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Allegations in the war logs that Pakistan's Inter-Services Intelligence has been covertly supporting the Taliban kicked off a political storm tonight as the White House said the situation was "unacceptable" and described militant safe havens in Pakistan as "intolerable".
More than 180 intelligence files in the war logs, most of which cannot be confirmed, detail accusations that Pakistan's premier spy agency has been supplying, arming and training the insurgency since at least 2004.
On October 6, 2001, a senior-level U.S. government official, told CNN that U.S. investigators had discovered Ahmed Omar Saeed Sheikh (Sheik Syed), using the alias "Mustafa Muhammad Ahmad" had sent about $100,000 from the United Arab Emirates to Mohamed Atta. "Investigators said Atta then distributed the funds to conspirators in Florida in the weeks before the deadliest acts of terrorism on U.S. soil that destroyed the World Trade Center, heavily damaged the Pentagon and left thousands dead. In addition, sources have said Atta sent thousands of dollars—believed to be excess funds from the operation—back to Saeed in the United Arab Emirates in the days before September 11. CNN later confirmed this.
The 9/11 Commission's Final Report states that the source of the funds "remains unknown."
More than a month after the money transfer was discovered, the head of ISI, General Mahmud Ahmed resigned from his position. It was reported that the Federal Bureau of Investigation (FBI) was investigating the possibility that Gen. Ahmed ordered Saeed Sheikh to send the $100,000 to Atta 
The Wall Street Journal was one of the only Western news organizations to follow up on the story, citing the Times of India: "US authorities sought General Mahmud Ahmed's removal after confirming the fact that $100,000 was wired to WTC hijacker Mohamed Atta from Pakistan by Ahmad Umar Sheikh at the insistance of General Mahmud." Another Indian newspaper, the Daily Excelsior, quoting FBI sources, reported that the "FBI’s examination of the hard disk of the cellphone company Omar Sheikh had subscribed to led to the discovery of the "link" between him and the deposed chief of the Pakistani ISI, Mahmud Ahmed. And as the FBI investigators delved deep, reports surfaced with regard to the transfer of $100,000 to Mohamed Atta, one of the terrorists who flew a hijacked Boeing commercial airliner into the World Trade Center. General Mahmud Ahmed, the FBI investigators found, fully knew about the transfer of money to Atta."
U.S. investigators later said that this was a confusion with Mustafa al-Hawsawi, also known as Mustafa Muhammad Ahmad, who is currently held in Guantanamo Bay.
The Pittsburgh Tribune notes that there "are many in Musharraf's government who believe that Saeed Sheikh's power comes not from the ISI, but from his connections with our own CIA."
Sheikh rose to prominence with the 2002 killing of Wall Street Journal reporter Daniel Pearl, who at the time was in Pakistan investigating connections between the ISI and Islamic militant groups. In Pakistan, Sheikh was sentenced to death for killing Pearl, however his complicity in the execution and the reasons behind it are in dispute.
Both al-Qaeda and the Taliban are CIA assets. The Taliban emerged from madrassas established by the Pakistani government along the Afghanistan border and funded by the U.S., Britain, and the Saudis. The creation of the Taliban was “actively encouraged by the ISI and the CIA,” according to Selig Harrison, an expert on U.S. relations with Asia, a fact affirmed by Republican Congressman Dana Rohrabacher.
“Between 1994 and 1996, the USA supported the Taliban politically through its allies Pakistan and Saudi Arabia, essentially because Washington viewed the Taliban as anti-Iranian, anti-Shia, and pro-Western. Between 1995 and 1997, US support was even more driven because of its backing for the Unocal [pipeline] project,” writes Ahmed Rashid, a long-time expert on Pakistan and Afghanistan.
LOS ANGELES: The CIA has paid millions of dollars to Pakistan's Inter-Services Intelligence (ISI) since 9/11, accounting for as much as one-third of the foreign spy agency's annual budget, says a media report.
The ISI also collected "tens of millions of dollars through a classified CIA programme", which pays for the capture or killing of wanted militants, the Los Angeles Times reported on Monday citing current and former US officials.
"His obsession with secrecy, both in others and maintaining his own, lends him the air of a conspiracy theorist. Is he one? "I believe in facts about conspiracies," he says, choosing his words slowly. "Any time people with power plan in secret, they are conducting a conspiracy. So there are conspiracies everywhere. There are also crazed conspiracy theories. It's important not to confuse these two. Generally, when there's enough facts about a conspiracy we simply call this news." What about 9/11? "I'm constantly annoyed that people are distracted by false conspiracies such as 9/11, when all around we provide evidence of real conspiracies, for war or mass financial fraud."
Around 8:00 a.m., on September 11, 2001, ISI Director Lt. Gen. Mahmood Ahmed is at a breakfast meeting at the Capitol with the chairmen of the House and Senate Intelligence Committees, Senator Bob Graham (D-FL) and Representative Porter Goss (R-FL), a 10-year veteran of the CIA’s clandestine operations wing. Also present at the meeting are Senator Jon Kyl (R-AZ) and the Pakistani ambassador to the US, Maleeha Lodhi, as well as other officials and aides. (Goss, Kyl, and Graham had just met with Pakistani President Pervez Mushrraf in Pakistan two weeks earlier (see August 28-30, 2001)). [Salon, 9/14/2001; Washington Post, 5/18/2002] Graham and Goss will later co-head the joint House-Senate investigation into the 9/11 attacks, which will focus on Saudi government involvement in the 9/11 attacks, but will say almost nothing about possible Pakistani government connections to al-Qaeda and the 9/11 attacks (see August 1-3, 2003 and December 11, 2002). [Washington Post, 7/11/2002] Note that Senator Graham should have been aware of a report made to his staff the previous month (see Early August 2001) that one of Mahmood’s subordinates had told a US undercover agent that the WTC would be destroyed. Some evidence suggests that Mahmood ordered that $100,000 be sent to hijacker Mohamed Atta (see October 7, 2001).
Pakistan's Demands - Graham will later say of the meeting: “We were talking about terrorism, specifically terrorism generated from Afghanistan.” The New York Times will report that bin Laden is specifically discussed. [Vero Beach Press Journal, 9/12/2001; Salon, 9/14/2001; New York Times, 6/3/2002] The US wants more support from Pakistan in its efforts to capture bin Laden. However, Mahmood says that unless the US lifts economic sanctions imposed on Pakistan and improves relations, Pakistan will not oppose the Taliban nor provide intelligence and military support to get bin Laden. He says, “If you need our help, you need to address our problems and lift US sanctions.” He also encourages the US to engage the Taliban diplomatically to get them to change, instead of isolating them. Pakistani journalist Ahmed Rashid will later comment, “It was absurd for Mahmood to insist now that the Americans engage with the Taliban, when [Pakistan’s] own influence over them was declining and al-Qaeda’s increasing.”
Meeting Interrupted by 9/11 Attacks - Zamir Akram, an accompanying Pakistani diplomat, leaves the room for a break. While outside, he sees a group of Congressional aides gathered around a television set. As Akram walks up to the TV, he sees the second plane crashing into the World Trade Center. He immediately runs back to the meeting to the tell the others. But even as he gets there, a congressional aide comes in to say that Capitol Hill is being evacuated. The aide says, “There is a plane headed this way.” Mahmood and the rest of the Pakistani delegation immediately leave and attempt to return to the Pakistani embassy. But they are stuck in traffic for three hours before they get there. [Rashid, 2008, pp. 26-27]