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Chalabi: Iran Spy?

By Niles Lathem
New York Post | May 24, 2004

Jordan's King Abdullah fueled the U.S. move against Iraqi leader Ahmed Chalabi by providing bombshell intelligence that his group was spying for Iran, The Post has learned.
An explosive dossier that the Jordanian monarch recently brought with him to White House sessions with President Bush detailed Mafia-style extortion rackets and secret information on U.S. military operations being passed to Iran, diplomats said.

That new information led to the Bush administration's decision to stop its $340,000-a-month payments to Chalabi's Iraqi National Congress and back an aggressive Iraqi criminal probe into his activities.

The file was compiled by Jordan's intelligence service, which has had an interest in Chalabi since the 1990s, when the Iraqi exile leader was convicted in absentia for embezzling millions of dollars.

The scandal stemmed from the collapse of the Bank of Petra, which Chalabi controlled, the diplomatic officials said.

Just months ago, Chalabi had been favored by Bush administration hard-liners as the next leader of Iraq and sat behind First Lady Laura Bush at the State of the Union Address in January.

The Pentagon airlifted Chalabi and members of the INC into Iraq the day after Saddam Hussein fell and gave them prominent roles in the new governing council, in charge of the Finance Ministry and ridding Iraqi government agencies of Saddam's Ba'ath Party.

But the U.S. already felt burned by the INC's involvement in passing on questionable pre-war intelligence on Saddam's weapons of mass destruction.

On Thursday, the relationship came to a bitter end as Iraqi police, backed by U.S. troops and FBI agents, raided Chalabi's palatial Baghdad home and issued arrest warrants for 15 members of the INC.

Officially, the raid was described as part of an Iraqi probe, launched by the Central Criminal Court of Iraq.

Among the charges being pursued is that INC members on the government's "de-Ba'athification committee" instead ran a scheme in which they demanded payoffs from ex-Ba'ath Party members. In return, those Ba'athists were allowed to avoid arrest or to stay off lists the INC was preparing of people banned from jobs in the new Iraqi government, sources said.

Chalabi aides running the new government's Finance Ministry are also accused of ripping off $22 million from the Iraqi Treasury when Iraq issued new currency late last year, U.S. officials said.

King Abdullah's dossier provided critical confirmation of U.S intelligence gathered elsewhere that the INC was playing a double game with Ba'athists and that Chalabi and his security chief were passing sensitive information to Iran.

That was when the Bush administration decided to break all ties with Chalabi, sources said.

Chalabi accused the United States of trying to intimidate him at a time when he is speaking out against the U.S. occupation and threatening to go public with bombshell files on the U.N. oil-for-food scandal.

Yesterday, he called an emergency meeting of the Governing Council seeking to get official condemnation of the raid.

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Iran admits regular contact with Chalabi

Julian Borger in Washington and James Sturcke
Monday May 24, 2004
The Guardian

The strange decline in relations between the US military and its one-time Iraqi ally, Ahmad Chalabi, took a new twist yesterday when Iran admitted having had regular dialogue with the former Pentagon favourite. The authorities in Tehran - and Mr Chalabi - were quick to deny suggestions that he had handed US secrets to Iran.

But an Iranian foreign ministry spokesman, Hamid Reza Asefi, told reporters that Tehran had maintained "continuous and permanent dialogue with Chalabi and other members of the Iraqi governing council". He added that spying charges were "unfounded and baseless".

Mr Chalabi, the leader of the Iraqi National Congress, said the accusation that he leaked secrets to Iraq's neighbour was a "smear" orchestrated by the CIA director, George Tenet.

Mr Chalabi, whose fall from grace with the Bush administration was symbolised by a raid on his Baghdad home and office last Thursday, appeared on a string of US news programmes to denounce the espionage allegations against him and his intelligence chief, Aras Karim.

"We never provided any classified information from the US to Iran - neither I nor anyone in the INC," he told CNN. "That is a charge being put out by George Tenet. I say let him bring all his charges, all his documents. We will bring all our charges and all our documents to the US Congress, and let Congress have hearings and resolve this issue."

He said Mr Karim, who is being sought by the Iraqi police, would also give sworn testimony to Congress.

Today's edition of Time magazine reports that US officials are being investigated for passing state secrets illegally to the INC, and that US intelligence has "hard" evidence that Mr Chalabi met a senior officer of Iran's ministry of intelligence and security in Iraq.

Anti-war sentiment has been simmering in Iran, particularly with the US attacks on Shia holy sites in Iraq, and yesterday some 500 protesters rallied for the fourth time in little over a week outside the British embassy in Tehran.

The crowd of mostly students threw firecrackers and tomatoes at the embassy and called for the ambassador, Richard Dalton, to be expelled.

Riot police with batons and shields prevented the students from getting close to the main gate of the embassy. About a dozen people were arrested as police tried to disperse the crowd. About 100 of the demonstrators staged a sit-in in front of the embassy.

The British embassy has been the focus of protests as the US has no diplomatic presence in Iran.