Saudi Arabia went on the diplomatic offensive Tuesday, announcing new measures to deny funds to terror groups and disputing allegations it has done a poor job in keeping the money out of terrorists' hands. State and Treasury departments immediately issued statements complimenting the Arab kingdom's efforts and muting calls by the White House last week for the Saudis to do more. But Sen. Bob Graham, D-Fla., chairman of the Senate Intelligence Committee, said "the Bush administration and the Saudis have done a masterful job of turning attention away from ... the trail that leads to the possibility that a foreign government provided support to some of the Sept. 11 hijackers."

Sen. Richard Shelby, R-Ala., said the Saudis had cooperated "some, probably begrudgingly."

Shelby, the senior Republican member of the Senate committee, called on U.S. authorities to find out whether the royal family funded terrorism "either directly or indirectly."

The senators referred to an investigation by the FBI into reports that contributions by a Saudi princess who is the wife of Bandar bin Sultan, the Saudi ambassador to Washington, may have indirectly helped two of the men who participated in the Sept. 11, 2001, terror attacks in New York and Washington.

The unusual campaign by the generally withdrawn Saudi Kingdom was waged by Crown Prince Abdullah's foreign policy adviser, Adel al-Jubeir.

Speaking at the Saudi Embassy, he depicted Saudi Arabia as a victim of an outrageous campaign that "borders on hate."

He said Saudi Arabia was itself a target of Osama bin Laden, the Saudi expatriate and reputed mastermind of the Sept. 11 attacks, and was the first nation to freeze al-Qaida's assets, in 1994.

The fact that 15 of the 19 alleged hijackers were Saudis was an attempt by al-Qaida to give the attacks a Saudi face to try to drive a wedge between the United States and Saudi Arabia, al-Jubeir said.

"We believe that people have been misinformed about Saudi Arabia and what Saudi Arabia has done, or frankly that people have lied about what we have done or what we allegedly have not done," he said.

A report issued at the embassy said Saudi Arabia had set up a commission to oversee charitable groups and had barred transfer of assets from one bank to another in cash.

"We've pursued terrorists relentlessly and punished them harshly," al-Jubeir said.

More than 2,000 terror suspects have been questioned and more than 100 are in detention, the Saudi official said.
The report said three al-Qaida cells had been broken up and 33 accounts totaling more than DLRS. 5.5 million had been frozen.

In all the investigations, al-Jubeir said, "we have not found a direct link between charity groups and terrorism."

Last week, the Bush administration disclosed that working groups through the U.S. government were considering ways to tighten controls on the flow of money to terrorists worldwide.

Ari Fleischer, the White House spokesman, said, "The president believes that Saudi Arabia has been a good partner in the war against terrorism, but even a good partner like Saudi Arabia can do more."

The U.S. drive is being undertaken with great care. The administration wants support from Saudi Arabia if there is war with Iraq. Two senior U.S. officials said last month that the Saudis had agreed to help, provided use of its territory was limited.

Asked Tuesday whether Saudi Arabia would allow U.S. aircraft to fly over the country or use the Prince Sultan air base in the event of war with Iraq, al-Jubeir dismissed the question as "speculative."

Meanwhile, U.S. officials have said they are satisfied with Saudi efforts to halt the flow of money to terrorists.

"We are really very happy with the effort," Treasury Department spokeswoman Michele Davis said of Saudi oversight of donations to charitable groups.

Similarly, Secretary of State Colin Powell, speaking to reporters en route to Colombia, said his initial impression of the Saudi presentation was that "it was a serious effort to deal with our concerns."

"I have always said the Saudis have done a lot," Powell said. "They have done a number of things that were responsible. Could they do more? Yes. Now they have responded in what seems like a forthright way."

Powell said he was impression that the Saudi's seem to be moving toward more transparency, in effect telling the world: "These are the things that we are going to be doing."

On Capitol Hill, Rep. Eliot Engel, D-N.Y., urged President Bush and the administration to take a close look at the U.S. relationship with Saudi Arabia.

PHOTO CAPTION

FILE --An unidentified receptionist at a Saudi Islamic charity in Riyadh, Saudi Arabia, sits behind books made for visitors titled ' Needy Families Aid Project in Palestine' in this file photo dated Feb. 3, 2002. (AP Photo/Hasan Jamal