The US Treasury Department has found that he was funnelling funds for Al-Qaeda, Taliban and other terrorist organisations including Lashkar-e-Taiba. It also found that Dawood had struck a deal with Osama bin Laden to use his wide network to acquire funds from various charitable organisations.

The Treasury Department with the approval of the UN declared Dawood, in mid-October last year as a "Specially Designated Global Terrorist".

"Just like in the case of Dr Khan, most in authority in Islamabad thus cannot afford to let Dawood out of the country and made to talk. He has surely been used by the ISI in Afghanistan or has at least enjoyed its benevolence." 

Dawood would have also realised that the Americans could ask for fuller inquiry and his interrogation. Islamabad would have then been unable to resist the American pressure as it could that of India's and get away by stating that he was not in Pakistan. An altered appearance could help in again iterating that he had left the country.

This is why the sources said there has been utter secrecy over the surgery. "The rumours have nevertheless persisted although there is no way to confirm."

According to reports he was last seen quite a few months ago at a wedding but since then he has not been spotted in public.

But, according to recent reports Dawood has been more worried for his safety since the start last November of investigations into Dr Abdul Qadeer Khan's selling of nuclear weapons technology and his nexus with the underworld for acquiring N-material and laundering his ill-gotten wealth.

"The report that Dr Khan was in critical condition after a sudden heart attack or even the amended report that he was in very bad health must have made the ever suspicious Dawood even more concerned." 

There is one report that like Dr Khan who possibly sent out of Pakistan through his daughter Dina, documents and a taped statement incriminating General including President Musharraf in his proliferation activities to ensure his own safety, Dawood has done the same. He has kept papers with his trusted men outside Pakistan.

The name of Dawood has not so far been mentioned as one of the underworld links of Dr Khan but the fact that Dubai was the main channel for leaking the N-technology and for sending out and receiving material surfaced quite early in the investigations about Dr Khan's activities.

Dawood's network in Dubai is well-known and it is now being said that his set-up with its wide-reach and large number of trusted operatives "came in handy" for the surreptitious proliferation and money-laundering. "It could have possibly won him passage to Pakistan through Dr Khan and his sympathisers in power."

Dawood was, it is alleged, part of the group of people linked with Dr Khan's proliferation and money-laundering activities. It included one known as bullion king, a major player in the Pak Stock and Exchange, a big gold dealer in Dubai and two army officers, a colonel and a major, both of whom were conduits for transfer of N-technology to Libya. 

The recent exposure of a Malaysian company that shipped a cargo of N-material to Dubai and specially the arrest of a Pak businessman Aizaz Jafri, alleged to be the frontman for Dr Khan could have alarmed Dawood more. Jafri was the middleman for Khan in the international black market network in the nuclear materials set up by the disgraced scientist.

The chains of hotels and restaurants owned fully or partially by Dr Khan were also managed by Jafri. Notably, Jafri made frequent trips to Dubai when Dawood was there. Intelligence agrees, that Dawood could fear exposure from persons like Jafri and several other businessmen who have been arrested. Worse his links in the ISI would fear too the likelihood of suspicion falling on him, for that would expose them.

Dawood is currently under 24-hour security, albeit for his own safety just like Dr Khan. He would very much wish he disappears with changed appearance rather than be caught in the Khan storm, particularly after hearing that the scientist's health has suddenly deteriorated. 

Bomb designs found in Libya last year by arms experts yielded dramatic evidence of China's long-suspected role in transferring nuclear know-how to Pakistan in the early 1980s and assistance in production of its first nuclear bomb, the Washington Post said quoting Government officials and arms experts.

"The Chinese designs were later resold to Libya by the Pakistani-led trading network that is now the focus of an expanding international probe", the Post said referring to AQ Khan's proliferation network.

The packet of documents, some of which included text in Chinese, contained detailed, step-by-step instructions for assembling an implosion-type nuclear bomb that could fit atop a large ballistic missile. They also included technical instructions for manufacturing components for the device, officials and experts said.

"It was just what you would have on the factory floor. It tells you what torque to use on the bolts and what glue to use on the parts," one weapons expert who had reviewed the blueprints, told the Post adding the designs are "very, very old" but "very well-engineered."

US intelligence officials, the Post points out, concluded years ago that China provided early assistance to Pakistan in building its first nuclear weapon —assistance that appeared to have ended in the 1980s.

Of the many proliferation activities linked to Khan's network, the selling of weapons designs is viewed as the most serious.

The documents found in Libya contained most of the information needed to assemble a nuclear bomb, assuming the builder could acquire the plutonium or highly enriched uranium needed for a nuclear explosion, the Post said

Weapons experts familiar with the blueprints expressed surprise at what they described as wholesale transfer of sensitive nuclear technology to another country.

Notes included in the package of documents suggest that China continued to monitor Pakistani scientists on the finer points of bomb-building over a period of several years, the officials said.

AQ Khan stole the blueprints for centrifuges from Europe to refine uranium to bomb-grade material and China provided parts and know-how to make the bomb, the report said.

The package of documents was turned over to US officials in November following Libyan leader Moammar Gaddafi's decision to renounce weapons of mass destruction and open his country's weapons laboratories to international inspection.

The blueprints, which were flown to Washington last month, have been analysed by experts from the US, Britain and the International Atomic Energy Agency.

Weapons experts also found in Libya large amounts of equipment used in making enriched uranium. The discovery helped expose the rogue nuclear trading network led by Khan that funnelled technology and parts to Libya as well as Iran and North Korea.

"Nobody in Pakistan believes Qadeer Khan just woke up one day and decided to sell the nuclear secrets on his own. He is being made a scapegoat to cover up the involvement of military leaders," Bhutto told Washington Times in an interview appearing on Sunday.

She drew attention to a full-page advertisement in a Pakistani newspaper in July 2000 in which the government invited applications for the export of sensitive nuclear materials, including enriched uranium.

The ad ran about 10 months after President Pervez Musharraf's coup.

It surprised many in Pakistan as it seemed to violate nuclear export guidelines set in place just weeks earlier.

Two days later, the Pakistani government called the ad a "mistake" and said it had been pulled.

Officials told GEO TV that the exports were meant for medicinal purposes.

Bhutto pointed out that Musharraf has called Khan "still my hero" and allowed him to keep all the money he purportedly made from the nuclear deals after saying that the scientist violated Pakistani law.

Bhutto said top Pakistani nuclear scientist reported directly to the Prime Minister's office, which had to clear their travels abroad. So Khan could not have travelled to Dubai and other places to strike his deals without the knowledge of the government.

The scientists, she said, were also provided round-the-clock security.

In 1989, for instance, Khan was forced to cancel a trip abroad because of an intelligence warning about a plan to kidnap him. She refused to name the country that was his destination.

Asked if the military could have tried to sell nuclear secrets without her knowledge when she was Prime Minister, Bhutto said it was possible but not likely, because the Prime Minister's office had tight control over the nuclear programme.