"In essence, US and Indian officials say, Headley was more than a terrorist: He served as a Pakistani spy," investigative American journalist Sebastian Rotella wrote in 'ProPublica.Com'.
Investigation into the Mumbai terrorist attacks by the US and Indian agencies, the news report said, has for the first time given a detailed account of how Pakistan's powerful ISI has been playing the "double game": acting as a front-line US ally in the fight against terror while supporting selected terrorist groups which serve Pakistani interests.
Documents about Mumbai attacks investigation in possession with ProPublica.Com, have built a strong case that officers in Pakistan's Inter-Services Intelligence (ISI) Directorate collaborated with the Lashkar-e-Taiba terrorist group in the plot that killed 166 people, six of them Americans, Sebastian wrote.
"Officials from both countries (India and the US) say they are persuaded that ISI officers recruited and trained Headley in spying techniques and gave him money and instructions to scout targets in Mumbai and elsewhere.
"Headley has told investigators that a Pakistani navy frogman helped plan the maritime attack on Mumbai," the news report said citing a 119-page report recounting his interrogation this year by Indian authorities.
The report, which was obtained by ProPublica, quoted Headley as saying his Pakistani intelligence handler took part in a discussion about a subsequent Lashkar plot to attack a Danish newspaper -- information that Pakistan did not share with Danish authorities, it said.
While the allegations have been denied by Pakistani authorities, according to ProPublica, US investigators see much of Headley's account as credible.
In a potentially significant revelation, ProPublica reports that Headley said Lt Gen Pasha, the director general of the ISI, went to see Zakiur Rehman Lakhvi, the LeT military chief, in custody after he was arrested post-26/11.
"Pasha had visited him to understand the Mumbai attack conspiracy," the report quoted Headley as saying, without further elaboration.
"Pakistani officials deny that the spymaster made the jailhouse visit. US and Indian officials and experts are more willing to believe the story," it said.
"I think Pasha was aware of the plot beforehand, or he is not chief of the ISI," an Indian counter-terror official was quoted as saying.
ProPublica report, however, says US counter-terrorism officials do not see evidence that ISI chiefs made an "institutional, top-down decision" to attack Mumbai.
Some feel that Headley's nuanced, sometimes ambiguous narrative tends to exonerate the top spymasters. For example: Headley told investigators that the ISI's Director General was apparently caught off-guard by the carnage in Mumbai, the report said.
"We should not assume that simply because the ISI policy is to sustain Lashkar that the leadership is aware of every detail in terms of the group's operations," said Stephen Tankel, author of the forthcoming book "Storming the World Stage: The Story of Lashkar-e-Taiba."
"The ISI policy is not to allow Lashkar to cross certain red lines, but sometimes the interpretation by ISI handlers of what constitutes an acceptable operation is different than that of the leadership," he told ProPublica.
"The spy agency has "control over the most important operatives" of Lashkar and every chief "is handled by some ISI official," he said.
An ISI brigadier general served as handler for Lakhvi, who also "is close to the (Director General) of ISI," he said.
According to Headley, the ISI funds Lashkar and shields its founder Hafiz Saeed from interference. "He is very close to ISI," Headley said of Saeed.
"He (Saeed) is well protected," the news report said.
The investigators believe Headely's main handler, a man identified only as Major Iqbal, was a serving member of ISI and one of several Pakistani intelligence officers who had contact with Headley, according to US officials.
Propublica said most experts see ISI's long-standing alliance with militant groups as a mix of geo-political strategy -- extremists are a useful weapon against India --and anti-Western ideology.
Headley's story of his high-level dealings with spies and militants alike opens a door into a secretive underworld, according to officials and experts.
"I don't know of any other cases in which ISI has used and worked with Americans," Charles Faddis, a former CIA counter-terror chief who worked in South Asia, was quoted as saying.
"Having a guy like this would be great for LeT and ISI. The Indians are working off a profile of what they think enemy operatives look like. This guy does not fit that profile. He can walk through the screen without being seen," he said.
The Indian counter-terrorism official was quoted as saying that "most of the Headley statement is consistent with what we know about the ISI and its operations."
"And it's consistent with what he told the FBI and what they told us. A lot has been cross-referenced to travel, communications, other evidence."
According to ProPublica, Major Iqbal of ISI gave Headley secret documents on India. He assigned a non-commissioned officer (NCO) to give the American standard intelligence training.
Headley learnt techniques for detecting surveillance, developing sources and other skills, then practised with the lower-ranking officer on the streets of Lahore.
The specialised training lasted several months and continued intermittently afterward as Major Iqbal taught Headley how to use cameras and other devices for missions, the report says.
"I became close to Major Iqbal," Headley told interrogators. "The training given by this NCO under the guidance of Major Iqbal was much more scientific and effective than the trainings I did in the LeT camps."
Phone and e-mail evidence have corroborated Headley's contact with Major Iqbal and other suspected ISI officers, US and Indian officials say.
Major Iqbal has been detected directing intelligence and terror operations in other cases, officials say, according to the investigations.
If the news report is to be believed, ISI helped Headley in every aspect of the Mumbai terrorist attacks.
ISI officers supplied a boat for a failed first attempt to send the gunmen to Mumbai and intervened when the American's chaotic personal life got him in trouble just two months before the attacks, the report says.
Headley said the Mumbai plot caused -- and resulted from -- conflict in the Lashkar-ISI partnership.
Disillusioned militants demanding a bigger role in fighting in Afghanistan were defecting to al-Qaeda and the Taliban, while chiefs of Lashkar and the ISI tried to keep the main focus on Kashmir, he said.
In response to the dangerous internal rifts, Lashkar decided on a spectacular al-Qaeda-style strike on Western targets in Mumbai, and the ISI approved the shift in tactics, Headley explained.
"The ISI I believe had no ambiguity of understanding the necessity to strike India (and)... shifting and minimising the theatre of violence from the domestic soil of Pakistan," he said.