U.S. officials were concerned that the Saudi ambassador to the Philippines might be engaged in “terrorism facilitation” because he intervened to get local authorities to free two suspected terror financiers, secret State Department communications posted by Wiki-Leaks reveal.

The cables also quote special representative Richard C. Holbrooke as saying the “chief source of Taliban financing” was private donations from individuals in Persian Gulf states, not drug trafficking.

The concerns about Saudi Arabia‘s ambassador in Manila, Muhammad Amin Waly, were raised by then-Homeland Security Department adviser Frances Fragos Townsend in a private meeting with Saudi Foreign Minister Prince Saud al-Faisal at his home in Jeddah on Feb. 6, 2007, according to one classified diplomatic cable.

Of particular concern was Mr. Waly‘s “intervention to get two members of IIRO out of prison,” the cable states, referring to the International Islamic Relief Organization, a Saudi-based charity that U.S. officials have said was set up by a brother-in-law of al Qaeda leader Osama bin Laden‘s.

In August 2006, the previous year, the Philippine and Indonesian branch offices of the IIRO, and one of its senior officials in the kingdom, were designated terrorist entities by the U.S. Treasury Department, which said they were bankrolling the al Qaeda network in Southeast Asia.

The cable gave no clue to the identity of the two IIRO members and did not explain what they were doing in prison.

But the Manila Times, citing a high-ranking Philippine intelligence official, said the men were Saudis who were arrested trying to enter the country at the airport after a tip from the U.S. government. The official said the Saudi government had requested that the men, whose arrests were never made public, be deported. The official added that Mr. Waly was “just doing his job as ambassador” in offering them consular services.

According to the cable, Prince Saud told Mrs. Townsend that Mr. “Waly had been investigated — and no evidence was found regarding his involvement” in terrorism finance. The prince added that “some of his actions may have involved bad judgment rather than intentional support for terrorism,” the cable notes, adding that he had asked for U.S. officials to share any evidence they might have.

“He was trying to help out some people,” one Saudi official told The Washington Times on the condition of anonymity. “He didn’t know of their connection” to alleged terror financing.

Mrs. Townsend did not return phone or e-mail messages requesting comment.

The cable records Prince Saud as saying that Mr. Waly‘s “assignment in Manila would be ending in several months.” However, he returned to the kingdom in October 2009, according to the Manila Times.

The cable is one of dozens released so far detailing the complex and at times difficult relationship between the United States and its most important ally in the Gulf and the Islamic world.

The cables paint U.S. officials as generally pleased with counter-terrorism cooperation with the Saudis but less so with the kingdom’s actions on the terror-financing front, especially against groups other than al Qaeda.

“Donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide,” says one cable from December 2009. “In contrast to its increasingly aggressive efforts to disrupt al Qaeda‘s access to funding from Saudi sources, Riyadh has taken only limited action to disrupt fundraising for the … Taliban and [Pakistani] groups that are also aligned with al Qaeda.

These groups “probably raise millions of dollars annually from Saudi sources, often during Hajj and Ramadan,” the cable states.

The Saudi official said that oversight and control of the thousands of private Saudi charities historically had been too lax, making it “easy for [extremist] groups to use it to their advantage.”