In October 2005, news surfaced where Julius Babao was allegedly linked to a suspected terrorist named Tyrone del Rosario Santos (alias: Dawud Santos). The reports surfaced when Dawud was released by the authorities on April 22, 2008, and was said to leave the detention center in an ABS-CBN owned van with Babao. In an intelligence report, Babao has been suggested to have paid the bail bond or the very least guaranteed the bail in order to gain an exclusive interview with the suspect. An investigation team was put together by ABS-CBN to look into the allegations made by the ISAFP, no further charges was made, clearing Babao of any allegations.
