Blaming the Saudis

A lawsuit that has strained relations between the U.S. and the Saudi royal family is about to strain them even further. Not long ago, 3,000 relatives of Sept. 11 victims filed a $1 trillion lawsuit against members of the Saudi royal family and others, alleging that they helped finance the 9/11 attacks. Sources tell TIME that 50 new defendants are about to be added to the list of 100 already named. Prime among them is likely to be Saudi Minister of the Interior Prince Naif. Another likely target is the Saudi American Bank (SAMBA), the kingdom's second largest financial institution, which is partly owned and managed by Citibank. The list will also include prominent Saudi charities, financial institutions and businessmen, notably Mohammed al-Amoudi, the multimillionaire owner of a lavish Addis Ababa hotel where Treasury Secretary Paul O'Neill and rock star Bono stayed this year while on their African tour. Al-Amoudi has repeatedly denied any links to terrorism.

What's driving the 9/11 families to expand the case, sources say, is new information coming from Europe, documenting a money trail from Saudi Arabia to the Hamburg, Germany, terrorist cell led by 9/11 ringleader Mohamed Atta. A royal family member told TIME the case is "baseless, offering false hope to victims' families by smearing honest Saudis."

That attitude is posing an especially tricky problem for the Bush Administration. Saudi officials are trying to get the U.S. government to intervene and dismiss or delay the case on national-security grounds. And senior figures in the State Department, sources tell TIME, are arguing that the litigation should be done away with before it impedes Saudi cooperation in a possible war against Iraq. But that view is not shared by everyone. Some Justice and Treasury Department officials see the lawsuit as a useful tool to pressure the Saudis into defunding al-Qaeda." The Saudis have offered piecemeal cooperation that has led to some successes," says a frustrated senior U.S. official. "Now it's time for an approach that produces greater results."

--By Adam Zagorin