Trea­sury offi­cial expresses frus­tra­tions with the administration’s efforts to force action by the king­dom. A Sen­ate panel orders a review.

by Josh Meyer

LOS ANGELES TIMES

WASHINGTON — Saudi Ara­bia remains the world’s lead­ing source of money for Al Qaeda and other extrem­ist net­works and has failed to take key steps requested by U.S. offi­cials to stem the flow, the Bush administration’s top finan­cial counter-terrorism offi­cial said Tuesday.

Stu­art A. Levey, a Trea­sury under­sec­re­tary, told a Sen­ate com­mit­tee that the Saudi gov­ern­ment had not taken impor­tant steps to go after those who finance ter­ror­ist orga­ni­za­tions or to pre­vent wealthy donors from bankrolling extrem­ism through char­i­ta­ble con­tri­bu­tions, some­times unwittingly.

“Saudi Ara­bia today remains the loca­tion where more money is going to ter­ror­ism, to Sunni ter­ror groups and to the Tal­iban than any other place in the world,” Levey said under questioning.

U.S. offi­cials have pre­vi­ously iden­ti­fied Saudi Ara­bia as a major source of fund­ing for extrem­ism. But Levey’s com­ments were notable because, although reluc­tant to directly crit­i­cize a close U.S. ally, he acknowl­edged frus­tra­tion with admin­is­tra­tion efforts to per­suade the Saudis and oth­ers to act.

“We con­tinue to face sig­nif­i­cant chal­lenges as we move for­ward with these efforts, includ­ing fos­ter­ing and main­tain­ing the polit­i­cal will among other gov­ern­ments to take effec­tive and con­sis­tent action,” Levey said, later adding: “Our work is not nearly complete.”

Levey was the sole wit­ness before the Sen­ate Finance Com­mit­tee, which Tues­day ordered an inde­pen­dent review of the efforts to choke off financ­ing used by Al Qaeda and other extrem­ist groups.

Sen. Max Bau­cus (D-Mont.), the com­mit­tee chair­man, announced the review at the end of the hear­ing held to assess the money-tracking cam­paign by Treasury’s Office of Ter­ror­ism and Finan­cial Intel­li­gence, headed by Levey.

The Bush admin­is­tra­tion cre­ated the office in 2004 to spear­head efforts to dis­rupt the flow of money to extrem­ist causes, pri­mar­ily from wealthy donors in Saudi Ara­bia and else­where in the Per­sian Gulf.

How­ever, U.S. offi­cials and counter-terrorism experts have said that inter­na­tional sup­port for the effort has waned while ter­ror­ist groups have found ways around the finan­cial restric­tions. At the same time, there have been turf bat­tles among the 19 fed­eral agen­cies that work on the problem.

Sen­a­tors praised work done by Levey but expressed con­cerns about the over­all U.S. effort. The committee’s Demo­c­ra­tic and Repub­li­can lead­ers cited a Los Ange­les Times report last week detail­ing prob­lems under­min­ing the effort.

Sen. Charles E. Grass­ley of Iowa, the rank­ing Repub­li­can, said extrem­ist groups had adapted to chang­ing U.S. inves­tiga­tive meth­ods: “We are sim­ply not pre­pared right now to keep up with them and put them out of busi­ness once and for all.”

Levey said the cam­paign has suc­ceeded in dis­rupt­ing ter­ror­ist financ­ing by freez­ing sus­pi­cious assets and in gath­er­ing intel­li­gence that could be used to iden­tify extrem­ists and dis­rupt their activities.

But under ques­tion­ing by sen­a­tors, Levey also spoke of dif­fi­culty in get­ting Saudi Ara­bia to take the steps U.S. offi­cials con­sider necessary.

Levey said the Saudis had been aggres­sive in going after ter­ror­ist cells. But he said they had not lived up to promises to estab­lish the kind of finan­cial intel­li­gence unit needed to trace the money trails of ter­ror­ists. Another prob­lem is that the Saudi gov­ern­ment has not set up a char­ity over­sight com­mis­sion to track whether dona­tions end up in the hands of extremists.

Levey said the Saudi gov­ern­ment has not moved to pub­licly hold account­able those within the king­dom who have been the sub­ject of enforce­ment actions by the U.S. and other authorities.

Sen. Ron Wyden (D-Ore.) said the Saudi fail­ures mean that Amer­i­cans who pay more than $100 a bar­rel for oil are in effect bankrolling extrem­ism because wealthy Saudis “back-door” their prof­its into char­i­ties that fund extrem­ist causes.

Nail Jubeir, press attache for the Saudi embassy in Wash­ing­ton, dis­missed those con­cerns, say­ing the Bush admin­is­tra­tion has repeat­edly praised Saudi Ara­bia for its efforts to com­bat terrorism.

“We have been very vig­i­lant in our cam­paign against ter­ror­ism financ­ing,” Jubeir said. “We have come a long way since 9/11 on this issue.”

Jubeir con­firmed that Saudi Ara­bia has not set up the finan­cial intel­li­gence unit or char­ity com­mis­sion, but said it was crack­ing down on the financiers of ter­ror­ism in other ways, such as mak­ing it ille­gal for any­one to send money out­side the king­dom “with­out going through offi­cial gov­ern­ment channels.”

Alleged financiers of ter­ror­ism iden­ti­fied by the United States are being inves­ti­gated, and their assets have been frozen, Jubeir said. “But unless we have evi­dence to try them . . . we don’t parade them in pub­lic,” he said. “What if it turns out they are innocent?”

At the hear­ing, sen­a­tors also expressed con­cern about dis­putes among U.S. agen­cies and other admin­is­tra­tive and inves­tiga­tive func­tions of Levey’s office. Bau­cus and Grass­ley asked that the Gov­ern­ment Account­abil­ity Office review its inter­nal effi­ciency and effec­tive­ness as well as its coop­er­a­tion with for­eign governments.

Levey said he had not seen the request from Bau­cus and Grass­ley, but added: “We wel­come any source of advice as to how we can improve.”