December 09, 2003

From the Washington Post: The FBI, in an unprecedented move that has strained relations with a close ally in the war on terrorism, has subpoenaed records for dozens of bank accounts belonging to the Saudi Embassy, part of an investigation into whether any of the hundreds of millions of dollars Riyadh spends in the United States each year end up in the hands of Muslim extremists, US and Saudi officials said.

The wide-ranging investigation into the $300 million a year the Saudi Embassy spends here was launched this summer, just as the US and Saudi governments were hailing a new era of cooperation in the fight against Muslim terrorism. Earlier this year, US and Saudi officials established the first-ever joint task force to track terrorist financing in Saudi Arabia.

US officials said the FBI's Washington field office subpoenaed the records of dozens of Saudi bank accounts to determine whether Saudi government money knowingly or unknowingly helped fund extremists in the United States. Although many Saudi entities have been investigated in the past, US officials said this was the first investigation to directly probe Saudi government funds.

Senior US officials said they do not recall any other time when the bank records of an embassy were subpoenaed.

The probe, US officials said, was approved by the National Security Council working group on terrorist financing at the request of several congressional leaders. The investigation focuses on the financial activities of the Islamic and cultural affairs office of the embassy as well as the activities of Saudi consulates around the United States, officials said.

The subpoenas outraged Saudi officials, who believe they were unnecessary.

"We became aware of the subpoenas in August, and we immediately said to the American authorities, 'if you want this information, why didn't you just ask us? We would have given it to you,' " one senior official said.

In fact, the official said, the Saudi government subsequently turned over embassy spending records for the past 20 years, including records of Saudi payments for educational expenses and medical attention for Saudi nationals here.

"We have nothing to hide," the official said. "If there is something suspicious, we want to know. But if there is nothing, they owe it to us to say publicly they found nothing."

The investigation of Saudi money was first reported by the Los Angeles Times last week.

US and Saudi officials said the subpoenas strained the complicated relationship between the two countries, which are grappling with mutual distrust and suspicions even as they try to forge an effective alliance in the war on terrorism.

US law enforcement officials have gone out of their way to praise Saudi cooperation in fighting al Qaeda, especially since the deadly May 12 terrorist attacks in Riyadh, but questions remain about whether millions of dollars still flow from the oil-rich kingdom to radical causes.

Saudi officials said they have opened their banking system and intelligence operations to the United States as never before, but are still treated as junior partners in a war in which both nations are targets. Senior Saudi officials strenuously deny any ties between their government and terrorist groups. They say they have moved to control how and where charities spend their money, and have halted the operations of many while their books are examined.

Since the Sept. 11, 2001, attacks, authorities also have stepped up their interest in the Saudi government's support for the puritanical brand of Islam known as Wahhabism.

Wahhabism eschews what it considers the West's corrupting influence on Islam and often advocates violence against Christians, Jews and the West. Its principles have been embraced by al Qaeda leader Osama bin Laden.

US and foreign intelligence agencies have documented the flow of money to terrorist groups from organizations affiliated with charities that received funds from wealthy Saudis and the Saudi government. Money for such charities often flows through the embassy's Islamic and cultural affairs bureau.

The subpoenas were issued several weeks after the May deportation of Fahad al Thumairy, who had worked for the Islamic and cultural affairs section of the Saudi consulate in Los Angeles since 1996. Thumairy's visa was revoked, and he was deported because of suspected ties to terrorists, according to officials from the Department of Homeland Security.

Law enforcement officials said there was no specific event or transaction that prompted the subpoenas, but noted it also came shortly after a congressional investigation chastised the Saudis for failing to crack down on terrorist financing. In a controversial decision, 28 pages of the report dealing with a possible Saudi role was classified and not made public.

A senior official with direct knowledge of the probe said the FBI was still doing a "preliminary analysis" of the documents. "It is mostly legitimate stuff as far as we can tell so far," the official said, "but there are some things we are following up on."

The Saudi official said that, while large sums of money passed through the embassy, most of it was for scholarships for thousands of Saudi students and government-paid medical treatment for Saudi subjects.

In all, the official said, about $17 million over the course of 20 years, less than $1 million a year, went to supporting Islamic institutions and religious work in the United States. In contrast, he said, each of the estimated 4,000 Saudi students studying here receives about $40,000 a year, a total of $160 million a year.

"The notion that we can send money here and not account for it is preposterous," the official said. "We are not a banana republic."

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