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Chalabi Back in Iraq, Aide Says

Former U.S. Client Charged With Counterfeiting Currency

By Rajiv Chandrasekaran and Carol D. Leonnig
Washington Post Foreign Service
Thursday, August 12, 2004; Page A19

BAGHDAD, Aug. 11 -- Ahmed Chalabi, an Iraqi political figure who once had support from the Pentagon, returned to Iraq on Wednesday to face arrest on charges of counterfeiting currency, his spokesman said.

Chalabi crossed the border from neighboring Iran by car and drove to an undisclosed location, said the spokesman, Haidar Moussawi. "I cannot tell you where he is at the moment, but he is here in Iraq," Moussawi said.

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The chief investigating judge of the Central Criminal Court of Iraq issued an arrest warrant for Chalabi on Saturday, after a police search of his house in May produced counterfeit currency. Chalabi has denied the charges, saying the notes were samples used for a meeting with Iraq's Central Bank in his capacity as chairman of the Governing Council's finance committee.

Chalabi has accused the judge, Zuhair Maliky, of acting at the behest of the U.S. government. Maliky has insisted that his investigation has not been influenced by the United States or by Iraq's interim government, whose prime minister, Ayad Allawi, is a longtime rival of Chalabi's.

In a news conference Wednesday in Washington, Chalabi's grown daughter and his attorney announced that a suit had been filed in U.S. federal court against the Jordanian government, arguing that it falsely convicted Chalabi of embezzling funds from Petra Bank, an institution he ran in Jordan. The government seized the bank in 1989.

They said the suit was not meant to combat the charges by the Iraqi authorities, but rather a long pattern of false accusations against Chalabi.

"In all the charges leveled against my father, the basis has been unnamed sources. . . . It's a smear campaign, all false," said his daughter, Tamara Chalabi, 31. "Well, we have filed a lawsuit which will require us to be specific and prove what we say. We can't wait."

Lawyers who are expert in the specialized field of claims against foreign governments brought in U.S. courts said the complaint was more publicity stunt than solid legal pleading. They predicted that a federal judge would throw out the claim for failure to meet the strict standards for allowing a U.S. court to pass judgment on a foreign government.

"This case doesn't look like it's going to get past the courthouse door, despite the best efforts," said Stuart Newberger, a lawyer for the firm of Crowell & Moring who has filed and won dozens of such cases. "Congress intentionally decided people could sue federal governments only in very limited circumstances. "

The suit, filed in federal court in Washington, accuses the Jordanian government and its central bank of engaging in a conspiracy starting in 1989 to steal Petra Bank from Chalabi, its founder, strip it of assets and then blame the former Iraqi exile when $300 million in deposits were discovered missing. Chalabi was found guilty of embezzlement and fraud in absentia in 1992 and sentenced to 22 years of hard labor.

In Washington, a diplomat at the Jordanian Embassy said his government's case against Chalabi had nothing to do with politics. "This is a legal issue, not a political issue," said the diplomat, who spoke on condition of anonymity because the matter is pending in court. "Our position regarding Chalabi is that he's wanted in Jordan for the embezzlement case of Petra Bank. He's already been tried in absentia and found guilty, and that verdict stands. Officials have said this over and over whenever this issue comes up."

Chalabi's relationship with the U.S. government, which included Pentagon payments of $340,000 a month to his Iraqi National Congress political party, turned sour after disputes over the quality of prewar intelligence supplied by the party, his criticism of the U.S. occupation and his ties to Iran.

Since losing U.S. backing, Chalabi has sought to build support among Iraq's Shiite majority, traveling repeatedly to the holy city of Najaf.

His spokesman, Moussawi, said Chalabi has said that he is "not above the law" and would cooperate with the Iraqi judge's investigation.

Supporters had brought 11 sheep to Chalabi's home in an affluent Baghdad neighborhood for a ritual slaughter to welcome him, but he did not return to that house.

Maliky also has issued an arrest warrant for Chalabi's nephew, Salem Chalabi, in connection with an investigation of the killing of a top Finance Ministry official who was looking into whether the Chalabis were illegally occupying Iraqi government property.

Leonnig reported from Washington. Staff writer Robin Wright in Washington contributed to this report.


© 2004 The Washington Post Company