Former Bin Laden friend denies terror ties

According to Khalifa, the Afghans were upset by bin Laden's training camp, called al-Masadah, The Lion's Den. The members of this camp went on to form the first Al Qaeda cell.

Khalifa says the Afghans pleaded with him to stop bin Laden's activities and he left Peshawar to talk to bin Laden. The two friends fought and fell out. "He refused to even listen to what I had to say," Khalifa recalls. "It was very unlike him. In the end he was prepared to lose me rather than back down."

Khalifa's case highlights the difficulties facing the US as it pursues the war on terror. If he is a pivotal Al Qaeda operative, why is he free in Saudi Arabia?

Much of the evidence against him is circumstantial, says Marc van der Hout, a San Francisco attorney who defended Khalifa during his imprisonment in the US in 1994-5. "My assessment at the time was that this was guilt by association in the basest form," he says.

But Gunaratna believes Khalifa's freedom points to failures in international law.

"If Khalifa was guilty of these offenses after Sept. 11, then today he would be in [the Guantánamo detention camp], but Khalifa was active in the '90s when the US did not aggressively pursue terror," he says. "If he entered the US today, he would be imprisoned for a long time."

Khalifa was among the first suspects to be arrested following Sept. 11. He was questioned in a Saudi jail for nearly three months before being released. The Saudi government, which has jailed around 100 suspected Al Qaeda members, stands by its decision to release Khalifa and has said he is "clean."

Indeed, there is no hint of the suspected terrorist at dinner on this mild Saudi Arabian night. Khalifa smiles often and jokes easily. He is charming, dressed in a white ankle-length shirt and skull-hugging white cap.

"I don't know what I did wrong," he says. "When I first heard these allegations I was shocked. Me? A threat? I went straight to the mirror to take a good look at myself."

Gunaratna agrees that Khalifa's charity work in the Philippines did have some legitimacy. He built schools, established healthcare clinics, and distributed food aid. Many residents of the southern Philippines, Christians as well as Muslims, remember Khalifa kindly.

The gray area lies in how much of Khalifa's charity money was diverted to terrorism. Khalifa says none: "I am not only sure, but challenging anyone to prove otherwise." Defectors from Abu Sayyaf claim they received up to 70 percent of the money.

Jamal Khashoggi, a Saudi columnist whose views are aired in the Western media, is a Khalifa supporter.

"I know Jamal very well and there is no way I believe he is involved [with Al Qaeda]," says Mr. Khashoggi.

Khalifa says he was horrified by the Sept. 11 attacks. "I am against Al Qaeda's activities and condemn it all," he says, adding that he is ready to offer insight into the way Islamic charities operate and the roots of Al Qaeda.

Khalifa says the charities are being unfairly targeted as funders of terror. "Maybe some people misuse funds in this way," he says. "I don't think so, because it's our obligation to meet our own financial needs [for jihad]."

The flipside, he says, is the potential threat from closing them down: "Those organizations are giving food and jobs to the needy. When you take the food from their mouth, they will ask, 'Who stopped this organization?' They will be told: America. No American will move safely after that."

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