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Mumbai Case Offers Rare Picture of Ties Between Pakistan's Intelligence Service, Militants

Raising questions about Pakistan, its military and security forces.

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Update May 2, 2011:As the world now knows, Osama Bin Laden was found not in a cave but just a short walk [1] from the Pakistan's top military academy. That raises many questions [2] about Pakistan, its military and security services.

We have long reported on the security services’ seeming double-games. Last year, we detailed the Mumbai attacks [3], laying out the evidence that officers in Pakistan’s powerful intelligence service, the ISI, collaborated on the plot with the Lashkar-e-Taiba terrorist group [4].

Pakistan's powerful intelligence service has been accused for years of playing a "double game:" acting as a front-line U.S. ally in the fight against terror while supporting selected terrorist groups which serve Pakistani interests.

Now, for the first time, there is a detailed inside account of how that game is played. The U.S. investigation of the 2008 Mumbai attacks [3] has built a strong case that officers in Pakistan's Inter-Services Intelligence Directorate (ISI) collaborated with the Lashkar-e-Taiba terrorist group in the plot that killed 166 people, six of them Americans. U.S. and Indian investigators say their understanding of the ISI-Lashkar alliance is drawn from the confessions of David Coleman Headley, an American convicted of participating in the Mumbai plot, as well as documents, phone records and electronic eavesdropping.

Officials from both countries say they are persuaded that ISI officers recruited and trained Headley in spying techniques and gave him money and instructions to scout targets in Mumbai and elsewhere. Headley has told investigators that a Pakistani Navy frogman helped plan the maritime attack on Mumbai, according to a 119-page report recounting his interrogation this year by Indian authorities. The report, which was obtained by ProPublica, quotes Headley as saying his Pakistani intelligence handler took part in a discussion about a subsequent Lashkar plot to attack a Danish newspaper -- information that Pakistan did not share with Danish authorities.

In essence, U.S. and Indian officials say, Headley was more than a terrorist: He served as a Pakistani spy.

During the period that ISI officers allegedly helped Lashkar plan to kill Americans and Jews in Mumbai, the intelligence service was working closely with the CIA and U.S. military in counter-terrorism efforts and Pakistani President Asif Ali Zardari was pledging his support for the U.S. campaign against militants in Pakistan and Afghanistan.

Pakistani officials deny any link to Lashkar and point out that hundreds of ISI officers have died in clashes with militants. They accuse India of politically motivated distortion in the report on Headley's interrogation.

"It is a stereotype, a Pakistan-specific version of an Indian interrogation," said a Pakistani official who requested anonymity because of the sensitive topic. "The Indian version is totally distorted and fabricated as there was no involvement of the ISI whatsoever. Nor did any serving official interact with Headley or any of the perpetrators."

But U.S. investigators see much of Headley's account as credible, U.S. officials said. The investigators believe his main handler, a man identified only as Major Iqbal, was a serving member of ISI and one of several Pakistani intelligence officers who had contact with Headley, according to U.S. officials.

The Obama administration has expressed frustration with Pakistan's failure to bring to justice the suspected masterminds of Mumbai and to rein in Lashkar, the ISI's longtime proxy army against India. Recent intelligence shows Lashkar remains intent on striking the West, according to a U.S. official who requested anonymity.

Tensions between Washington and Islamabad worsened earlier this month when the CIA was forced to abruptly withdraw its station chief from Pakistan after his identity was made public in a lawsuit there. U.S. government officials suspect that the ISI leaked the station chief's name to Pakistani lawyers suing the CIA for deaths in drone missile strikes, the U.S. official told ProPublica. The official said the move may have been "tit-for-tat" because of a recent civil lawsuit filed in New York by relatives of the victims of the Mumbai attacks naming the ISI and its chiefs as plaintiffs along with Lashkar.

The ISI plays a dominant role in Pakistan's fractured government. Most experts see its long-standing alliance with militant groups as a mix of geo-political strategy -- extremists are a useful weapon against India -- and anti-Western ideology. Headley's story of his high-level dealings with spies and militants alike opens a door into a secretive underworld, according to officials and experts.

"I don't know of any other cases in which ISI has used and worked with Americans," said Charles Faddis, a former CIA counter-terror chief who worked in South Asia. "Having a guy like this would be great for LeT and ISI. The Indians are working off a profile of what they think enemy operatives look like. This guy does not fit that profile. He can walk through the screen without being seen."

When he spoke to Indian investigators in June, Headley repeated much of the account he had given U.S. investigators before pleading guilty in March to conducting reconnaissance for the Mumbai and Denmark plots, U.S. officials say. Since his arrest in late 2009, the FBI and Indian counterparts have spent more than a year checking his confessions against other evidence: witness testimony, phone and e-mail intercepts, travel and credit card records, data stored in his computer.

"Most of the Headley statement is consistent with what we know about the ISI and its operations," said an Indian counter-terrorism official who requested anonymity. "And it's consistent with what he told the FBI and what they told us. A lot has been cross-referenced to travel, communications, other evidence."

Aspects of the Indian report of the Headley interrogation have been previously disclosed, but its significance in detailing the ISI's interaction with Lashkar has not been fully described. This article is based on that document, U.S. court papers and interviews with Western and South Asian investigators, intelligence officials and experts.

Headley's revelations have led to differing interpretations. Indian leaders and some Western experts say his account reinforces accusations that the ISI plays an active role in terrorist operations.

"For the first time you have an American talking about this agency not just being aware of, but involved in, a terrorist plot," said Sajjan Gohel of the Asia-Pacific Foundation, a security consulting firm based in London. "What have the last nine years since 9/11 been about? And all the money from the U.S. taxpayers to fund and stabilize Pakistan? Is that money being used for terrorism?"

On the other hand, U.S. counter-terrorism officials do not see evidence that ISI chiefs made an "institutional, top-down decision" to attack Mumbai, the U.S. official said. Some feel that Headley's nuanced, sometimes ambiguous narrative tends to exonerate the top spymasters. For example: Headley told investigators that the ISI's director general was apparently caught off-guard by the carnage in Mumbai, the Indian report says.

"We should not assume that simply because the ISI policy is to sustain Lashkar that the leadership is aware of every detail in terms of the group's operations," said Stephen Tankel, author of the forthcoming book "Storming the World Stage: The Story of Lashkar-e-Taiba." "The ISI policy is not to allow Lashkar to cross certain red lines, but sometimes the interpretation by ISI handlers of what constitutes an acceptable operation is different than that of the leadership."

Between June 3 and June 9, investigators of India's National Investigation Agency questioned Headley for 34 hours in Chicago in the presence of U.S. prosecutors, FBI agents and his lawyers, the report says. He cooperated as part of a plea deal enabling him to avoid the death penalty. The Indian interrogation report offers Headley's story in his own words: the wild odyssey of a Pakistani-American businessman-turned-militant who was also an informant of the Drug Enforcement Administration.

At each step along the way, the ISI emerges as a central player.

Headley begins the account with his trip to Lahore in 2000 to visit his family home. While there, he befriended Lashkar's spiritual leader, Hafiz Saeed, who draws tens of thousands of followers to rallies.

Headley, a former heroin dealer, was on U.S. federal probation and working as a DEA informant, according to U.S. officials.

Over the next several years, Headley embraced the cleric's ideology. Between 2002 -- when Pakistan officially outlawed Lashkar -- and 2005, he did five stints at Lashkar terror camps where officers of the ISI and the Pakistani army helped provide arms, screening and training, according to the report and Western investigators. Lashkar assigned him to work with a militant chief named Sajid Mir, also known as Sajid Majid, who allegedly became a lead plotter of the Mumbai attacks. Western investigators say that Mir had close ties to the ISI and may be a former military or intelligence officer.

Throughout this period, Headley told interrogators, he saw Lashkar maintain an almost-symbiotic relationship with the ISI. The spy agency has "control over the most important operatives" of Lashkar and every chief "is handled by some ISI official," he said, according to the Indian report. An ISI brigadier general served as handler for Zaki-ur-Rehmane Lakhvi, Lashkar's military chief, who also "is close to the [Director General] of ISI," he said.

The ISI funds Lashkar and shields Saeed, the spiritual leader, from interference, Headley said.

"He is very close to ISI," Headley said of Saeed. "He is well protected."

The description conforms to what is known by foreign intelligence agencies, officials and experts said. Lashkar was born as a guerrilla force fighting against India's control of the disputed Kashmir region. In exchange for funding and direction from the ISI, the militant group has steadfastly avoided attacking the Pakistani state in contrast to al Qaeda, its longtime ally, and other groups. The ISI retains alliances to selected militant networks both because of ideological sympathy and a strategic imperative to fight Indian influence in the region, U.S. officials say.

Critics see those ties as a key source of violence and instability in the region. In a blunt speech this month in Washington, former Afghan spy chief Amrullah Saleh accused Pakistan of supporting Lashkar and also declared that the headquarters of the Taliban "are in Pakistani intelligence's basements."

Pakistani officials deny such allegations.

Headley began a direct relationship with ISI officers in January 2006 after Pakistani authorities briefly detained him for trying to smuggle arms into India, according to his account. An ISI officer named Major Samir Ali interviewed the American, then referred him to a Major Iqbal, who became his main handler in Lahore. Major Iqbal, described as fat, deep-voiced and in his mid-thirties, introduced Headley to a man identified as Lieutenant Colonel Shah, who promised Headley financial support for terrorist operations against India.

At subsequent meetings in safe houses, Major Iqbal gave Headley secret documents on India. He assigned a non-commissioned officer to give the American standard intelligence training. Headley learned techniques for detecting surveillance, developing sources and other skills, then practiced with the lower-ranking officer on the streets of Lahore. The specialized training lasted several months and continued intermittently afterward as Major Iqbal taught Headley how to use cameras and other devices for missions, the report says.

"I became close to Major Iqbal," Headley told interrogators. "The training given by this NCO under the guidance of Major Iqbal was much more scientific and effective than the trainings I did in the LeT camps."

Phone and e-mail evidence have corroborated Headley's contact with Major Iqbal and other suspected ISI officers, U.S. and Indian officials say. Major Iqbal has been detected directing intelligence and terror operations in other cases, officials say.

Because Lashkar keeps the spy agency informed about activities of its foreign militants, the arrest of Headley near the Pakistani border may have been part of a plan to recruit a promising American operative, the Indian counter-terror official said.

"I have come across previous cases of Lashkar recruits trained by ISI separate from the camp training," the Indian official said. "There was a guy from the south of India who underwent similar training. He was an attractive recruit because he was very articulate. He had connections to several militant groups and knew two or three languages."

Pakistani officials say they have not been able to identify Major Iqbal or confirm any involvement of military officers.

"It's possible people impersonate the ISI or the army," the Pakistani official said. "Uniforms have been stolen in the past for this kind of thing."

Headley said Major Iqbal gave him $25,000 to set up a front company in Mumbai as a cover while conducting reconnaissance for the attacks. Headley spent months scouting the Taj Mahal hotel and other targets for Mir and Major Iqbal, who also sent him on separate missions to gather intelligence on an atomic research center and military sites around India. Major Iqbal called Headley from a phone number with a 646 area code (one used in the New York area), the report says. This could have been a technique to conceal the origin of the calls in Pakistan and avoid eavesdropping by American and Indian intelligence agencies, experts say.

Headley told investigators that Major Iqbal contributed advice about tactical issues to the Mumbai plot: escape routes for the gunmen, setting up a safe house, hijacking an Indian vessel at sea. Headley said the major approved of Mir's decision to attack Western targets such as the Chabad House Jewish center directed by an American rabbi.

"He was very happy to know that Chabad House had been chosen as a target," Headley said.

The rabbi and his pregnant wife were killed by gunmen during the Mumbai attacks.

Headley reported separately to Iqbal and Mir, his Lashkar handler, but the two handlers coordinated with each other, the report said.

"The whole thing feels like ISI is trying to maintain plausible deniability," Faddis said, using the intelligence term for operating through an intermediary who can be disavowed. "They are running in parallel with LeT and clearly leveraging sources for their own purposes, but they are still trying to avoid being directly tied to the attack planning, most of the time."

Indian investigators say Headley's confession portrays Iqbal as a mastermind of the attacks. U.S. investigators analyze his account differently, attributing a more limited support role to the ISI officer.

In the interrogation, Headley implicated other Pakistani military men. He said a Pakistani Navy frogman helped plan the portion of the assault that involved hijacking an Indian vessel at sea, according to the report. Headley described attending a two-day meeting of plotters in Muzzafarabad in 2008 at which the guest of honor was the crew-cut, clean-shaven frogman named Abdur Rehman. He gave the Lashkar chiefs technical advice, the report says.

"They had discussed various landing options along the coast of Mumbai," Headley said. "The sea chart brought by the frogman was discussed...The frogman told them that the sea became rough after the month of June...[He] told me to check the position of the naval vessels on the Indian side so as to avoid a gunfight."

ISI officers supplied a boat for a failed first attempt to send the gunmen to Mumbai and intervened when the American's chaotic personal life got him in trouble just two months before the attack, the report says.

Headley had married a Moroccan medical student in Lahore in 2007, though he already had a Pakistani wife and a third wife in New York. The Moroccan wife quarreled with him and visited the U.S. embassy in early 2008 to warn officials that she thought her husband was involved in terrorism, according to U.S. officials.

In September, the wife also complained about Headley to "senior police officials" in Lahore, the Indian report says. Headley said Pakistani police jailed him for eight days; his account does not specify the charges. Headley's Pakistani father-in-law put up bail and "Major Iqbal also helped me [in] this case," Headley said.

The incident, which could not be independently confirmed, joins a list of a half-a-dozen missed warnings from Headley's wives and associates dating back to 2001.

The Pakistani official denied the story. Noting that Headley had worked for the DEA, he blamed U.S. officials for failing to tell Pakistan about intelligence that was shared with India in 2008 warning about a possible attack on Mumbai.

"He was not arrested in Lahore in September 2008 as he claims," the Pakistani official said. "The U.S. had intelligence reports about this plot but they were not shown to Pakistan. Perhaps with Pakistan alerted, the plots could have been avoided."

Headley said the Mumbai plot caused -- and resulted from -- conflict in the Lashkar-ISI partnership. Disillusioned militants demanding a bigger role in fighting in Afghanistan were defecting to al Qaeda and the Taliban, while chiefs of Lashkar and the ISI tried to keep the main focus on Kashmir, he said.

In response to the dangerous internal rifts, Lashkar decided on a spectacular al Qaeda-style strike on Western targets in Mumbai, and the ISI approved the shift in tactics, Headley explained.

"The ISI I believe had no ambiguity of understanding the necessity to strike India [and]... shifting and minimizing the theater of violence from the domestic soil of Pakistan," he said.

The analysis rings true, according to officials and experts.

"Lashkar's senior leaders are sometimes pulled between adherence to the ISI and their dedication to pan-Islamist jihad," Tankel said. "Meanwhile, the ISI is trying to pressure the group enough to keep it in line and not so much that it fragments. That becomes more difficult as LeT integrates further with other outfits and a segment of its members agitate for breaking free of ISI control."

Three months after the Mumbai attacks in November 2008, the ISI arrested Lakhvi, the Lashkar military chief, and six other militants. In a potentially significant revelation, Headley said Gen. Ahmed Suja Pasha, the director general of the ISI, went to see Lakhvi in custody, according to the report.

"Pasha had visited him to understand the Mumbai attack conspiracy," the report quotes Headley as saying, without further elaboration.

Pakistani officials deny that the spymaster made the jailhouse visit. U.S. and Indian officials and experts are more willing to believe the story.

Headley's language suggests that Pasha, who had become director only two months before Mumbai, was surprised by the attack or at least its dimensions. This reinforces the U.S. view that top ISI brass were not involved.

Once again, Indian officials disagree. They believe Pasha visited the jailed Lashkar chief to ensure his silence and obedience.

"I think Pasha was aware of the plot beforehand, or he is not chief of the ISI," the Indian counter-terror official said.

Headley's testimony that Lashkar bosses have high-ranking ISI handlers, if accurate, suggests that information about the plot must have circulated among senior ranks of the spy agency. Key questions center on how much ISI liaison officers to Lashkar -- in addition to Major Iqbal -- and others in the spy agency knew about the Mumbai plot, U.S. investigators say.

ISI officers certainly knew of Lashkar's increasing determination to take its terror campaign into the West, Headley said. The report describes a crucial meeting in November 2008. After almost two years maintaining a careful distance from each other, Headley's handlers from the ISI and Lashkar paid him a joint visit in Lahore, the report says.

"This is the first time Major Iqbal and Sajid came together to my home," he said. "We discussed about the Denmark project."

The project was a plot to attack a Danish newspaper that had published caricatures of the Prophet Mohamed. Mir directed and funded Headley's subsequent reconnaissance on the newspaper's offices in Denmark, according to the report and U.S. court papers. But U.S. officials have not previously mentioned Major Iqbal's involvement in the high-stakes meeting to launch an attack in the heart of Europe.

"The presence of Iqbal at a meeting about the Denmark plot is pretty seismic," Gohel said. "They take it to the next phase. Either the hierarchy was aware or there was no accountability."

Experts said Iqbal's visit alongside Mir sent a message of trust to Headley. But the extent to which the major approved of the Danish plot, and the degree to which he was acting on his own, remain unclear.

"I think this was a particularly sensitive discussion and somebody above Iqbal's pay-grade told him to sit in and be present for the conversation between Headley and Mir," Faddis said.

Major Iqbal soon cut off contact with Headley because "the Mumbai investigation was getting bigger and hotter" and a suspect had revealed "ISI cooperation" in the plot, the report says. Lashkar shelved the Denmark project, so Headley continued plotting and scouting in Denmark and elsewhere in Europe under the direction of al Qaeda, U.S. court documents say.

But Headley did not sever all links to the ISI. He remained in touch with Ali, the major who had first recruited him, until June 2009, even during trips back to the United States, he said. The report does not say whether Major Ali knew Headley was conducting reconnaissance for al Qaeda and Lashkar until his arrest in October of 2009.

Pakistan charged Lakhvi and six other militants in the Mumbai attacks, but their trial has stalled. Pakistani officials say lack of evidence has prevented them from identifying or arresting Major Iqbal, Mir and other suspected masterminds. But they insist that they want to get to the bottom of Headley's explosive allegations.

"Pakistan is considering an interrogation of Headley, making a request to the U.S.," the Pakistani official said. "We are pursuing the matter. Pakistan is committed to not allowing its soil to be used for terrorist attacks on any other country."

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