Terror suspect Osama bin Laden sent through his brother-in-law Mohammed Jamal Khalifa $1 million to fund a separatist group in the southern Philippines in 1993.

Half the amount was sent through a key Abu Sayyaf member who was killed by the army the following year, a local paper said. The Abu Sayyaf member was identified as Abdul Asmad, a scholar at the Al Macdum University in Zamboanga, the Inquirer said.

The paper added that Asmad, designated as the Abu Sayyaf's foreign and liaison officer, often met with foreign nationals.

In 1992, the Abu Sayyaf had built camp Al Madinah in the mountains of Upper Kapayawan, just a few kilometres away from the last military checkpoint in Isabela, Basilan.

Everyone in Al Madinah followed the rules laid down by Abu Sayyaf founding leader, Abdurajak Janjalani. The women were fully clad, with only their eyes exposed, the Inquirer quoted a 20-year-old son of a former key leader of the Abu Sayyaf as saying.

Janjalani had just arrived from a four year scholarship in Libya where he received the highest honour ever achieved by a Filipino Muslim. After Libya, he made a side trip to Afghanistan where his ties with Bin Laden supposedly started.

In 1992, Khalifa visited the camp at least thrice in the company of Asmad. Khalifa saw in him "the determination, skills and intellectual capability to carry out whatever mission the Arab had in the Philippines," the Inquirer said.

Asmad even escorted Khalifa to the office of the late Gen. Job Mayo in Zamboanga and introduced him as an Arab investor. The two made frequent trips in and out of the country.

Later, Asmad made the local and foreign trips that Khalifa used to organise. Asmad was supposedly to receive $1 million for use in strengthening his group's military capability in 1993.

He was to receive the amount on behalf of the group in 1994. In December 1993, while working on the final stages of the fund transfer, Asmad met with another key figure, Ramsi Ahmed Yousef, the Inquirer said.

The two met at Mandaluying's Edsa Shangri-La Hotel along with two other Arab nationals, to arrange the last stage of the transfer of the $1 million fund to a personal account.

But in 1994, Asmad was arrested and killed in Zamboanga by police intelligence. The arresting police officer said in its report that Asmad had tried to snatch the former's gun. Asmad was shot at pointblank range.

A military intelligence unit, which was on the track of the supposed fund transfer, wanted Asmad alive.

The other urban cells of the international terrorists in the Philippines would have been discovered earlier if Asmad had not been killed, the Inquirer quoted the military intelligence unit's post-operation report.

The military unit was then on standby at the hotel where Asmad was arrested.

The $1 million fund, which was deposited in a local bank, is still intact, but there is no other signatory apart from Asmad, intelligence sources said.