---

The Saudi Connection
How billions in oil money spawned a global terror network
By David E. Kaplan

The CIA's Illicit Transactions Group isn't listed in any phone book. There are no entries for it on any news database or Internet site. The ITG is one of those tidy little Washington secrets, a group of unsung heroes whose job is to keep track of smugglers, terrorists, and money launderers. In late 1998, officials from the White House's National Security Council called on the ITG to help them answer a couple of questions: How much money did Osama bin Laden have, and how did he move it around? The queries had a certain urgency. A cadre of bin Laden's al Qaeda terrorists had just destroyed two of America's embassies in East Africa. The NSC was determined to find a way to break the organization's back. Working with the Illicit Transactions Group, the NSC formed a task force to look at al Qaeda's finances. For months, members scoured every piece of data the U.S. intelligence community had on al Qaeda's cash. The team soon realized that its most basic assumptions about the source of bin Laden's money--his personal fortune and businesses in Sudan--were wrong. Dead wrong. Al Qaeda, says William Wechsler, the task force director, was "a constant fundraising machine." And where did it raise most of those funds? The evidence was indisputable: Saudi Arabia.

America's longtime ally and the world's largest oil producer had somehow become, as a senior Treasury Department official put it, "the epicenter" of terrorist financing. This didn't come entirely as a surprise to intelligence specialists. But until the attacks of Sept. 11, 2001, U.S. officials did painfully little to confront the Saudis not only on financing terror but on backing fundamentalists and jihadists overseas. Over the past 25 years, the desert kingdom has been the single greatest force in spreading Islamic fundamentalism, while its huge, unregulated charities funneled hundreds of millions of dollars to jihad groups and al Qaeda cells around the world. Those findings are the result of a five-month investigation by U.S. News. The magazine's inquiry is based on a review of thousands of pages of court records, U.S. and foreign intelligence reports, and other documents....

... It didn't hurt that the Saudis had spread money around Washington by the millions. Vast sums from Saudi contracts have bought friends and influence here. In his recent book Sleeping With the Devil: How Washington Sold Our Soul for Saudi Crude, former CIA operative Bob Baer calls it "Washington's 401(k) Plan." "The Saudis put out the message," Baer wrote. "You play the game--keep your mouth shut about the kingdom--and we'll take care of you." The list of beneficiaries is impressive: former cabinet secretaries, ambassadors, and CIA station chiefs. Washington lobbyists, P.R. firms, and lawyers have also supped at the Saudi table, as have nonprofits from the Kennedy Center to presidential libraries. The high-flying Carlyle Group has made fortunes doing deals with the Saudis. Among Carlyle's top advisers have been former President George H.W. Bush; James Baker, his secretary of state; and Frank Carlucci, a former secretary of defense. If that wasn't enough, there was the staggering amount of Saudi investment in America--as much as $600 billion in U.S. banks and stock markets....