Pakistan's release of a CIA contractor arrested for killing two men last month is drawing criticism from a radical Islamist leader.

Jamaat-ud-Dawa (JuD) chief and Lashkar-e-Tayyiba (LeT) founder Hafiz Mohammed Saeed denounced the acquittal of Raymond Davis, who was freed after more than $2 million in blood money was paid to the families of the victims. Blood money or "diyya" is a routine means to settle murder cases in Pakistan by which families of victims have a right to settle for compensation instead of execution of the murderer.

"Besides killing two Pakistanis, Davis was involved in a number of criminal activities in the country. His freedom has hurt the sentiments of the whole nation," Saeed said in a statement issued by the JuD. He had called for "stern punishment" for Davis.

Saeed's criticism echoed in protests held throughout Pakistan Friday. The government, speakers said, sold out "Pakistani blood and honour" by freeing Davis. He reportedly opened fire on the two men after they tried to attack him.

"Diyya" which is in compliance with Sharia law, was used as a last recourse to free Davis following the Lahore High Court's refusal to accept U.S. demands for diplomatic immunity in the case.

The Press Trust of India reports that Davis may have been part of a covert CIA team monitoring Lashkar activities. A similar claim appeared in the New York Times.

U.S. officials have expressed concern that Lashkar, which has close ties to elements of Pakistani intelligence, is expanding its operations in the region. A Pentagon official told a House committee that officials are "very concerned about that interaction that LeT is having on India and the effect, the compression effect that you have between two nuclear powers when there is an attack into India from LeT."