Counterfeit trail led to Chalabi

THE thick, black smoke that drifted over the prosperous Mansour suburb of Baghdad last January had nothing to do with the bomb blasts and rocket fire that shook the Iraqi capital almost daily. In special furnaces built into an old warehouse complex near the former headquarters of the Mukhabarat intelligence service, Iraqi workers were burning money.

The coalition's decision to introduce a new Iraqi currency could scarcely have been avoided. No one wanted banknotes bearing the face of Saddam Hussein. Yet the operation to exchange and destroy countless old Iraqi dinars was an invitation to fraud.

The way judge Zuhair Maleki related the story last week, a routine investigation into a giant currency fiddle eventually led to a heavily guarded Baghdad compound belonging to Ahmad Chalabi, the former London banker whose high-level US connections had eased him into a prominent role on the interim Iraqi Governing Council.

As the chief investigative judge of Iraq's central criminal court, Maleki was in charge of a curious case involving one of Chalabi's minions. Sabah Nouri, described by Maleki as a "former driver and smuggler with no qualifications", had been appointed to head an audit committee at the Iraqi finance ministry, which fell under Chalabi's council wing.

When evidence emerged that old dinars sent for burning were being switched with counterfeit bills – and that the genuine dinars were being represented in exchange for more dollars – Nouri apparently set off in hot pursuit of culprits.

This seemingly innocuous investigation into alleged currency fraud ultimately led Iraqi police to kick down the door to Chalabi's home, rousing him from his bed and provoking a startling political row over whether the man the Pentagon once regarded as its best friend in Iraq was spying for Iran.

The tangled tale of Nouri's currency shenanigans and Chalabi's supposed dealings with Tehran reflects much that has gone wrong with the coalition effort in Iraq.

Under the pressure of the approaching June 30 deadline for the handover to civilian rule in Baghdad, Iraqi factions are scrambling for power almost as furiously as rival branches of the US administration are blaming each other for the mess. No one seems to agree on who is friend or foe.

According to Maleki and other sources, Nouri responded to reports of the currency fiddle by storming into several Baghdad banks and seizing female tellers suspected of skimming profits. Nouri "roughed up the girls, abused them verbally and dragged them out of the banks", said Maleki. "He violated and exceeded his powers."

When Maleki followed up complaints that the bank tellers had been kidnapped, the scam began to unravel. After weeks of further investigation, the judge concluded that Nouri and other Chalabi aides had in fact been running the counterfeit currency switch.

When 15 arrest warrants were issued, the most prominent name on the list was Aras Habib, Chalabi's security chief, who is now in hiding. The charges included murder, kidnapping, fraud, forgery, extortion and stealing government property.

On Saturday, two of the judge's bodyguards were wounded in an attempt to shoot him at a petrol station. "Twice a pistol was pointed at me and twice my bodyguards hurled themselves at me to protect me," said the 38-year-old judge, who escaped with nothing worse than a broken tooth. He declined to speculate on the reason for the attack.

The investigation into Chalabi's Iraqi National Congress initially seemed unlikely to trouble President George W. Bush – allegations of corruption are endemic in post-war Iraq – yet the presence of US military personnel at the raid on Chalabi's home signalled a breach in Washington's relations with the man dubbed the Savile Row Shi'ite.

Within hours, anonymous US intelligence officials were alleging at private briefings that the 59-year-old Iraqi had passed US secrets to the hardline Shi'ite regime in Tehran and that Habib was in the pay of Iranian intelligence.

Chalabi shrugged off the allegations, but they made embarrassing reading for the Pentagon neo-conservatives who had promoted him as a suitable successor to Saddam. At the CIA and the State Department, officials who had long been contemptuous of Chalabi's links to the Pentagon could barely contain their glee. "He's made a monkey of the neo-cons," claimed one former official.

Worse was to follow. Some of Chalabi's critics accused him of conspiring with Tehran to push the US into war with Iraq. His now-discredited claims about Iraqi weapons of mass destruction were alleged to have been dreamt up by the Shi'ite ayatollahs to trick the US into getting rid of Saddam, the hated Sunni strongman who had waged a 10-year war on Iran.

"Ahmad Chalabi may go down as one of the great conmen in history," Newsweek magazine declared.

Yet, as the week wore on, the idea that the West had fallen victim to a Shi'ite scam was losing much of its steam.

If Chalabi was really manipulating the US, it was also clear that certain senior American officials had been willing to be manipulated. In making the case for war against Iraq, they overlooked evidence that Chalabi had lied.

Chalabi was 14 when his parents fled Iraq for Lebanon. He was educated in the US and returned to Lebanon to study at the American University of Beirut. He then moved to Jordan, where he eventually became embroiled in a financial scandal that continues to haunt him. Convicted in absentia for fraud (which he has always denied) over his management of Jordan's Petra bank, he established himself in London.

He soon became a magnet for exiled opposition to Saddam. By 1992 he had talked the CIA into funding the establishment of the INC, theoretically an umbrella group of anti-Saddam exiles but in practice the bandwagon on which Chalabi hoped to ride back to presidential glory in Baghdad.

But when Chalabi bungled a coup attempt against Saddam in 1996, the CIA lost patience with a man who was always boasting of secret intelligence but got it wrong when it mattered. His star began to wane until he encountered a new breed of Washington conservatives who lapped up his pleas for help in toppling Saddam.

In 1998 the so-called "neo-cons" sent a letter to then president Bill Clinton urging regime change in Iraq. Among the signatories were Donald Rumsfeld and Paul Wolfowitz. Within three years Chalabi's new neo-con patrons were running the US Department of Defence. After the attacks of September 11, the CIA was eclipsed -- the Pentagon was in charge.

There was no serious suggestion at that stage that Chalabi was secretly working for Tehran. On the contrary, his contacts with the ayatollahs were well known in Washington.

In the late 1990s Chalabi opened an INC office in Tehran and joked that US money was paying for it in technical contravention of US sanctions. He once told Robert Baer, a former CIA agent who worked with the INC: "Iran is the key to Iraq's future and the key to my future."

All this was recorded in CIA files when the Pentagon despatched Chalabi to Iraq last year to mop up after the fall of Saddam. The way Chalabi had predicted it, this should have been a triumphant homecoming, with hordes of grateful Iraqis showering flowers on American tanks. Of course it was nothing of the kind.

At about the time Chalabi was establishing his new base at the Baghdad Hunting Club, a former watering hole for the Baathist elite, a nervous Iraqi nuclear scientist named Mahdi Obeidi was thinking about digging up his garden.

Obeidi had presided over Saddam's efforts to construct a nuclear centrifuge that would process uranium fuel. When the program was forced to shut down after Saddam's humiliating defeat in Kuwait, Obeidi lied to United Nations inspectors about destroying nuclear-related plans. Instead he buried them under a tree.

The strange fate of Obeidi's hidden cache speaks volumes about Washington's relationship with Chalabi and the inter-agency struggles that have hamstrung the coalition effort.

When Saddam's statue fell and US troops marched into Baghdad, Obeidi waited with mounting anxiety for soldiers to knock on his door.

When two weeks passed and nothing happened, Obeidi called David Albright, a former UN nuclear expert he knew from inspection visits. He explained that he wanted to give up his nuclear treasure in return for safe passage to the US. He was frightened that he might be shot by US soldiers or murdered by returning exiles bent on revenge.

Albright finally persuaded a CIA contact to intervene. But the contact insisted on one condition. He knew Chalabi was chasing former officials of Saddam's regime. He feared for Obeidi's safety – and for the WMD evidence that might be uncovered – if Chalabi got there first.

"I wanted none of Chalabi's people around this," Albright said, "and the US military was using Chalabi's people as scouts. So that meant no US military either."

The CIA secretly contacted Obeidi, who led agents to his rose garden and dug up 200 blueprints for gas centrifuge components, 180 documents describing their use and a few critical parts.

It was an important find that the neo-cons interpreted as evidence that Saddam had operated a hidden nuclear program.

That is not how Albright or any other nuclear expert saw it. "Obeidi had put together everything that would be needed if the order came to restart the centrifuge program," he said. "He had a bunch of classified centrifuge designs that he'd got from the Germans in the late 1980s. You just don't throw that stuff away."

So Obeidi buried the plans in his garden and waited for an order that never came. After 1991 there was no Iraqi nuclear program – which was not what Chalabi's men had told the Pentagon and not what US Secretary of State Powell had told the UN as the US prepared for war.

The story took a farcical turn when the Pentagon finally caught up with Obeidi and, blissfully unaware of the CIA's operation, bundled him off to a "rat-hole jail" at Baghdad airport.

Obeidi was eventually given asylum in the US, but the CIA analysts were left embarrassed.

For the weapons inspectors who had long been doubtful of the INC's intelligence, the Obeidi episode came as no surprise. "The information provided by Chalabi was so specific it appeared to be very credible," said Joseph Cirincione, author of a WMD report for the Carnegie Endowment for International Peace.

"He would tell people, 'You go to this facility, and in the third building, first corridor, second door, there's a refrigerator with anthrax in it.' Well, inspectors went to those facilities, and there wasn't even a third building, or a corridor, or a door."

Whether or not Chalabi's intelligence was inspired or provided by Tehran, Cirincione and others believe there were compelling reasons for Bush administration officials not to believe it. The return of UN inspectors to Iraq in late 2002 provided ample evidence that defectors introduced by the INC had consistently lied about or exaggerated what they claimed to have seen.

Albright blames "war fever" for a suspension of the administration's judgment about Chalabi and his WMD intelligence. "There was a predilection to believe this stuff," he said.

However much Tehran wanted to be rid of its belligerent Iraqi neighbour, it barely seems conceivable that it would have preferred the Americans in charge. After September 11, the neo-cons dreamt not only of toppling Saddam but of spreading democratic reform across the Middle East. Tehran was – and remains – a prime target for US reformist pressure.

Saddam had been muzzled and leashed after his abortive adventure in Kuwait. Why on earth would Iran want to upset a stable status quo and entice the US to Baghdad?

The key to Chalabi's Iranian flirtations may have more to do with religion than fanciful rings of spies. As a secular Shi'ite with no natural constituency in Iraq, Chalabi has long been in danger of being marginalised by the creation of a civilian government.

Once it became clear that Chalabi could not rely on the Pentagon to usher him to power, he reached out to the one political figure without whom none of the others can govern Iraq: Grand Ayatollah Sistani, leader of the country's Shi'ite majority.

Both the Americans and the British have found Chalabi useful in dealing with Sistani. He has also earned the Pentagon's praise for helping track down Saddam loyalists. And Chalabi was scarcely alone in warning of WMD.

Little of this suggests the work of a traitor. Rather, it seems to reflect the scrambling of a veteran political operator determined to cling to whatever coat tail might lift him to power.

Chalabi's confrontation with Washington may even have strengthened his hand in Iraq. He is no longer the neo-con lapdog, parading his dodgy documents up and down Capitol Hill.

Instead he is becoming a Shi'ite populist whose appeal will be enhanced by American accusations of treachery. He is beginning to turn into a strongman.

The key to understanding Chalabi is that he does not work for either Tehran or Washington. He has always worked for himself.

Watch the statemnts you make, or it will be you with egg on your face. Who are the sources in this article? IT IS AN OPINION PIECE.

I could say john Kerry was a french spy and a lot of people would believe it.

My point is, THERE IS NO PROOF, ever, in any of the charges. They are all accusations. Name one shred of evidence instead of "intelligence officials".

The article was filled with lies and half-truths, like how Chalabi "botched" a coup. Botched? He told the CIA it wouldn't work! They didn't listen, and he went public after he was proven right.

The only part true is that he only works for himself. True. He's a politician. He is at once everybody's friend, yet everyone's enemy.

Read Moelbray's Wash. Times article:

http://www.washingtontimes.com/op-ed/20040531-094323-7204r.htm

Take your defense of this bozo Chalabi, who I always thought had the face of an untrustworthy weasel, to somebody who cares.

You, Ledeen and Perle will, I'm sure, be very happy together. I personally take the President's side. The US was snookered by this guy and by the people who foisted him upon us.

OK, one simple question: Why did you "always thought had the face of an untrustworthy weasel"?

When I look at his face and listen to him speak I see an untrustworthy weasel. What part of that don't you understand? It's a totally subjective assessment, but I have a fairly good record of judging character.

Chalabi has fraud charges against him going back decades. He is a slick operator, not a sober, prudent leader. He should never have selected by the United States to represent the kind of leader we have in mind for Iraq.

There is a poster in this forum, jasonc, who argued eloquently, as is his habit, that Chalabi has been more right than the State Department about the proper stategies to follow in the Middle East over the past few decades, suggesting that if we had followed Chalabi's advice we would have avoided a lof of the messes we got ourselves into. Jasonc may be right. Maybe Chalabi has demonstrated exceptional analytical skills combined with personal knowledge of the indigenous people of the region. But all that was done from his armchair in Washington. It has no bearing on the way he himself might exercise power once he became acquainted with it.

That's where good judgment should have come in on the part of those who should have known the man best, i.e., the policymakers and their advisors who nominated the man to represent our hopes for the future of Iraq. And that's where they failed. They failed because they didn't see, as I saw clearly, that the man has the face of an untrustworthy weasel.

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