purchased by Bank of America, declined to comment on the bank's role, noting that it is a violation of federal law to even refer to the existence of a SARS. But investigators noted that Fleet Bank SARS stand in stark contrast to the lack of similar reports from Riggs Bank, where the Saudi Embassy kept its accounts and the wire transfers began. Riggs Bank's failure to alert investigators to a large number of unusual cash transactions by the Saudi Embassy and other foreign bank customers has led to a wide-ranging investigation by Treasury Department regulators that is likely to result in substantial civil fines imposed on the bank in the next few weeks, according to sources familiar with the matter. "Anytime, you have suspicious money movements, and it's not reported as needed, it hurts our overall efforts," a senior U.S. counterterrorism official said about Riggs' failure to file the SARS. Riggs recently terminated the Saudi Embassy as a client and, according to a story in today's Wall Street Journal, may be planning to drop its diplomatic business entirely.)

Riggs officials say they've initiated a program to more vigorously monitor financial accounts. And the bank late last year filed more than two-dozen reports involving Saudi Embassy transactions, including large overseas wire transfers and cash deposits made by Saudi Ambassador Prince Bandar bin Sultan; his executive assistant, Ahmed A. Kattan; his chief military aide, Gen. Abdual Rahman Al-Noah, and other embassy officials.

Most of these transactions have no apparent links to terrorism and may simply reflect the Saudis' longstanding habit of mixing government and personal accounts. In one case, Kattan, who carries the rank of ambassador, deposited $6 million in embassy funds into his personal account at Riggs, wired $5.5 million to the agents of a school in Egypt and the remaining $500,000 to his own account in Saudi Arabia. Al-Noah, the military officer, made a total of $1.6 million in cash deposits--most in cash, one of them for $210,000--and then wired the money to pay for the purchase of furniture for a new palace in Saudi Arabia. Bandar himself wired $17 million last year to his construction manager for a new palace in Saudi Arabia. Just last December, one of Bandar's personal aides deposited $3 million in international drafts, converted them to dollars, and then wired substantial sums back overseas--including about $200,000 to a luxury-car dealer in Great Britain. (A Saudi spokesman said that Bandar has substantial business interests overseas, so it is not surprising that he would conduct such transactions.)

But other transactions raised eyebrows at the FBI. The Riggs accounts showed a number of checks to flight schools and flight-school students in the United States as well as 50 separate $1,000 American Express travelers checks issued by Bandar to Saudi employees between July 9, 2001 and Aug. 28, 2001--including seven that were deposited that summer at the MGM Grand Hotel in Las Vegas. Riggs also reported $19,200 in payments from the Saudi Embassy to Gulshair al-Shukrijumah, a Florida-based imam who once served as an interpreter for the "blind Sheik" Omar Abdul Rahman, who was convicted in 1996 of a plot to blow up New York City landmarks. Gulshair al-Shukrijumah's son, Adnan al-Shukrijumah, also known as "Jaffar the Pilot," is a suspected Al Qaeda operative who is the subject of a worldwide FBI manhunt. (In response to U.S. demands to impose tighter controls, the Saudis have since terminated the payments to Gulshair al-Shukrijumah, along with a number of other clerics who were being supported by the embassy.)

A Saudi Embassy spokesman stressed that the Saudis have been actively cooperating with U.S. officials on all aspects of the war on terrorism and that the embassy has recently been assured by top FBI officials that the bureau "has no concerns" about any of the embassy accounts. But senior law-enforcement officials told NEWSWEEK that Saudi Embassy accounts--including the wire transfers related to Siddiqui--remain under active investigation. Told that the Saudis have been assured the FBI "has no concerns," a law-enforcement official made additional checks and reported back to NEWSWEEK: "That is not the case."

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