The emerging Saudi funds probe is a complex case, involving top Saudi diplomats in Washington, Saudi migrs formerly based in San Diego, and two men who later helped hijack U.S. airliners on September 11, 2001. It is a case being watched with intense interest by some of the most senior officials in the Bush administration, who rely on the Saudis for everything from intelligence and military logistical help to a reliable source of petroleum. At the heart of the case are questions about whether members of the Saudi Royal Family have been too lax in their giving to charities and other persons claiming to be in need, and whether funds that were intended for worthy causes ended up financing terror.
The case is particularly significant now because U.S.-Saudi relations are at a critical point as Saudi hesitation about allowing the U.S. to launch military strikes on Iraq from Saudi soil continues, and on other fronts, the longstanding relationship between Washington and Riyadh is under pressure.
One question that has captivated officials in Washington is whether funds from the bank accounts of the Saudi Ambassador to the U.S., Prince Bandar bin Sultan, and his wife, known as Princess Haifa, might have found their way into the wrong hands.
In the last 48 hours, TIME has learned, Riyadh's embassy in Washington has launched a major search through its medical, student, consular, cultural and other records to try to find out whether funds from an account of Princess Haifa their way into the hands of people who may have been supporting terror. That link has not been proven. But sources close to the Saudis made it clear that the ambassador's wife did not keep a close eye on her accounts. On Friday, Princess Haifa's accountant was dispatched to a branch of the Riggs National Bank in Washington to make an exhaustive search of her records. The Princess has two bank accounts in the U.S. one a checking account, the other a savings account both at the Riggs Bank in Washington. As soon as she was confronted with allegations that she had made payments to 9/11-linked figures, the princess dispatched her accountant to Riggs to begin a search that lasted until 4 am Saturday.
That search is not complete; only a portion of the checks have been scrutinized so far. But sources said that starting in January 1999, payments of $2000 a month were made from Princess Haifa's checking account to a woman named Majida Ibrahim Ahmad Dwaikat, a Jordanian national with a green card, who is the wife of Osama Bassnan. Bassnan first came to the attention of the Saudi Embassy in Washington in April 1998, when he wrote a pleading letter to Princess Haifa introducing himself as a Saudi living in Washington with four children and a pregnant wife, who also had a severe thyroid condition. After vetting by the Saudi Embassy, sources say, the Saudi ambassador, Prince Bandar, responded by making a payment of $15,000 to Bassnan himself. Such applications for financial help are not uncommon in Saudi Arabia, nor is such reciprocal generosity.
Some eight months later, Bassnan's wife Majida wrote to Princess Haifa to make a similar plea and, in January of 1999, the first series of payments to Majida were sent to an address in Northern Virginia, in care of another party. Majida then apparently moved, and later checks went to an apartment in Baltimore, Md.
Sources close to Princess Haifa say that when the Embassy's bank search began, the Princess initially had no idea who Majida was because the checks did not include her last name. It was only at mid-afternoon Saturday that her last name was determined and the Princess recalled the story, sources told TIME. And all this, in part, because the checks issued to Majida were not signed by Princess Haifa; they were cashier's checks.
Sources told TIME that all payments stopped in May 2002. Majida was deported in November 2002; her husband Osama Bassnan has been charged with visa fraud.
But sources close to the investigation say some of the checks from Princess Haifa to Majida were endorsed over to a woman named Manal Bajadir who is the wife of Omar al-Bayoumi. And it is al-Bayoumi who first attracted the FBI's attention.
FBI Agents long ago established that Omar Al Bayoumi had helped the two hijackers find an apartment and meet others in the Arab community in San Diego when they first arrived. According to several sources, Bayoumi helped the pair find an apartment and paid the first month's rent with a check when the landlord wouldn't accept their cash. They then paid Bayoumi back in cash, according to the FBI's understanding of the transaction. Bayoumi left San Diego in mid 2001 and moved to England, where he pursued a Ph.D. at Aston University.
In late September 2001, he was charged in the U.S. with visa fraud and arrested by Scotland Yard at the request of the FBI. He was held for some months on that immigration charge while both the bureau and Scotland Yard investigated him for possible connections to al-Qaeda. None were found, despite, sources say, intensive reviews of his phone calls, other communications, bank accounts and associates.
A source close to the Saudi government tells TIME that al-Bayoumi made repeated calls to the Saudi Embassy in 2001 hooking up with the Embassy's Islamic Affairs unit to ask for religious books and materials. The FBI found out about this and asked permission to interview two Saudi diplomats at the Embassy Ambassador, Prince Bandar gave permission, and the interviews occurred in October 2001.
FBI officials say the investigation, while not officially closed, has concluded that Bayoumi was not a witting accomplice of the hijackers in particular or al-Qaeda in general, and that that he did not, wittingly or even unwittingly, provide substantial funds to them for any purpose, legitimate or nefarious. "There's some indication he may have helped them with a little seed money but that was paid back," says one federal law enforcement source. The FBI investigation to date shows, the official says, "that he never really supported them in any material way. These guys didn't need money."
Two senior federal sources say that the investigation of the hijackers' sojourn in San Diego has concluded that they paid their bills with money transferred via the same channels that funneled money to Mohammed Atta and other hijackers based in Florida: al-Qaeda financial operatives transferred funds to them accounts in the United Arab Emirates. "We had ample opportunity with Al Bayoumi in custody to run out that end of it, and it didn't produce," says a federal law enforcement official. "That's why he was cut loose. We could not find any contact between him and terrorists, any involvement (with al-Qaeda.) There was nothing to indicate he's any different form any of the hundreds of people who had contact with the hijackers, who were unwitting to the fact that they were going to be hijackers. It just wasn't there."
The FBI's investigation of Bayoumi and attracted the attention of investigators with the Joint Intelligence Committee, and, according to knowledgeable sources, some of these investigators came to suspect that there was more to the story than the FBI had found. The backroom dispute over the vigor of the FBI's investigation, and Congressional displeasure at being denied access to an FBI informant in the San Diego Arab community, has now spilled into public view. The leaks have thrown the FBI and Justice Department on the defensive. Now the spill-over from this long running dispute has put additional pressure on the already tense U.S.-Saudi relationship.
Administration officials suspect that one reason the still-murky details of a possible Saudi funds connection to the San Diego hijackers have emerged is an angry behind-the- scenes dispute between the Joint Intelligence Committee's staff and the FBI and Department of Justice over the committee's final report on intelligence failures before the September 11 attacks. According to one source, the FBI was shown a 45-page draft report recently and responded with a 21-page rebuttal citing a long list of errors, overstatements and the like. If the committee proceeds to release its draft, the FBI and Justice Department are threatening to fire back with a lengthy counter report. For the record, a spokesperson for Princess Haifa tells TIME: "Princess Haifa al-Faisal was never contacted by U.S. officials concerning these donations and neither was the embassy. She had no knowledge that funds she gave away for charity may have been passed on to others."