Terror plots and conspiracy theories: the hunt for Rashid Rauf

The rugged and beautiful valley of Balakot, rolling down to the blue-green waters of the Kunhar river near the Kashmir border in Pakistan, used to be a popular tourist destination before the devastating earthquake of three years ago wreaked havoc.

Reconstruction has been slow but one development which was back in business fast, supposedly with money siphoned from millions of pounds of international aid, has been a training camp used by Islamist militants.

It is in this area that Rashid Rauf, the 27-year-old from Birmingham accused of being a key organiser of a notorious plot to blow ten airliners out of the sky was said to have been spotted in March this year – his first sighting since his amazing escape from Pakistani police three months previously. The so-called "liquid bomb" plot was one of the most audacious terrorist conspiracies to be uncovered and led to sweeping security measures at airports around the world. The trial ended with seven men convicted of charges in relation to the plot, with a computer studies student Abdulla Ahmed Ali identified as the ringleader in court. They all face a retrial on more serious charges but the man described by law agencies as the real "mastermind", Rashid Rauf, remains on the run as Britain's most wanted terrorist.

He is reported to have broken cover again a month later around the 25th and 26th April. Looking thin and pale, with his once sparse beard down to his chest, he was spotted in Bahawalpur, around 400 miles south of the Pakistani capital, Islamabad. If true this was a remarkably bold move, for this was the same town where he had been arrested by Pakistani police in August 2006 in connection with the airliner plot. He had also chosen to make his appearance at a meeting of the leadership of Jaish-e-Mohammed, a supposedly banned Muslim extremist group, which could have been raided by the country's security forces.

The Balakot camp, in the Manserah district, is run by Jaish-e-Mohammed, and has previous links with extremist UK Muslims, including Shahzad Tanweer, one of the 7/7 bombers. The reasons why Rauf, who is said to have been a conduit for al-Qa'ida in the "liquid bomb" plot, remains free to mix with a Jihadi group with continuing links to British Muslims is shrouded in the realpolitik of espionage and terrorism. It also raises questions about who are the real paymasters of the baker's delivery man from the Midlands who became such an important terrorist target.

Rauf first officially became a subject of police interest over the murder of his uncle Mohammed Saeed, stabbed to death on his way home from work in what was described as a frenzied attack, in Birmingham in 2002. Rashid, who had been working at a bakery in the Bordesley Green area of Birmingham, started by his father, Abdul Rauf, fled to Pakistan soon after his uncle's death and headed for Bahawalpur, a dusty backwater, where the extended family of his wife, the daughter of an imam, were based.

Among them was his brother-in-law, Maulana Masood Azhar who founded Jaish-e-Mohammed at the Binori mosque in Karachi. The terrorist group was outlawed by Pakistan's then ruler, General Pervez Musharraf, after pressure from the US following the 9/11 attack. In reality, like many other groups officially banned in Pakistan, Jaish continued to operate under other guises. It uses the Balakot camp, known as Harkat al-Mujaheddin, to supply fighters in Afghanistan, and carries out attacks in India and Pakistan, where it was responsible for the country's first sustained wave of suicide bombings.

Jaish-e-Mohammed was also suspected of attempting General Musharraf's assassination, which surprised analysts as it is said to have a close working relationship with elements within ISI, the Pakistani secret police. The group went on to forge links with a number of Islamist groups, including, say the Pakistani authorities, al-Qa'ida and its bombmakers, who are suspected of causing the devastating blast at the Marriot Hotel in Islamabad last weekend.

Rauf's radicalisation, according to those who knew him, had begun long before he went to Bahawalpur. There is believed to have been a political element to his uncle's murder and he was in contact with people from an extremist background. Rauf's father had helped set up Crescent Relief, a charity based at Ilford, in Essex, which raised and sent more than £100,000 to Pakistan following the earthquake of 2005. A significant portion of that was said to have been diverted to Islamic militants. There is, however, nothing to suggest that Mr Rauf senior, who stepped down as a director of the charity in 2003, knew about terrorists benefiting from donations.

The fugitive Rauf took the first name of Khalid while living in Bahawalpur, where he is said to have made contact with a senior al-Qa'ida operative, Abu Obadiah al-Masri, to plan the airliner attacks. The police then became aware of his identity. By that time British security agencies had uncovered the airliner plot and the Pakistani authorities were requested to track Rauf but not arrest him as it would have alerted the UK players in the illicit operation.

That is precisely what happened on 7 August 2006 before British investigators had gathered what they considered enough evidence to successfully prosecute the plotters. This was the prime reason given when the defendants, although convicted of other charges, were cleared of conspiracy to blow up the planes.

Peter Clarke, then the head of Counter Terrorism Command, said of Rauf's arrest: "This was not good news, we were at a critical point in building our case against them. If they got to hear that he had been arrested they might destroy evidence and scatter it to the four winds. More worrying still, if they were tipped off to the arrest they might panic and mount a desperate attack."

According to some sources within hours of Rauf's arrest someone connected with him had tried to contact the plotters in the UK asking them to launch the attacks as soon as possible. "The plotters received a very short message 'go now'," said Franco Frattini, the European Union's security commissioner, who was briefed by John Reid, then Home Secretary. "I was convinced by the British authorities this message exists." Why Rauf was arrested at that particular point is an issue of continuing controversy. The official Pakistani explanation was that there were fears that he may flee to Afghanistan. It is also said the Americans ordered his arrest because of concerns that the terrorists might slip through the net. There is another view that the arrest was ordered by the ISI to use Rauf to backs claims that the plot had originated in Afghanistan. This version of events was dismissed in the West as a desperate attempt to shift blame.

Britain had no extradition treaty with Pakistan, but the foreign minister said it might be willing to deport Rauf, who holds dual British and Pakistani nationality, if a request was made. In December 2006 a judge in Pakistan threw out terrorism charges against Rauf but he was remanded in custody, accused of possessing explosives and forged identity papers, regarded as holding charges while details were being sorted out for him to be sent back to the UK.

Rauf escaped in December 2007 while being taken back to his place of incarceration, Adiala prison, near Rawalpindi, after a court appearance in Islamabad. His jail record stated: "The accused is a dangerous person and involved in international activities. Therefore, he needs strict security. If any mishap happens while he is travelling, the in-charge police will be responsible." In the event his police escort, just two constables, allowed him to leave their van to travel in his uncle's car, stopped off for lunch at a branch of McDonald's and then allowed him to go into a mosque by himself for afternoon prayers.

Rauf was not seen again. The two constables, Mohammad Tufail and Nawabzada Khan, said they looked for him and were given a lift back to the police station by the uncle who then disappeared. An interim report into the escape concluded: "This is not a case of negligence but a case of criminal collusion."

Nine police officers were sacked over Rauf's escape. And that is where the matter appears to have ended. Al-Masri, the al-Qa'ida official Rauf had allegedly been working with, has, according to security sources, subsequently died of natural causes.

Few in the know in Pakistan accept that a bunch of provincial policemen were responsible for one of the most high profile prisoners in Pakistan, Rauf, fleeing with such ease. His lawyer, Hashmat Ali Habib, said in an interview: "You could call it a 'mysterious disappearance' if you like, but not an escape. The Pakistanis are simply not interested in handing him over to the British. They never have been, although it is not clear why not." Mr Habib says he is certain who was responsible, but like many in his country, he is afraid of publicly blaming the ISI for anything. One Pakistani official, who says he despairs of the Islamist "subversion" of his country, said: "It should not be difficult to understand why Rauf could not be sent to England... Can you imagine what kind of stuff Rauf may reveal under cross-examination in court in Britain?"

Previous experience has shown, however, that protection provided by a court does not necessarily lead to candour. At the 2006 trial of the group accused of plotting to blow up the Bluewater shopping centre and the Ministry of Sound nightclub one of the defendants, Omar Khayyam, 24, had given evidence at the Old Bailey that he was at a training camp in Pakistan where he had seen ISI officials giving lessons in bomb-making. Then, at the start of a day's proceedings, he said: "I just want to say that the ISI has had a word with my family in Pakistan regarding what I have been saying about them. I think they are worried I might end up revealing more about them and right now the priority for me has to be the safety of my family there. Much as I might want to go on and clarify matters I am going to stop. I am not going to discuss anything relating to the ISI any more."