Militants Moving In Behind Pakistan Flood Waters

NOWSHERA, Pakistan Aug. 18, 2010— -- Pakistani officials have insisted that aid will not fall into the hands of Islamic extremist groups - and that those groups will be allowed to take advantage of the flooding crisis to increase their support. But today ABC News found evidence that's exactly what those groups are doing.

An ABC News team visited a relief camp operated by the charity arm of Lashkar-e-Taiba, the banned terror group behind the brazen attacks in Mumbai, India in 2008 which killed more than 160 people at luxury hotels.

The camp manager said the group is operating with no restrictions.

"We've been here since soon after the floods," the camp manager said. "We have 17 or so camps all over the province."

Flood victims are not hesitating to accept the help. Eight million Pakistanis are in need of food, water and shelter.

One victim said, "I don't want handouts. Give me a bag of cement so I can start rebuilding my house."

The U.S. is waging a hearts and minds campaign of its own. U.S. Marine helicopters are delivering aid to the hard-hit Swat Valley, where earlier this year Pakistani forces completed a massive offensive against the Taliban and other extremist groups, under pressure from the U.S.

Now, those same extremist groups are moving back into the area to provide aid. Still, U.S. officials insist the extremists' role in flooding relief remains small.

"Frankly we are not too concerned about the role of extremist charities because we think the people of Pakistan have a lot of domestic NGOs [non-governmental organizations] that are very active and very reputable," U.S. Ambassador to Pakistan Anne Patterson told reporters yesterday.

But neither the government or aid groups are satisfying the overwhelming need, leaving the gap to be filled by the very same militants that threaten the Pakistani government and the U.S.

Pakistan senior meteorologist Arif Mahmood said floodwaters won't fully recede until the end of the month, and existing river torrents were still heading to major cities such as Hyderabad and Sukkur in the south. But he said there were no heavy rains forecast this week — "good news for aid agencies involved in the rescue and relief operations."