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The National Security Archive at George Washington University

CONSORTIUM NEWS - Edited by Robert Parry


April 14, 2004

Chalabi's Iraqi National Congress (INC) Illegally Used State Dept. Money to Disseminate Propaganda In US

From Newsweek (4/5/2004): Ahmad Chalabi has never paid much attention to rules. As an international financier, he was convicted in absentia in 1992 of embezzling millions from his own bank in Jordan. In the mid-'90s, the CIA tried to make him its point man in a plan to oust Saddam Hussein, but found he was not controllable, leading to a bitter divorce. "His primary focus was to drag us into a war that [Bill] Clinton didn't want to fight," says Whitley Bruner, the CIA agent who first contacted Chalabi in London in 1991. "He couldn't be trusted." Most recently, Chalabi and his Iraqi National Congress have been accused of passing on hyped or fabricated reports from defectors on WMD that Saddam didn't have -- but which provided the casus belli. Like the CIA, the State Department eventually cut off dealings with Chalabi.

Today Chalabi is in Baghdad and wielding considerable influence as a prominent member of the Iraqi Governing Council. He's overseeing de-Baathification, a purge of alleged Saddam loyalists throughout the country. He apparently has no regrets that his WMD warnings have turned out to be inaccurate. What matters, Chalabi suggested recently, is that he finally got the regime change he had long sought. "As far as we're concerned we've been entirely successful," he told a British newspaper. "That tyrant Saddam is gone and the Americans are in Baghdad. What was said before is not important."

Some in Congress disagree. Newsweek has learned that the General Accounting Office, Congress's investigative arm, is opening a probe into the INC's use of US government money the group received in 2001 and 2002. The issue under scrutiny is not whether Chalabi prodded America into a war on false pretenses; it is whether he used US taxpayer dollars and broke US laws or regulations to do so. Did Chalabi and the INC violate the terms of their funding by using US money to sell the public on its anti-Saddam campaign and to lobby Congress?

The investigation could easily become a political football. The GAO inquiry was requested by Democratic presidential candidate John Kerry (who when not on the stump is still a working senator) and another prominent critic of the Iraq war, Sen. Carl Levin of Michigan, ranking Democrat on the Armed Services Committee. A March 3 letter from the senators says the INC's use of US money is "troubling."

Under a written agreement examined by Newsweek, the INC had to abide by certain conditions for use of State Department funds. The group was permitted to use the money to "implement a public information campaign to communicate with Iraqis inside and outside of Iraq and also to promulgate its message to the international community at large." But the grant terms would "strictly exclude" activities "associated with, or that could appear to be associated with, attempting to influence the policies of the United States Government or Congress or propagandizing the American people."

Even so, in 2002 the INC -- in an apparent effort to get Congress to continue its funding -- submitted to the Senate Appropriations Committee a list of 108 news stories published between October 2001 and May 2002. The INC's document said these stories contained "ICP product" from an INC "Information Collection Program" financed by State. The stories included allegations about Saddam's WMD programs and links to terrorism, as well as INC material supporting innuendo that linked Saddam to the 9/11 attacks. Late last year Chalabi's Washington representative, Francis Brooke, told Newsweek that State Department money had been used to finance the expenses of INC defectors who were sources for some of the listed news stories. Brooke said there were "no restrictions" on the use of US government funds to make such defectors available to the news media.

One journalist who dealt with the INC on a defector story told Newsweek that INC contacts indicated some of the defector's expenses were paid with US government funds. Last week another Chalabi spokesman said, "The INC paid some living and travel expenses of defectors with USG [US government] funds. None of these expenses was related to meeting journalists." He also said the group "did not violate any US laws."

In 2001, State Department auditors found that the defector program had rung up more than $465,000 in costs that were "inadequately" or entirely undocumented. A subsequent audit found that the INC had improved its accounting methods. Even so, the State Department decided in summer 2002 that it no longer wanted to pay $150,000 per month to the INC for "information collection."

In September 2002, funding for the INC defector program was transferred to the Defense Intelligence Agency. The Pentagon struck a deal whereby secret military intelligence funds, rather than State Department political funds, would be used to restart the $340,000 monthly payments to the INC for intelligence gathering -- a sum the group is still receiving today. But intelligence sources say the rules the DIA set for the use of its money strictly forbid the INC from publicly releasing any info about its intelligence program without written permission from the Pentagon. Chalabi and his group -- who continue to be defended by the Pentagon -- were assigned to collect intelligence on Saddam's alleged connections with Al Qaeda, WMD and the whereabouts of Michael Scott Speicher, a US Navy pilot missing since being shot down during the first gulf war. Defense officials maintain that since the end of the latest Iraq war, information collected by the INC for the DIA has been "useful," including information on Saddam's atrocities, terrorist attacks and Iraqi WMD.

Some critics of Chalabi say he still can't be trusted to supply good information, and he may now be using US funds to help build himself into a political figure. "He has no real political base... Chalabi has always had to spend money to gain loyalty -- to rent loyalty," says Bruner, the former CIA officer. A former US intelligence official says Chalabi's use of CIA money in the early '90s was just as dubious. "There was a lot of hanky-panky with the accounting: triple billing, things that weren't mentioned, things inflated... It was a nightmare." (The Chalabi aide calls this a "smear.") The Defense Department, the former intel official says, is "getting rolled like everyone else."


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