Chalabi's House Raided by U.S. Troops

In turn, Chalabi, who is one of 25 members of the U.S.-appointed Governing Council, has emerged as among the most outspoken mainstream critics of U.S. policy in Iraq.

During the past few months, he has criticized the Bush administration for not moving quickly enough toward ending the occupation and granting full political powers to an Iraqi government. U.S. officials intend to hand over limited authority to an interim Iraqi government next month.

More recently, Chalabi has blamed U.S. military officials for allowing Baath Party members to remerge as a local security force in the restive city of Fallujah west of Baghdad. Chalabi condemned U.S. security policy as a failure after the assassination earlier this week of Izzedin Salim, the Governing Council president this month who was killed in a suicide car-bomb while waiting to enter the U.S. compound.

He has also been feuding with L. Paul Bremer, the U.S. civilian administrator of Iraq, over who should manage an investigation into corruption inside the Hussein-era U.N. oil-for-food program.

Chalabi and the rest of the Governing Council want to oversee the inquiry, and they had asked the U.S. firm KPMG to conduct the audit. Bremer refused to release the money, however, and has approved the hiring of Ernst & Young to conduct the $20 million investigation.

INC officials said U.S. troops and Iraqi police arrived in the elite Mansour neighborhood, the location of Chalabi's house and the INC offices, around 6 a.m.

The officers said they were pursing several "suspects," INC officials recounted, but would not disclose the reason or produce an arrest warrant when asked.

Musawi said Chalabi "conducted negotiations" from inside his home, an INC official said, and eventually allowed one Iraqi police officer to enter and search the premises for the suspects. No one was found.

The police and soldiers moved next to the INC offices, housed in an ornate Chinese-style mansion once the perk of whoever headed Hussein's intelligence agency. Several guards on duty said as many as 100 U.S. soldiers arrived and stood guard as six Iraqi police officers entered with an American dressed in civilian clothes and body armor.

One of the guards said the American directed the Iraqi police, who they said kicked down doors and smashed a picture of Chalabi. A damaged frame could be seen in one of the ransacked offices.

Haider Ridha Mohammed, a guard on duty at the time, said he asked the police officer why he had tossed the framed photograph on the ground. Mohammed said the officer responded, "He's gone now, Ahmad Chalabi is finished."

A senior Iraqi police official familiar with the raid denied that the officers damaged the photographs.

Musawi said eight or nine computers had been taken, along with files from several individual offices. He said the three guards detained by U.S. troops were the latest INC officials picked up by U.S. forces.

Two others have been arrested in the past month, he said, although he did not name them. One of them is Sabah Nouri, whom Chalabi picked to become the top anti-corruption official in the new Iraqi Ministry of Finance.

Chalabi heads the Governing Council's finance committee and has enormous clout over its staffing and operation. Nouri, a German national, is now being held in a maximum-security prison. He faces 17 charges related to corruption, according to three sources familiar with the case.

For several months, U.S. officials have been investigating people affiliated with Chalabi's INC and possible ties to a scheme to defraud the Iraqi government during the currency exchange that took place from Oct. 15 to Jan. 15, according to three U.S. officials who asked not to be identified because of the sensitivity of the matter.

When auditors early this year began counting the old Iraqi dinars brought in and the new Iraqi dinars given out, they discovered that there was a difference of more than $22 million.

Nouri accused bank cashiers of stealing the money. In February, he organized mass arrests of these cashiers, prompting protests from worker rights groups. The cashiers, mostly women, said they did nothing wrong and accused Nouri of trying to cover up a different conspiracy, the sources said.

The Ministry of Justice began a probe into the women's allegations in April. Nouri was arrested on charges including extortion, fraud, embezzlement, theft of government property and abuse of authority related to the currency exchange.

Thursday, U.S. soldiers also seized at least 36 rifles from the headquarters, at least some of them licensed, according to INC officials. "They took the weapons three days after the president's assassination -- what kind of a message does that send?" Musawi said. "They have been waging a smear campaign against Chalabi and the INC for some time. It is clear this is a political game."

Ariana Cha reported from Washington.