According to this weeks issue of Time, Hambali told his American interrogators that some $27,000 (about P1.5 million) from the al-Qaeda fund was transferred to the MILF sometime between July and August.
The Time exclusive was the most detailed confirmation yet of US Ambassador Francis Ricciardones claim that the JI has set up terrorist cells in Mindanao, threatening the pledged $30-million US development aid to MILF areas if it maintains ties with terrorists and outlaws.
But the MILF continued to deny the charge, with MILF vice chairman Ghadzali Jaafar saying "all maneuvers are being done to pressure us."
According to the report on Hambalis interrogation, a copy of which Time obtained, al-Qaeda also sent money to fund future attacks on targets such as the US and British embassies in Bangkok, nightclubs in Thailand and shopping malls in Makati City.
Hambali himself scouted the Israeli embassy and a synagogue, also in Makati City, according to the interrogation report, because "Jewish targets were always the main priority."
Hambali also confirmed suspicions that JI members train in MILF camps and that it is "most likely (that) a large number of members of JI Indonesia are hiding in the Philippines and supporting the MILF."
According to the interrogation report, Hambali said al-Qaeda sent him $30,000 to finance the bombing of two nightclubs in Bali that left 202 people dead.
"Al-Qaeda was highly satisfied with the Bali bombing and as a result provided additional money" totaling $100,000, an interrogation report said.
From that money, $45,000 was given to JI in Indonesia, Hambali said. Another $15,000 was to support the families of the imprisoned Bali bombers and $30,000 was to finance new attacks.
Hambali said some of the money could have been used for the August bombing of the Marriott Hotel in Jakarta, where 12 people were killed, the magazine said.
Hambali, who was captured in Thailand on Aug. 11, is under interrogation at the US-British air base in the British island of Diego Garcia in the Indian Ocean.
Hambali is believed to be al-Qaedas Asian pointman and JI operations chief.
"Of course, Hambali, 39, may be lying about at least some of it," wrote Times Southeast Asian correspondent Simon Elegant from Kuala Lumpur. Prefaces to summaries of Hambalis questioning warn he may be practicing "counter-interrogation techniques."
But two of his closest aides, Bashir bin Lap, alias Lillie, and Mohammed Farik bin Amin corroborated much of what Hambali said.
Hambali claims JI has been virtually "destroyed... because of those who had been captured."
"The US will not provide economic development assistance in areas controlled by the MILF if that organization maintains ties to outlaws, terrorists, in violation of the written testimony of (deceased MILF) chairman (Hashim) Salamat in his last days," the envoy said last week.
Before his death in July, Salamat wrote a letter to US President George W. Bush expressing the MILFs commitment to peacefully resolve their 35-year rebellion, Ricciardone said.
Ricciardone said Washington was "particularly concerned about the continuing presence in Mindanao of JI, which has been blamed for the October (2002) bombing in Bali, Indonesia that left more than 200 people dead."
However, the MILFs Jaafar said in an interview with a Cotabato City radio station that Ricciardones pronouncement was only meant to "intimidate" the MILF and "pressure it to accelerate its forging of a final peace pact with the government."
Peace negotiations between the government and the MILF have been revived under the auspices of the Malaysian government and talks are set to restart in Kuala Lumpur sometime this month.
"There can be no other way we can interpret the circulation of these recycled stories ... that the MILF has links with al-Qaeda and the Jemaah Islamiyah," Jaafar told Catholic radio station dxMS.
Jaafar said Salamat, who died on July 13, was not the only one to disavow any link to terrorist organizations.
MILF chairman Ebrahim Murad, who succeeded Salamat, also issued a statement announcing that the MILF central committee has rejected terrorism.
"We will welcome an investigation on our alleged links with the Jemaah Islamiyah and al-Qaeda. Surely, investigators will find nothing," Jaafar said. - Time Asia, AFP, John Unson