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Suspected hijack bankroller freed by India in '99

WASHINGTON (CNN) -- A man suspected of playing a key role in bankrolling the September 11 terrorist attacks in the United States was released from prison in India less than two years ago after hijackers of an Indian Airlines flight demanded his freedom, a senior-level U.S. government source told CNN.

This source said U.S. investigators now believe Sheik Syed, using the alias Mustafa Muhammad Ahmad, sent more than $100,000 from Pakistan to Mohammed Atta, the suspected hijacking ringleader who piloted one of the jetliners into the World Trade Center.

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Investigators said Atta then distributed the funds to conspirators in Florida in the weeks before the deadliest act 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 Syed in the United Arab Emirates in the days before September 11.

Syed also is described as a key figure in the funding operation of al Qaeda, the network headed by suspected terrorist mastermind Osama bin Laden.

But Syed would still be in prison were it not for the December 1999 hijacking of Indian Airlines Flight 814 -- an ordeal strikingly similar to the four hijackings carried out on September 11.

The plane, with 178 passengers on board, was en route from Katmandu, Nepal, to New Delhi, India, when terrorists used knives to take control of the aircraft, slitting the throat of one passenger to force the pilots to open the cockpit door.

For eight days, the passengers and crew were held hostage in a terrifying journey that finally ended up in Kandahar, Afghanistan, when the Indian government agreed to release three Islamic militants held in Indian prisons.

One of those men was Syed, widely recognized as the leader of an al-Qaeda-affiliated Islamic militant group known as Harkat-ul-Muhahedin, which is fighting for independence for Kashmir, a disputed region between India and Pakistan.

Because investigators have now determined that Syed and Mustafa Muhammad Ahmad are the same person, it provides another key link to bin Laden as the mastermind of the overall plot. Investigators have said at least three of the 19 suspected hijackers were tied to al Qaeda.

Syed was educated at the London School of Economics and has experience in international money transfers. Indian intelligence officials said the last time they spotted him was six months ago at a bookstore in Islamabad, Pakistan.

"He is also linked to the financial network feeding bin Laden's assets, so therefore he's quite an important person," said Magnus Ranstorp, a terrorism expert. "He's quite an influential person because he transfers money between various operatives, and he's a node between al Qaeda and foot soldiers on the ground."

-- CNN Correspondents Kelli Arena and Mike Boettcher contributed to this report.