FBI's seizure of embassy bank records enrages Saudis

Washington 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 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 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.

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.

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.

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."

©Los Angeles Times-Washington Post News Service