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The National Security Archive at George Washington University

CONSORTIUM NEWS - Edited by Robert Parry


May 22, 2004

Bombshell: Chalabi & Top INC Official Are Spies for Iran; Op Inadvertently Paid for by Pentagon

Iran used Chalabi to dupe U.S., report says (5/22/2004 - Seattle Times)

The US-backed Iraqi National Congress was actually a front for Iranian intelligence, which used the group to help bamboozle the US into invading Iraq and then to receive stolen US military secrets, some of it classified above top secret. Patrick Lang, former director of the Defense Intelligence Agency's Middle East branch, described the Iranian effort as "one of the most sophisticated and successful intelligence operations in history."

Multiple sources in US military intelligence, diplomatic, and Bush Administration circles are confirming "rock solid" information that Iraqi National Congress (INC) leader Ahmed Chalabi and his security chief, Araz Habib, have both been working with Iranian intelligence for several years. At this writing, most reports emphasize the role of Habib, who has directed the Information Collection Program. However reports are currently emerging, citing intelligence sources and unnamed "US officials," that state Chalabi himself is personally involved.

According to a Defense Intelligence Agency (DIA) source quoted in the Seattle Times article below, Iranian intelligence used Chalabi's INC to funnel disinformation to the US in an effort to provoke the US into overthrowing Saddam Hussein. The intelligence provided by Chalabi and the INC -- almost all of it now discredited -- formed the central basis for the Bush Administration's publicly stated reasons for invading Iraq.

The CIA and other US intelligence agencies warned off on Chalabi, saying he and his information were unreliable. The Bush Administration -- particularly hardliners like Vice President Cheney, Sec. of Defense Rumsfeld, and Dept. Sec. of Defense Wolfowitz -- derided the warnings and insisted the INC's information be taken at face value. (Related story 1 -- Related story 2)

The INC's Information Collection Program (ICP) was the primary channel for the bogus intelligence. The very same ICP also successfully pedaled its wares to dozens of prominent US and foreign news outlets. The INC recently distributed a list of such stories it got published between 2001 and 2002. The GAO is currently investigating whether the US money the INC received was used to distribute the propaganda, a clear-cut violation of federal law.

Additionally, sources intimately familiar with the investigation say that the INC was simultaneously providing highly sensitive US military secrets to Iranian intelligence, including US troop movements. Some of the intelligence provided to the Iranians was reportedly classified above top secret, begging the question of how and why the INC came to have such sensitive information.

Thus far, the New York Post, CBS News and the Wall Street Journal have all published reports citing US officials confirming that Chalabi was personally involved in passing secret US intelligence to the Iranians.

Since the beginning of the Bush Administration, the INC has been backed by the US to the tune of tens of millions of dollars in open funds -- and likely much more in covert money. Only in the last few days did the Pentagon end $340,000 in monthly payments to the INC. The INC has been fronting for Iranian intelligence for most if not all of that time, meaning the Bush Administration ignored strong CIA warnings about Chalabi's reliability to back and pay for an Iranian covert operation directed against the United States.

The New York Post reports that the revelation of the INC's role as a front for Iranian intelligence came from Jordan's intelligence service, which has been tracking Chalabi's activities since his conviction in absentia for embezzling millions of dollars from the collapsed Bank of Petra, which he controlled. Chalabi fled Jordan, and is currently a fugitive under the protection of the US.

According to the Post, the secret dossier on Chalabi was delivered directly to President Bush by King Abdullah during his recent state visit to the US. (During that visit, early in the Abu Ghraib torture scandal, the King was used as a prop for a Bush press conference in which the president said he "apologized to him" for the treatment of Iraqi prisoners.)

The revelations -- and there may be more to come -- are an unmitigated disaster for the already embattled Bush Administration, which is clearly working hard to mitigate the impact of the story. Government and military sources only began talking late on Friday, meaning the story would be relegated to the Saturday editions -- the least read of the week. The story came out so late that it did not even make the Saturday edition of the New York Times.

Meanwhile, Chalabi and his people are denying the allegations. On Friday, Chalabi told a TV interviewer, "I only act from an Iraqi national perspective." Today, a Chalabi aide told Agence France-Presse the charges are "nonsense," claiming they are part of a CIA strategy to discredit Chalabi.

[Read the source...]

Seattle Times
Sat., May 22, 2004

Iran used Chalabi to dupe U.S., report says

By Knut Royce

The Defense Intelligence Agency has concluded that for years Iran has used a U.S.-funded arm of Ahmad Chalabi's Iraqi National Congress to funnel disinformation to the United States and to collect highly sensitive American secrets, according to intelligence sources.

"Iranian intelligence has been manipulating the United States through Chalabi by furnishing through his Information Collection Program (ICP) information to provoke the United Sates into getting rid of Saddam Hussein," said an intelligence source who was briefed on the conclusions of the Defense Intelligence Agency (DIA).

The ICP also "kept the Iranians informed about what we were doing" by passing classified U.S. documents and other sensitive information, he said. The ICP has received millions of dollars from the U.S. government over several years.

An administration official confirmed that "highly classified information had been provided (to the Iranians) through that channel."

The Defense Department this week halted payment of $340,000 a month to Chalabi's program.

Patrick Lang, former director of the DIA's Middle East branch, said he had been told by colleagues that Chalabi's U.S.-funded program to provide information about weapons of mass destruction and insurgents was effectively an Iranian intelligence operation. "They (the Iranians) knew exactly what we were up to," he said.

He described it as "one of the most sophisticated and successful intelligence operations in history."

"I'm a spook. I appreciate good work. This was good work," he said.

A DIA spokesman would not discuss questions about his agency's internal conclusions about the alleged Iranian operation. But he said some of its information had been helpful. "Some of the information was great, especially as it pertained to arresting high-value targets and on force-protection issues," he said. "And some of the information wasn't so great."

At the center of the alleged Iranian intelligence operation, according to administration officials and intelligence sources, is Aras Habib, 47, a Shiite Kurd who was named in an arrest warrant issued during a raid on Chalabi's home and offices in Baghdad on Thursday. He eluded arrest.

Habib is in charge of the information collection program.

The intelligence source briefed on the DIA's conclusions said that Habib's "fingerprints are all over it."

"There was an ongoing intelligence relationship between Habib and the Iranian Intelligence Ministry, all funded by the U.S. government, inadvertently," he said.

A U.S. intelligence official said the evidence of Habib's ties to Iran includes both intercepts and some documentation. The official said Habib provided sensitive information, some of it classified above top secret, to the Iranians.

The Iraqi National Congress (INC) has received about $40 million in U.S. funds over the past four years, including $33 million from the State Department and $6 million from the DIA.

The links between the INC and U.S. intelligence go back to at least 1992, when Habib was picked by Chalabi to run his security and military operations.

An intelligence official said Habib also was the INC official who handled most of the Iraqi defectors, including one code-named "Curveball," who provided much of the fabricated, exaggerated and unconfirmed information about Iraqi weapons programs and links to terrorism that President Bush used in making his case for invading Iraq.

Indications that Iran, which fought a bloody war against Iraq during the 1980s, was trying to lure the United States into action against Saddam Hussein appeared many years before the Bush administration decided in 2001 that ousting Saddam was a national priority.

In 1995, for instance, Khidhir Hamza, who had once worked in Iraq's nuclear program and whose claims that Iraq had continued a massive bomb program in the 1990s are now largely discredited, gave United Nations nuclear inspectors what appeared to be explosive documents about Iraq's program.

Hamza, who fled Iraq in 1994, later teamed up with Chalabi.

The documents, which referred to results of experiments on enriched uranium in the bomb's core, were almost flawless, according to Andrew Cockburn's recent account of the event in Counterpunch, a political newsletter and Web site.

But the scientists were troubled by one minor matter: Some of the technical descriptions used terms that would be used only by an Iranian. They determined that the original copy had been written in Farsi by an Iranian scientist and then translated into Arabic.

The International Atomic Energy Agency concluded the documents were fraudulent.

Material from Knight-Ridder Newspapers is included in this report.

New York Post
Sat., May 22, 2004

Jordanian Tip Exposed Chalabi as Iran 'Spy'

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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