Bin Laden suspect loses fight for benefits

Osama bin Laden's "key contact" in Britain lost a legal battle yesterday to restore income support that was denied him following the terrorist attacks on New York, but the ruling left open a loophole for him and his family to continue to receive state benefits.

Omar Mohammed Othman, better known in the UK as Abu Qatada, lost his demands for the £213.25-a-week income support after the High Court heard that police had seized £180,000 in a raid on his home.

The ruling by Mr Justice Collins means that Mr Othman will not be entitled to claim while he remains on a United Nations list of suspected terrorists but neither he, his pregnant wife nor his four children will be left destitute.

Rejecting his claim that Alistair Darling, the Secretary of State for Works and Pensions, had acted "irrationally" in suspending his benefits, the judge nevertheless said that "the law of humanity comes to the aid of the claimant and others who might be in the same situation". Therefore, if Mr Othman becomes ill, homeless or destitute, he will be entitled to benefits in kind from his local social services department.

It emerged during evidence that the discovered cash was in sterling, US dollars, Spanish pesetas and Deutschmarks – currencies that detectives believe may be significant, given that al-Qa'ida has known terror cells in Spain and Germany.

While the hearing was under way Mr Othman, 41, was not in court; he was appearing in a CNN interview in which he accused the West of "pillaging" the wealth of the Islamic world.

The Muslim cleric arrived in the UK on false papers in 1993 and was granted political asylum after being convicted in Jordan, in absentia, of terrorist offences that carry the death penalty.

As such, he is entitled to the same benefits as British subjects. However, the benefits were stopped in October after he was named as a terrorist suspect. Mr Othman was already being investigated by the police following the raid on his home in Acton, west London, in February.

His counsel, Stephen Knafler, told the court that his client had been wrongly deprived of his income support after the police raid.

As a result of losing income support, he also lost housing benefit and now faced homelessness and destitution. In an action supported by emergency legal aid expected to amount to about £15,000, Mr Othman claimed the £180,000 was not his. It had, he said, been saved to buy a meeting place for a prayer group.

Mr Knafler said the money could have had only two explanations; the one given by Mr Othman, or for use in international terrorism. However, he argued that Mr Darling's interpretation of EU regulations freezing the assets of suspected terrorists on the UN list – and halting their rights to benefits or to work – were "manifestly disproportionate".

Mr Justice Collins said the minister had acted within his powers in suspending payments while Mr Othman's right to state benefits was being investigated. But he added: "In my judgment, the law of humanity applies as much to European directives as it does to any other law which is applicable in this country."

The family should, he said, be entitled to payments under the 1948 National Assistance Act, which would provide him with the bare necessities of life and nothing more. Mr Othman has been receiving child benefit at the rate of £46.55 a week plus a single social services payment of £50 to support his children.

Since 11 September, he has done little to curry favour with moderate Muslims and the British population as a whole.

Judge Baltasar Garzon, the Spanish judge who applied for the extradition of the former Chilean dictator Augusto Pinochet, recently described Mr Othman as the "spiritual head of the mujahedin in Britain" during his own investigations into the bin Laden network.