Terrorist mastermind Osama bin Laden's son, Saad bin Laden, has emerged in recent months as part of upper echelon of his father's Al Qaeda network and is managing the outfit with the help of a small group of leaders from Iran.

Saad and other senior Al Qaeda operatives were in contact with an Al Qaeda cell in Riyadh, Saudi Arabia, prior to May 12 suicide bombing there that left 35 people dead, including eight Americans, The Washington Post reported on Tuesday quoting US, European and Arab intelligence sources.

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The younger bin Laden is protected by an elite, radical Iranian security force loyal to the country's clerics and beyond the control of the government.

Also under Jerusalem Force's protection is Saif al-Adel, Al Qaeda's chief of military operations, Abdullah Ahmed Abdullah, the organisation's chief financial officer, and two dozen other top Al Qaeda leaders, the report said.

The Jerusalem Force is a 'state within a state' and that is why it is able to offer protection to Al Qaeda, the daily said quoting intelligence analysts.

The force trains in psychological and guerrilla warfare with emphasis on use of hand-grenades, mines, booby-trap techniques, camouflage and ambushes.

The Iranian govenrment, meanwhile, reacted angrily to the report and called it an 'absolute lie.'

"We have announced time and again that we will not allow these activities to take place in Iran. This is a decision taken by the highest officials in the country," a government spokesman said.

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