In Muridke, Pakistan, there is a toney boarding school set in a neatly trimmed green campus that includes a farm, swimming pool, and even a small hospital. Indian authorities believe this bucolic facility is also the headquarters for the terrorists who carried out the Mumbai attacks.

The school is officially an educational and charitable arm of Jamaat ud Dawa, or JUD, a radical Islamic group that is legal in Pakistan. The campus was originally constructed in 2005 by Lashkar-e-Taiba, the Islamic extremist group that American intelligence has tied to al-Qaeda, and that Pakistan outlawed in 2002 at the Americans’ behest. A senior CIA analyst told Whistleblower that Jamaat ud Dawa is only an alias for the banned LeT.

A CIA source says the Agency has known for two years that the school was “funded by the Saudis and protected by the Pakistanis.”

The same source says that the school is bankrolled by donations from Saudi Arabia, a disclosure that could complicate the U.S. relationship with one of its few allies in the region. The CIA has known for two years that the school—which teaches Wahhabism, the ultra-conservative strain of Islam practiced by the Saudi royal family--was “funded by the Saudis and protected by the Pakistanis.”

The Saudis have told American counterparts that it is difficult for them to stop the flow of money to JUD since the funds are channeled through charitable organizations on both ends: donations collected by Saudi charities or mosques are sent to JUD’s philanthropic arm in Pakistan. But U.S intelligence officials are skeptical. Although they concede the Saudis are too smart to directly fund the Pakistan militants, they also believe the Royal family could do much more to control the private donations that end up in the bank accounts of violent extremists.

Attempts to reach Saudi Arabian authorities for comment were unsuccessful. The embassy in Washington DC is closed for a week to observe the Muslim holiday of Eid el-Adha.

France's new intelligence agency, the Direction Centrale du Renseignement Intérieur (DCRI) has concluded that more than $1 billion in Palestinian public funds stolen by Yasser Arafat are now in French banks. According to an investigation the DCRI recently completed at the behest of the Minister of the Interior, nearly $300 million was transferred into France earlier this year from Switzerland’s Lombard Odier Bank.

The Palestinian Authority had previously tracked up to three billion that Arafat siphoned off to banking havens such as the Cayman Island and investments in a Tunisian cell phone firm and a Ramallah Coca-Cola plant.

U. S. intelligence sources long ago concluded that Israel knowingly allowed Arafat to enrich himself in the vain hope that he would use the illicit gains to buy off Islamic hardliners. Under the Oslo Accords, Israel agreed to collect sales tax on goods purchased by Palestinians and transfer that money to the Palestinian treasury. But instead, the CIA determined that much of that money was transferred directly to Arafat-controlled bank accounts, including some in Israel. Indeed, his primary account was at the Bank Leumi in downtown Tel Aviv.

It is little surprise that most of the cash has ended up in France, where Arafat’s 45-year old widow, Suha, has lived with their daughter, since 2000. Suha – who married Arafat in 1990 when she was only 28 -- lives in a sprawling villa on one of Paris’ s most exclusive streets, Rue Fauborg St. Honore, and also keeps a decadent private suite at the five-star Hotel Le Bristol. Although investigators are not sure how much of the money, if any, is controlled by Suha, she is famous for her massive shopping sprees, and her ostentatious lifestyle has often been condemned by Arafat critics and Islamic hardliners.

The Palestinian Authority is aware of the DCRI report and has demanded that the French government seize the funds and return them. But to the consternation of Palestinian Prime Minister, Mahmoud Abbas, President Nicholas Sarkozy has refused to take any action.

“We do not give any information on this topic,” said a spokesman for the French Ministry of the Interior.

Gerald Posner is the award-winning author of 10 best-selling books of investigative nonfiction ranging from political assassinations, to Nazi war criminals, to 9/11, to terrorism (www.posner.com). He also has written dozens of articles for national magazines and newspapers. He is a regular contributor to NBC, CNN, CBS, and MSNBC. Posner lives in Miami Beach with his wife, the author Trisha Posner.