MI5 'starved of funds' in run-up to July 7 attacks

The security services were alerted to the plot's ringleader nine times before he and three others blew themselves up in London, according to a new report. But the leads were not followed up. Mark Hughes explains why

MI5 had such limited resources in the run-up to the July 7 terror attacks on London that it was only able to properly track less than 1 per cent of its suspects, an official report concluded yesterday.

The document published by the Intelligence and Security Committee (ISC), which monitors the security services on behalf of Parliament, revealed that despite the raised terrorism threat in the wake of September 11, MI5's funding had barely increased in the three years before the attacks on London's transport system in 2005. This left the agency "playing catch up, moving resources from one plot to the next" and with leads it could only follow up "when it had time". The report also points out that, since the July 7 bombings, MI5's funding has more than doubled.

The lack of funding was one of several revelations in the report, which concluded that the security services could have done nothing to prevent the attacks. This is despite the fact that the police and MI5 had come into contact with two of the bombers on a number of occasions before the 2005 atrocities, which killed 52 people and remain the biggest terror attacks ever carried out on British soil.

The ringleader of the plot, Mohammad Sidique Khan, had come to the attention of the police and MI5 at least nine times. He and fellow bomber Shehzad Tanweer were observed meeting Omar Khayam, now a convicted terrorist, then the object of an MI5 terror investigation, three times. They were dismissed as "small-time fraudsters".

The report says: "MI5 had seen two of the July 7 bombers and it is therefore frustrating to think how close they could have been to preventing the attacks." But the committee said that it is only with the benefit of hindsight that the attacks could have been prevented, adding: "Having taken everything into account, and having looked at all the evidence in considerable detail, we cannot criticise the judgements made by MI5 and the police based on the information they had and their priorities at the time." They were, the report said, "understandable and reasonable".

The document also deals with the suggestion that another terrorist was involved in the attacks but never caught. It says: "There remains no specific confirmed intelligence that there was a fifth bomber or a 'mastermind' directly involved in the attacks. The agencies do however assess (i.e. they do not know for certain, but judge it is likely) that the bombers were directed in some way by elements of al-Qa'ida based overseas."

The findings will leave the Government open to allegations of a whitewash, and calls for a public inquiry into the attacks intensified immediately after the report's publication. But the chairman of the ISC, Kim Howells, countered: "There will inevitably be those who do not like what we have written, who will criticise the report because it does not say what they want it to say, but we cannot alter the facts to suit the story."

The report, titled Could 7/7 Have Been Prevented?, is the second such review into the terror attacks and includes what it describes as an "unprecedented level of operational detail". It focuses on MI5 intelligence gleaned from an investigation called Operation Crevice, which took place in 2003 and 2004 and ultimately thwarted a fertiliser bomb plot in South-east England.

Omar Khayam was one of the key suspects in that operation and, following his trial, it emerged that he had been in contact with two of the July 7 bombers. The report confirms that, while under MI5 surveillance in July and August 2003, Khayam made contact with Khan by mobile phone. MI5 officers discovered that Khayam called the number for an extremist bookshop in Leeds registered to a "Siddique Khan".

The following year Khayam met with two unidentified men, codenamed UDM D and UDM E. He saw them twice – at a service station in February 2004 and again in his flat the following month, where they discussed fraud.

After the first meeting, on 2 February, the UDMs were followed by the security services back to addresses in Yorkshire, a process known as "housing" – establishing an address should further inquiries be necessary. MI5 also ran checks on the car the men travelled in, a Honda Civic, and found it was registered to a "Sidique Khan" – a name with a slightly different spelling than that registered to the mobile phone.

Despite admitting that they could have "easily" identified the unknown men, MI5 chose not to do so because they were not thought to be involved in Khayam's terror plot. It later transpired that these men were Sidique Khan and Tanweer.

The report said: "There was no intelligence to show whether the UDMs were suspicious or innocent until the final meeting, when they were heard discussing financial fraud. This was sufficient for MI5 to run routine checks and exchange information on them with West Yorkshire Police and the Metropolitan Police. However, given that they were not discussing attack planning and did not pose a threat to life, they were not made priority targets.

"MI5 did not, therefore, verify the details they had on the men or open 'personal files' for them. There was nothing, at the time, to suggest that MI5 should divert resources away from investigations of known terrorists in order to investigate someone whom they believed was a minor criminal." Instead they were made "desirable" targets but never pursued.

The report said that to vigorously pursue every such target would be unfeasible given that there are more than 2,000 people under suspicion in Britain. The report's authors also pointed out that MI5 had foiled 12 terror plots targeting British sites, which may have gone ahead had the security service been forced to divert their resources to other lower-priority targets.

It ends with the warning: "The attacks... demonstrate there will always be gaps in intelligence coverage. It is an uncomfortable truth that, at some time in the future, without any prior warning, it is very possible that the UK will be the subject of another terrorist attack."

The conspiracy theories... and the truth

Myth 1: A fax sent from MI5 to West Yorkshire Police with information about Mohammed Siddique Khan was lost or simply never replied to.

Fact: No such fax existed. The security services do not use fax machines.

Myth 2: A police/MI5/Transport for London training exercise took place on the morning on 7 July 2005, to train for bomb attacks on the Tube.

Fact: No such event was held by any of these bodies on the day itself, but a police exercise, in which the scenario was bomb attacks on tube stations, did take place on 1 and 2 July 2005. The Committee plays down any conspiracy theory and says this is merely "an interesting coincidence".

Myth 3: Mohammed Siddique Khan was on an FBI "no fly list".

Fact: He was not. The man reported to be on the FBI no fly list was Mohammed Ajmal Khan. It was a case of mistaken identity but widely reported after it appeared in a book called The One Percent Doctrine by Ron Suskind.

Myth 4: Mohammed Siddique Khan's car was bugged before the terror attacks.

Fact: It was not. A tracking device was placed there on 11 July 2005, when he was already dead. When this was learned on 12 July, the car was seized by the police.

Myth 5: CCTV footage of the bombers at Luton is not genuine.

Fact: It had been said that the image looked doctored, with parts of a fence appearing in front of one of the bombers, rather than behind him, but the report shows other images in the sequence which appear to prove it is genuine.