The road to Riyadh
A stillborn FBI inquiry and a money trail from the Saudi Embassy to two of the 9/11 hijackers
On October 9, members of the special congressional committee investigating the 9/11 attacks met privately with a key FBI witness. The next day, panel members were to meet in open session with CIA Director George Tenet and FBI Director Robert Mueller. After the FBI agent finished testifying, the open meetings with Tenet and Mueller were summarily canceled. Several members were "appalled" at what informed sources described as the "explosive" testimony of Special Agent Steven Butler, who recently retired from the FBI after his final posting in the bureau's San Diego field office.
Government officials told U.S. News that Butler disclosed that he had been monitoring a flow of Saudi Arabian money that wound up in the hands of two of the 9/11 hijackers. The two men had rented a room from a man Butler had used as a confidential informant, the sources say. According to officials familiar with his account, Butler said that he had alerted his superiors about the money flows but the warning went nowhere. "Butler is claiming . . . that people [in the FBI] didn't follow up," says a congressional source. Adds another: "He saw a pattern, a trail, and he told his supervisors, but it ended there."
Roommates. In a conversation outside his home in the gated Rancho Penasquitos community in San Diego, Butler told U.S. News, "It's very sensitive stuff." Wearing a Buffalo Bills cap, Butler said, "I'd love to talk to you guys," but added that he couldn't without permission from the Justice Department.
Butler's testimony comes after disclosures that FBI executives failed to take action in response to memorandums by agency lawyers and agents in Minneapolis and Phoenix about suspicious activities involving young Muslim men enrolled in flight schools. One of the men, Zacarias Moussaoui, the so-called 20th hijacker, is awaiting trial on charges stemming from the attacks.
In his closed-door appearance on Capitol Hill, Butler described his dealings with a leader in San Diego's Muslim community, a 68-year-old man named Abdussattar Shaikh. In 2000, Shaikh rented a room in his house in a San Diego suburb, Lemon Grove, to Khalid Almihdhar and Nawaf Alhazmi. Almihdhar and Alhazmi helped hijack American Airlines Flight 77, which crashed into the Pentagon. Shaikh did not respond to a phone message.
After Butler testified, Eleanor Hill, the staff director for the 9/11 committee, detailed his statements in a memo to the Justice Department. Justice officials, saying Butler's testimony is classified, declined comment. FBI officials also declined comment, saying they are pursuing "all investigative leads . . . in a thorough and confidential manner."
FBI agents and CIA officers reconstructing the activities of the 19 hijackers were intrigued by two men, Osama Basnan and Omar al-Bayoumi, Saudi nationals who lived in the United States, despite having been charged with visa fraud. Investigators say Bayoumi helped Almihdhar and Alhazmi pay their rent and even threw them a party. According to Newsweek, Bayoumi also helped the two men open a bank account and called flight schools in Florida to arrange flying lessons for them.
Congress, the FBI, and the CIA are now trying to learn whether any of the money Bayoumi spent on behalf of Almihdhar and Alhazmi came from the Saudi Embassy in Washington. Newsweek reported that Basnan first requested financial help from the Saudi Embassy in 1998, saying he needed money to cover his wife's medical problems. Princess Haifa bint Faisal, the wife of the Saudi ambassador, Prince Bandar bin Sultan, wrote several cashier's checks to Basnan's wife. She endorsed some of them to Bayoumi's wife. Proceeds from the cashed checks, investigators believe, were used by Almihdhar and Alhazmi.
Basnan and Bayoumi have left the United States and could not be reached for comment. In an interview with a Saudi-owned, London-based newspaper, Basnan denied that his wife had passed money from Princess Haifa to Bayoumi's wife.
The disclosure of the Saudi money trail has further strained ties between Washington and Riyadh. Fifteen of the 19 hijackers were Saudi citizens, and Republicans and Democrats have criticized the royal family for underwriting a radical form of Islam that has been used by some adherents to countenance violence against the West. In an interview with the New York Times last week, Prince Bandar and Princess Haifa described themselves as committed to President Bush's war against terrorism and said they were "outraged" at suspicions that they would have knowingly supported anyone involved in terrorist activities.
Cash. Even before investigators began tracing the cashier's checks from Princess Haifa, government officials told U.S. News, FBI and treasury investigators had begun formal inquiries into the flow of funds through the Saudi Embassy in Washington. Bank accounts of the embassy and embassy personnel enjoy diplomatic immunity. But the government officials say investigators have taken a number of steps--not including electronic surveillance--to attempt to monitor money flows through the embassy. Of particular concern, several officials said, is cash that may have been transported under diplomatic seal from Riyadh to Washington.
Separately, U.S. government officials say, FBI and treasury investigators believe that as much as $100 million has flowed from Saudi Arabia to terrorist organizations in recent years. "We're talking about major-league businessmen who have ties to the royal family," says a senior treasury official. "Over the years, they've put funds into a lot of different mechanisms--business charities, moneymaking ventures--and routed them through offshore havens. They distance themselves from the money--it gets washed again and finally disbursed to the bad guys."
The escalating investigations come at a time when the Bush administration is receiving increasing criticism for "easing up" on the Saudis--because of concerns over both oil prices and the importance of Saudi bases if Bush authorizes an attack against Iraq. Administration officials bristle at such suggestions. "It's on the front burner," a senior official says, "at . . . the very highest levels."
With David E. Kaplan, Chitra Ragavan and Randy Dotinga
This story appears in the December 9, 2002 print edition of U.S. News & World Report.