Who Killed Daniel Pearl?

A year ago this week, Wall Street Journal reporter Daniel Pearl walked into a kidnap trap in Karachi, Pakistan's biggest and most chaotic city. After six days of captivity, he was murdered. In July, a Pakistani court convicted four men for their role in delivering Pearl to the kidnappers, who were waiting for him in a car outside Karachi's Metropole Hotel. Three were given life sentences. Ahmad Omar Saeed Sheikh, 29, a smooth-talking, British-educated Islamic militant who had served jail time in India for kidnapping Western tourists, received the death sentence for acting as the master planner of Pearl's abduction and killing.

Pakistani authorities plainly wanted—and delivered—a speedy resolution of the Pearl murder case, partly to please the Bush Administration, which viewed the affair as a test of President Pervez Musharraf's willingness to crack down on homegrown terrorists. But with the Pakistani government's rush to bring Saeed and his three co-defendants to trial and close the case, much has remained a mystery—including the identity of the man who actually wielded the knife that beheaded Pearl. However, TIME has learned that crucial fresh evidence is emerging from two Islamic militants whom Pakistani police and paramilitary rangers have been secretly holding in Karachi. Two people who took part in their interrogation tell TIME that one of the militants, Fazal Karim, has confessed to witnessing the murder.

Karim and the other detained suspect, Naeem Bukhari, haven't yet been charged with any crime. But Karim's account suggests that Saeed may have played a relatively minor role in the Pearl affair—and that the actual killers are still at large. While prosecutors say Saeed was the mastermind who grabbed Pearl, Karim denies that Saeed was in Karachi during the kidnapping. Karim, a former mujadedin fighter in Afghanistan, has told police that the man who actually drew the knife across Pearl's throat was Khalid Shaikh Mohammed, a top al-Qaeda terrorist. Mohammed, whom U.S. investigators say was a chief architect of the 9/11 attacks, is now believed to be hiding in Pakistan.

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Why was Daniel Pearl kidnapped? And why did his captors kill him? The Wall Street Journal, which last week published an investigation into the murder of its South Asia bureau chief, quotes Saeed telling investigators that "he was falling into my trap so easily, so I thought, 'I might as well do it.'" Saeed's aim, writes the Journal, was to "strike a blow against the U.S. and embarrass Pakistan's government."

Murdering Pearl on camera, however, may not have been part of the original plan, some investigators say. It was Pearl's bad luck, they believe, that during the week of his captivity, the television news featured images that would have infuriated his captors: shackled and blindfolded prisoners at Guantánamo Bay, and Israeli tanks smashing down Palestinian homes. Nor did it help Pearl that a Pakistani newspaper reported that he was Jewish. On top of that, the Pakistani authorities had just begun rounding up Islamic radicals across the country. "The international events were sufficient for any Islamic militant to become emotional," one investigator says. Pearl may also have enraged his jailers by trying to crawl out of a ventilator hole in the bathroom, the Journal writes.

Saeed denies any involvement in Pearl's kidnapping, even though authorities say logs of his phone calls and e-mails link him to the plotters. The most damning—and disputed—piece of evidence in Saeed's trial came from a taxi driver who dropped Pearl outside the Metropole Hotel where he was abducted. The cabbie testified that he saw Saeed sitting in the car that drove the reporter away. But during the trial, Saeed's defense lawyers argued that in the 7 p.m. darkness and from 15 meters away, it would have been impossible for the cabbie to distinguish one bearded Pakistani from another. "The taxi driver also happens to be a police constable," says Saeed's lawyer Abdul Waheed Katpar, who is appealing his defendant's conviction next month in the Supreme Court. "We think his superiors leaned on him to tailor his testimony." Police deny this allegation.

For several months Saeed and his co-defendants—who were accused of sending out ransom demands and photos of Pearl in captivity—were the police's only suspects. But in May, a suicide bomber rammed an explosives-laden car into a bus carrying French naval technicians who were hired to work on a Pakistani submarine. The blast killed 11 Frenchmen and three Pakistanis, and it galvanized the Pakistani government into a wider crackdown on militant groups in Karachi. Hundreds of people were arrested, including Karim and Bukhari. Under interrogation, they confessed to helping abduct Pearl, then led police to his body, which Karim said he had helped bury in a walled garden in the outskirts of Karachi. Karim was unrepentant about the American's death, telling his inquisitors "I would go out and do it again. He was a Jew, an American. I feel great to be a part of the revenge against America."

Karim and Bukhari were fellow travelers on the jihad circuit, having fought together in Kashmir and Afghanistan. Bukhari ran a boot camp for Kashmiri volunteers inside Afghanistan—a camp that intelligence sources say was used to train members of al-Qaeda. In his Kashmir activities, Bukhari was also known, and abetted, by Pakistani intelligence services—a connection that worries U.S. officials looking into Pearl's death.

Karim, at least, is spilling the goods, giving investigators a much clearer picture of what happened: Pearl's kidnapping was carried out by three teams, involving 12 Pakistanis and at least three Arabs. The first team, which Saeed belonged to, lured Pearl into the trap. The second team of Pakistanis abducted Pearl, guarded him and later buried him. According to Karim, the third team of Arabs called the shots. One warned Pearl's captors not to negotiate a ransom deal on the sly, and told them "Don't leave him alone."

Pearl was imprisoned in a small, cinder-block house surrounded by a garden that, in retrospect, was one of the first places in Karachi the police should have searched. The garden was owned by a local businessman, Saud Memon, who was a well-known jihadi with ties to al-Rasheed Trust. This charity was a major backer of the Taliban, and after the regime's collapse, police say, Memon used the garden hut to shelter Taliban and al-Qaeda fugitives. Karim told police that on the day of Pearl's killing, either Jan. 29 or Jan. 30, Karim's boss Memon escorted al-Qaeda's Mohammed along with the two other killers to Pearl's cell, their long blades and video camera at the ready. A warrant is out for Memon's arrest but he, like Mohammed, has now gone into hiding.

Karachi police working on the Pearl case notice a distinct cooling in their superiors' interest these days. For them, the affair is closed; Saeed will hang for the crime. If they pursue clues provided by self-confessed kidnappers Karim and Bukhari, the Supreme Court might conceivably overturn Saeed's conviction, and nobody wants that. Khawaja Naveed Ahmed, a lawyer for one of Saeed's co-defendants, says, "Everyone involved got promotions. And now, there is no attempt to arrest the remaining suspects."

Journalists aren't resting any easier, even though Pearl's convicted abductors are behind bars. In December, the Karachi bureau of the Associated Press news agency was contacted by an unknown militant group and promised—much in the way that Pearl had been—some "exclusive material." A.P.'s Pakistani reporter met with a go-between who blindfolded and drove him to Karachi's outskirts. There the car was met by an Arab who drew off the reporter's blindfold and swore at the go-between: "What is this? You promised me a foreign journalist!" Eventually, the Pakistani journalist was allowed to leave, and the Arab gave him his exclusive material—a blank CD. Pearl's death is a lesson to all journalists: it could happen again.