Ahmad Chalabi: Iraq's master manipulator

Excerpts of Aram Roston's book, 'The Man Who Pushed America to War'

His inner circle called him The Doctor, because of his Ph.D in mathematics. Some of his operatives called him Our Big Brother. The Central Intelligence Agency called him by a code name - which intelligence sources reveal as Pulsar One. Whatever you call him, Ahmad Abdul Hadi Chalabi, a shrewd Iraqi Arab from a family of Shiite bankers, literally changed the world. The United States, which he referred to so respectfully as a "strategic ally," had sponsored him, flown him and his people to Iraq, even toppled Saddam Hussein for him, as he would boast. The Iraq War has many critics and some fierce defenders, but many insiders on both sides of the debate agree on this: without Chalabi there would have been no war.

He is a man of large appetites, with a flair for theatrics, and a brilliant and untiring mind. He had a single-minded hatred of the sadistic Saddam Hussein, a loyalty to his own Shiite heritage, and an inexplicable certitude in his own entitlement. Chalabi's medium is people, and as an Iraqi exile his grazing area was America; his genius was his ability to make loyal friends among adventurous spirits. He epitomized "charismatic leadership." Over dinners, lunches, and coffee, he spoke in grand and colorful language about the human right to freedom, about the delightful world to come in the Middle East, about the great things that could be done. As he talked, Chalabi was physically transformed. What strangers saw as a smug smirk curled on his fleshy lips disappeared, and was replaced by a wise yet merry smile. Whereas once he had a stiff back and clumsy walk, now he appeared to have a regal and noble bearing. Some of his closest advisers were Democrats. Some were liberals. Some were pro-Israel; others were anti-Zionists. It didn't really matter once they met him. But in the end it was notoriously the recruitment of the American neoconservatives and the hawkish wing of the Republican Party that got him what he needed. They satisfied his needs, and he theirs.

He touched America in three ways. His first success could be called ideological: he was able to affirm for a generation of thinkers the urgent need to overthrow Saddam. Toppling Saddam, and ending his aggression and his feared weapons of mass destruction, became the keystone of transforming the Middle East. Chalabi was not the sole source of this vision, but he was the chief intellectual facilitator for a now well-known cadre of hard-liners whose influence was extraordinary in the early part of the new millennium. They included Richard Perle, Paul Wolfowitz, I. Lewis "Scooter" Libby, John Hannah, Michael Ledeen and Danielle Pletka. They dined with him and met him and conversed, and through well-placed op-eds and clever talking points and sound bites, their ideas bled into the mainstream.

Second, Chalabi fed intelligence and sources to journalists and the U.S. intelligence services. This was, for him, the easiest task. Much of the world already believed Saddam had WMDs. And Saddam was indeed a sadistic tyrant. Chalabi's contribution was to give the allegations flesh and muscle and specificity. The tidbits he provided were often quickly discredited by intelligence officers, but they had tremendous impact on public opinion. His use of the press helped prepare the political battleground for war. The New York Times, CBS News' "60 Minutes," PBS' "Frontline" and Vanity Fair became his chosen outlets. The splash from his stories was immense. Saddam, the intelligence services knew, had no ties to the attacks of 9/11, but as Chalabi's friend Fouad Ajami wrote once to explain the war, "These distinctions did not matter; the connection had been made in American opinion."

Third, Chalabi had political impact that was virtually unheard of for a foreigner. He used his personal magnetism, lobbying skills and tactical abilities to merge U.S. policy with his own ambitions. The U.S. Congress passed a law written largely to achieve his vision and to boost the fortunes of his political vehicle, the Iraqi National Congress. He had a battery of supporters on Capitol Hill. U.S. senators like Trent Lott, John McCain, Sam Brownback, Joe Lieberman, and Bob Kerrey became his champions. But even more important, he knew how to manipulate the key aides who work anonymously in the back rooms to make Capitol Hill run. He courted key Republicans like Trent Lott's Randy Scheunemann and House international affairs staffer Steve Rademaker, as well as Senate Democratic aides like Chris Straub and Peter Galbraith.

As a younger man, Chalabi had presided over the wholesale collapse of his family's business empire, a worldwide venture riddled with fraud insider dealing and disastrous investments. But he was able to bounce back after locating a rich vein of financing from the U.S. government. American taxpayers generously funded him and his Iraqi National Congress during his fifteen-year campaign against Saddam. Although he was not an American, and in fact distrusted the United States, he moved from one federal agency to another with the easy grace of a hummingbird drifting from flower to flower. First he was funded by the Central Intelligence Agency, then by the State Department, and finally by the Defense Department. When he called the United States a "strategic ally," maybe it was a taunt as much as it was reality.

Part 2: End of 'golden age' in Iraq

Excerpts of Aram Roston's book, 'The Man Who Pushed America to War'

�We have undertaken to liberate the beloved homeland,"� announced the voice on the radio through the static one early morning in Baghdad in 1958. The calendar showed it was July 14, Bastille Day, the anniversary of the start of the French Revolution. Iraqis had slept on their rooftops to avoid the summer heat, and now, all over the city, people began to stumble out into the street. The radio crackled on, repeating a lengthy message. �We have undertaken to liberate the beloved homeland from the corrupt crew that imperialism installed. Power shall be entrusted to a government emanating from you and inspired by you."�

In the palace, the Crown Prince, the power behind the throne, got out of bed and turned on the radio to hear the news of his downfall, and then rushed out to surrender. The story goes that when the royals gathered in the courtyard, an Iraqi army captain slaughtered them, riddling their bodies with machine-gun fire in one long-sustained burst.

It was still the early hours of the morning when members of the wealthy Chalabi family, at their homes in the Baghdad neighborhood of Adhamiya, learned of the coup. Three majestic adjacent homes all belonged to the Chalabis, a close-knit clan. The Chalabis gathered hurriedly to consult on what to do in this new and sudden crisis. The children had slept on the roofs too, under the Baghdad sky, and now they watched the adults as they debated in fright. Children can sometimes sense these things, and the children there had a foreboding that this day was different, that it symbolized an ending of things as they had known them. The grown-ups quickly reached their decision, and then they acted.

Young Ahmad Chalabi, thirteen years old, black-haired and serious, was herded with his mother and the others into a convoy of big American sedans to flee their mansion. Ahmad left behind the basketball hoop he had helped to set up. He left behind the ping-pong table, which slid behind a specially constructed wall. Abandoned as well, just for a time that day, were the pet parrots in the massive cage --� almost as big as an aviary --� squawking away in the excitement. The brightly colored birds were just one of the delightful and distinctive things in their stately home that the Chalabis were leaving behind. The family split up. Some of the men, joined by the foreign minister of the country, Fadhil al-Jamali, and by Chalabi's much older brother Rushdie Chalabi, fled from town to hide. The rest, including Ahmad and his mother and several siblings and nephews and cousins, drove to Khadimiya, back then just a suburb just north of Baghdad. Khadimiya, a Shiite stronghold, had been the Chalabi family's main base going back for generations. In fact, Medina Abdul Hadi was an adjacent enclave named for Ahmad's father. Luckily, on this day Ahmad's father, Abdul Hadi Chalabi, was out of town; he was in Tehran when the revolution began.

But according to family lore, the Chalabis did not even venture into their compound in Khadimiya, called Seef, which had been a splendid place to play and hunt and celebrate in a well-tended orchard --� a wonderland where Iraq's royalty and elite held their parties and festivities. No, the family didn't even go there; instead they crowded into the home of an ally in Khadimiya. They needed somewhere to hide from the soldiers and mobs. While the rest of Iraq was celebrating the bloody revolution, the Chalabis were targets, clustered in their host's estate for shelter.

Born October 30, 1944, toward the end of World War II, when the British still quietly pulled the strings in Iraq, Ahmad Chalabi was his parents' ninth and final child. He was born nine years after his next oldest brother, Hazem, and their mother, Bibi, used to joke occasionally that Ahmad was a �mistake,"� an �accident."� Yet she doted on her youngest son. And since some of his older brothers were old enough to be his father, it was as if he had a half-dozen parents tending to him. The Chalabis were a leading Shiite merchant family, entwined with the monarchist government of Iraq. Before the monarchy they had allied themselves with the British occupiers and before that with their Turkish overlords. In the context of the Middle East, they had converted to Shiism relatively recently. Family members say that Ahmad's great-great-grandfather was a Sunni who adopted the Shiite faith. Perhaps the zeal of the convert impressed itself on his offspring, because they became pillars of the Iraqi Shiite community.

'A sigh of relief' after forebear's death
Iraqi historian Hanna Batatu describes Chalabi's great-grandfather as an extremely brutal and powerful man, with his own �special prison at his disposal"� and a �bodyguard of armed slaves"� that he used to impose his will on the Shiite community of Khadimiya. �When he died the people of Khadhimiyyah heaved a sigh of relief,"� Batatu wrote, citing Jawad Chalabi, Chalabi's elder brother, as the source.

Chalabi's father, Abdul Hadi, shed the oppressive reputation of his forebear. He functioned as a financier of the Iraqi monarchy, but also of the Shiite clerical leadership in Najaf. Family members say he gave a percentage of his wealth to the Shiite religious leaders, as was expected of those in his position. As for rulers of Iraq, in 1938 Abdul Hadi �got in the good graces of the regent-to-be, 'Abd-ul-Illah, by coming to his assistance with loans."� The prince, a gambler, �in due course made him a minister of public works and eventually the vice president of the Senate."�

Indeed, a year after young Ahmad Chalabi was born, Prince 'Abd-ul-Illah brought Abdul Hadi with his entourage to the United States on a state visit. They stayed at the Waldorf-Astoria in New York before going to Washington, D.C., where the prince overnighted at the White House. The Chalabi family was part of the old Baghdad business elite: the word �Chalabi"� --� of Turkish origin --� originally was an honorific applied to high-ranking merchants. As Batatu summed it up, �Translating economic power into political influence, and political influence into economic power, the Chalabis climbed from one level of wealth to another, and on the eve of the 1958 revolution surpassed other business families."�

Pampered and happy, Ahmad Chalabi was a studious boy. And in the play room of his father's big house, he played ping-pong with Jasseem, the son of a police official who helped to protect the place. He and Jasseem --� boys of a different class entirely --� played against each other, rhythmically tapping the ball back across the fragile table. Chalabi would later evoke the pleasant times in Iraq that preceded those atrocities of 1958. From his childhood perspective, waist-high to the wealthy, well-educated men around him, this Iraq was an eclectic, tolerant place, where Shiites, Sunnis, Christians, Jews, and even Yazidis worked together. Chalabi kept a photograph for decades that he would show to his friends. �It was the board of his father's company,"� as one man recalled, �and it was a Turcoman, a Jew, an Assyrian, a couple Shiite, a couple of Sunni. It was like a cross-section of Iraqi Society, and his big thing was, this is how Iraq was. This is how we were, this is how we will be again!"�

It was, in one account by a Chalabi supporter, a �golden age."� He wrote that �Iraq had a constitution, elections, a reasonably free press, a market economy, expanding public schools, a rising middle class."� Another writer described it this way: �Iraq in the 1950s was multiracial and increasingly prosperous."� That Iraq was a place to which anyone would want to return.

And indeed, for the rich, the Iraq of the day was a dreamland. The Iraqis mimicked the British nobility. Iraq even had the only foxhunting between Rome and Peshawar, diplomats would quip. But that Iraq existed for only a privileged few. The real Iraq of the day was nothing like it. Even the young Ahmad Chalabi must have caught a glimpse, or a smell at least, of the poverty of that other Iraq. The year before the coup of 1958, he has said, he had traveled to London. Like any boy, he must have looked out the car window on his drive to the Baghdad airport to see the surroundings: �clusters of medieval mud huts, holes for windows, a rusty piece of sheet iron for a door."� That was the way the Washington Post described it at the time. One historian writes, �Throughout the 1950s massive slums spread around Baghdad, with the hovel inhabitants periodically swamped by muddy overflows from the Tigris."� �The infant mortality [rate] is 250 per thousand. A woman has a 50:50 chance of raising a child to the age of ten. There are no social services of any kind. . . . On the adjacent dumps dogs with rabies dig in the sewage and the slum-dwellers pack it for resale as garden manure."�

Part 3: The collapse of a business empire

Excerpts of Aram Roston's book, 'The Man Who Pushed America to War'

On March 9, 1989, old Abdul Hadi Chalabi, Ahmad's father, passed away in London; his body was loaded onto a Royal Jordanian jet, which lifted off to Syria for burial in a Shiite cemetery. The death of the old man --� and the flight of his remains to the Middle East --� was a kind of marker for the family, for it heralded the beginning of a spiral of collapse, as if he was the only thing holding their businesses together.

Just a month and a half after his death, in the morning hours of April 27, 1989, a group of somberly dressed accountants and lawyers stepped into the foyer of 100 Rue de Rhone in Geneva, where the Chalabi family businesses in Switzerland were headquartered. The lawyers and accountants were polite but firm. For all their businesslike appearance and formality, however, they were the financial equivalent of the Grim Reaper, implacable and stolid, sent by the venerable Swiss Federal Banking Commission. The commission notified MEBCO that its banking license had been revoked. �This is the way it is done,"� said one of the Swiss lawyers who went in that day. �We had to go in and tell them, 'Your bank has been closed. We are the liquidators.'"�

Perhaps it was a good thing for the old man that he died when he did, because MEBCO Geneva, run by Hazem Chalabi, was just the first to fall in the long and painful collapse of the Chalabi enterprises worldwide. Petra Bank, in Amman, would be taken over in August, and after that Socofi in Geneva went down, and still later MEBCO in Beirut, all caught in a whirlpool that sucked away the life savings of a large number of investors. What's more, criminal investigations would hound the Chalabis in Switzerland, Lebanon, and Jordan.

In later years, Ahmad Chalabi blamed the governments of Iraq and Jordan for the collapse of his Petra Bank. It was a frame-up, he convinced his followers, including powerful members of the U.S. political establishment. According to Chalabi, he was the victim of a massive, politically motivated conspiracy to destroy his successful operation. The real story is far more complex and disturbing, involving mysterious business deals, fraud, embezzlement, an executive's love affair gone wrong, and secretive companies located in offshore tax havens like the Cayman Islands.

Unusual business associate
To chronicle the collapse of Petra Bank and its sister banks, it's best to start with a look at the circle of people the Chalabis were doing business with. The most unusual of the Chalabis' business associates was an American named Wayne Drizin. Back in the 1980s, when he met the Chalabis, he was operating in Lugano, Switzerland. Drizin would travel the world first-class, accompanied, sources say, by a small lapdog. He carried on business through a company called Welfin S.A., and he would later boast, in securities filings, that he �orchestrated the sale of Welfin S.A. to (a) Swiss-based multinational banking group indirectly wholly owned by the Chalabi Family, including Mr. Ahmed Chalabi."�

Drizin seems like a mismatch as a Chalabi business partner. He first surfaces in public record in the summer of 1980 in connection with the legalized prostitution industry in Nevada. He and a well-known madam announced they were about to purchase the famous Mustang Ranch brothel in Nevada. The brothel, a large pink structure, was home to sixty or seventy prostitutes, and was owned by the notorious Joe Conforte, an alleged mob associate. The deal attracted attention across the country, from Los Angeles to New York. Drizin said he had financing from London for the transaction, and he wasn't shy about publicity about his grandiose plans for the infamous brothel. Drizin said he planned to buy the facility, hire an additional seventy prostitutes, and build an airstrip so that the �johns"� could fly in to the place to attend to their desires. It would become a massive enterprise, if the publicity was to be believed. But the deal fell through. Still, Drizin quickly pushed to open another brothel, clearly enthralled by the business. County commissioners balked at granting him a license, and he lambasted them. �They seem to be more interested in stopping competitive brothels than helping the county,"� he told a reporter, in a unique take on the need for competition in the prostitution industry.

Drizin would later blame a series of legal troubles on various government conspiracies against him. He was charged with a felony for bouncing a check in Broward County in 1982, and that same year, records show, the Florida Bar Association disbarred him. He had bounced a check for $75,000 to one person, a check for $125,000 to another, and then a check for $18,000 to yet a third. Years later, he would face serious trouble with the law: a federal jury in Arizona found him guilty of wire fraud in 2003.

Drizin brought the Chalabis into ventures that suggest they had a penchant for high-risk schemes rather than conservative banking. One was a 300-foot ship called the Nissilios, supposedly being built at the shipbuilding port in Piraeus, Greece. It was to be an ultraluxurious cruise liner, more elaborate than anything ever built, a concept that fed off the conspicuous consumption of the Reagan years. It would boast massive staterooms designed for the extremely rich, who would shell out $7,000 a week for them. Like so many other shipping schemes, it turned out that it was like pouring money into a hole in the water.

Fleeing Jordan
On Aug. 7, 1989, in the dark of night, Ahmad Chalabi fled Amman, Jordan. He took few possessions with him, a sign either that he thought he would return soon or that the urgency of his departure left him no time to pack. He drove north, which would take him through the hills on the outskirts of the city and then toward the Syrian border. The wrath of Jordan would follow him as he left because Petra Bank, more than any other Chalabi family enterprise, left the most damage in its wake.

Back in the winter and spring of that year, Ahmad Chalabi, at his office in Wadi Saqri, had done his best to weather the storm after his father died. The problem was this: just as the Chalabi family businesses were coming apart at the seams, and the web of insider dealings was about to become exposed, the façade of health in the Jordanian economy was also shattered. Dubbed the Gucci Kingdom for its lavish and stylish ways, the place was in turmoil: hunger, food riots, bank runs and inflation. For months the Central Bank authorities were trying to prevent the collapse of the local currency, taking a variety of restrictive monetary steps. The Jordanian government put the brakes on spending, skidding the economy into tough times as it sought to curtail waste. It was an awful mixture just when Ahmad Chalabi needed liquidity the most.

It was nothing exceptional in the scheme of things: the loose practices of the Reagan years were coming to an end, and economies seemed to be collapsing everywhere. Savings and loans were going bust in the United States. U.S. Attorney Rudy Giuliani indicted the king of Wall Street, Michael Milken. In the spring of1989, the king of Jordan brought Mohammed Said Nabulsi back into the Central Bank to try to rein in the economic havoc of the country. The diminutive economist, who had actually helped get Petra its banking license in the first place in 1978, had chaired the Central Bank from 1972 to 1985 and then worked for the United Nations in Iraq. Once Nabulsi returned to Jordan, his first job was to prop up its crumbling currency. The dinar was under attack, and he needed to go to war to defend it or the nation's paper money would be worthless. Ahmad Chalabi mistrusted Nabulsi and viewed him as his nemesis. First, Nabulsi dropped the artificial price of the dinar and let it float a bit. Then, the Central Bank's currency reserves were completely depleted, so he ordered all banks to help him. They were commanded to deposit, with interest, a share of their foreign funds into the Central Bank. He had that authority according to the laws of the country. So in May 1989, the Central Bank of Jordan ordered all banks to deposit 35 percent of their foreign currency in the bank. This fact is undisputed.

�He said, "We are working on it"'
It was Chalabi's response � or lack thereof � that ended up exposing the extent of Petra Bank's problems, according to Nabulsi, who says Petra Bank was the only bank to deposit nothing in the Central Bank. "What happened is that all banks did it, except Petra,� he explains. Chalabi's supporters say that Nabulsi had always had a bitter relationship with Ahmad Chalabi, and that the new Cabinet in Jordan was less friendly to him than the last. Nabulsi says he was perplexed and disturbed. Personal dislikes aside, Nabulsi says, he called Chalabi up and Chalabi tried to allay his concerns over the phone. "He said, �We are working on it!'� recalled Nabulsi.

Who can say what Ahmad Chalabi was thinking at this point? For some men of wealth and status, the idea that everything can come unglued is like getting suffocated, almost intolerable. There seems to be no way out. The collapse, the possibility of poverty -- they are all horrors. But worst of all is the fear of possible shame and exposure, the sense that one may look ridiculous and petty. Did Ahmad Chalabi feel these things? It's possible. But perhaps he was immune to the psychological pressures of impending bank failure. Perhaps he did not realize just how tenuous his economic situation was. Possibly he believed he had done nothing wrong. In fact, at that time there were no public allegations of criminal misdoings by Chalabi. There may have been questions, but there were no specific allegations until several months later. On the contrary, back then, everyone assumed it was all just an accounting issue. No one knew about the various interlaced loans between the Chalabi banks.

Whatever Chalabi was thinking, Nabulsi admits that by this time he was getting concerned. The second-largest bank in Amman was not responding to his command as governor of the Central Bank. "I started to doubt the whole situation. Why is he not giving the Central Bank anything?� Nabulsi wondered. So he summoned Ahmad Chalabi to his office at the Central Bank. The two men faced each other across his desk awkwardly. Nabulsi said Chalabi, as usual, was playing with a pocketknife as if it were a set of worry beads. And then, he says, Chalabi gave him an unusual explanation. "He claimed that all the foreign currency he was supposed to have had been redeposited in certain companies or banks.� Nabulsi was upset. "I said, �Look, Ahmad, this is not legal! You should be able to give me immediately something of your deposits.'�

A lawyer for Chalabi admits that Chalabi resisted depositing funds in the Central Bank as ordered, but he cannot explain why. Certainly Petra Bank had engaged in some public relations stunts to prove it had foreign currency. It once stacked U.S. currency in its lobby, for example, to show that it had reserves on hand.

Extent of crisis becomes clear
By early 1990, the scope of Petra Bank's crisis was becoming clear. Some of the first devastating news came from a January 15,1990, audit the Jordanians commissioned to examine the bank's balance sheet on the day before it had been taken over � a financial snapshot in time. The auditors from Arthur Andersen found the Petra Bank books were a massive compilation of lies or mistakes. They found enormous losses: 40 percent of the bank's outstanding loans, about 126 million dinars ($176 million), were not being paid back, they said. The euphemism they used was "non performing.� Instead of 104 million dinars ($140 million) in cash on hand, as its books claimed, Petra had only 8.6 million dinars (about $12 million).

The auditors said the bank was undercapitalized for its size. While there were 30 million dinars in capital at the bank, or $42 million, the auditors said that was short to the tune of about 157 million dinars, or $220 million. Another interesting thing the audit found was very similar to what the auditors would find at Socofi: a vast web of insider deals. Forty-four million dinars had been lent to what was dryly called "related parties,� meaning borrowers connected to the Petra management. Meanwhile, there was a morass of deposits crossing over between Petra, Socofi and MEBCO.

By that time Ahmad Chalabi had already fled to London. At the age of forty-five, he found himself in exile for the second time in his life. There is no way to get inside his head, but there is ample evidence that he appeared to believe the story that he would so compellingly present to the receptive audiences he found in the West: that he was the victim of persecution, the target of an elaborate conspiracy, which could almost always be traced back to his original nemesis, Saddam Hussein in Iraq.

Part 4: Saddam's airline hijacking school

Excerpts of Aram Roston's book, �The Man Who Pushed America to War'

On November 4, 2001, almost two months after 9/11, Ahmad Chalabi called a telephone number in Lebanon, according to Mohamad al-Zobaidy, who took the phone call at his apartment in Beirut, greeted Chalabi and noted his instruction. Chalabi's code name in Zobaidy's records was Our Big Brother. Take care of the two men in your custody, Chalabi told Zobaidy on the phone. Don't let anyone see the men, he insisted. Don't let them talk to anyone. Zobaidy nodded and reassured Ahmad Chalabi before hanging up the phone. Zobaidy knew how to keep secrets and how to make sure people did what he told them to do. He's not a large man, but he carries himself as if he is. A veteran of the INC (Iraqi National Congress), he wears a rakish little goatee. And he lived the life of a secret agent, ranging across borders to serve the organization's needs. In fact, his own code name in the INC was Al Deeb, The Wolf. Zobaidy, who kept an immaculate diary, would later become bitter toward Chalabi and his INC, but in 2001 and 2002 he was still a loyal and dedicated secret soldier in its cause.

Chalabi's phone call to Zobaidy puts Chalabi in the middle of one of the earliest and most significant propaganda operations run by the INC after 9/11: an elaborate series of claims that Sadism ran a school for training airline hijackers at a terrorist camp called Salman Pak.

It was Francis Brooke (Chalabi's loyal American aide) who got the message out to Aras Kareem Habib and others right after 9/11: "Get me a terrorist and some WMDs, because that's what the Bush administration wants!� He tells the story in various ways: "If you've got it, bring it on, because now's the time� is the phrase he used in another conversation. Whatever Brooke's specific instructions were, the INC campaign had two themes: to ?nd Iraqi defectors who were prepared to make allegations about Saddam's WMDs on the one hand and defectors who'd make allegations about Saddam's links to terror on the other. All in all Chalabi's people � defectors and sources � produced four major story lines about Saddam, all of them false, but all with worldwide media coverage.

(The) story in the Times broke on November 8, 2001 � the headline was gripping, coming in those months after 9/11: "Defectors Cite Iraqi Training for Terrorists� � and it linked (Iraqi defector Sabah) Khodada's and (fellow defector) Abu Zainab's yarns together for the ?rst time. "Two defectors from Iraqi intelligence,� wrote (reporter Chris) Hedges, "said yesterday that they had worked for several years at a secret Iraqi government camp that had trained Islamic terrorists in rotations of ?ve or six months since 1995.� The story cited both Khodada and Abu Zainab, whom it called a "former lieutenant general.� Abu Zainab was evocative in his descriptions, calling the Islamists at the camp "a scruffy lot� who had trained in Iraq how to take over airplanes. "We were training these people to attack installations important to the United States,� Abu Zainab said in the article. "The gulf war never ended for Saddam Hussein. He is at war with the United States. We were repeatedly told this.� The New York Times article pointed out that the allegations were "likely to fuel one side of an intense debate in Washington over whether to extend the war against Osama bin Laden and the Taliban government of Afghanistan to include Iraq.�

Capitalizing on the publicity
Chalabi lost no time in capitalizing on the publicity. Working over the weekend at the Pennsylvania Avenue address of the INC, just blocks from the White House, the INC was anxious to prove that the hundreds of thousands of dollars per month in information-collection program funds were being spent well. The INC dashed out a report to the State Department, boasting that it continued to "collect sensitive information that reveals Iraq's link with September 11th aftermath.� That's an intriguing part of the story, because it indicates that the State Department, while not believing Chalabi's information, should have been aware of the propaganda operation.

As dramatic as all the information was, the Central Intelligence Agency never bought it. "It was tainted,� said one member of the Iraqi Operations Group. "We knew that Salman Pak was used to train Palestinians in the 1990s but not al Qaeda.� The agency's Iraqi Operations Group wrote up an analysis stating that "we have determined that much of his (Abu Zainab's) information is inaccurate and appears aimed at in?uencing U.S.(and probably Western) policy on Iraq.�

And a year after 9/11, on September 29, 2002, well before any invasion of Iraq, the CIA produced a secret report to explain its views about Salman Pak. "At least one of these defectors,� the CIA analysts wrote, referring to Abu Zainab, "had embellished and exaggerated his access. . . . No al Qaeda associated detainee since 11 September have said they trained at Salman Pak.�

This might have put it all to bed, except it came far too late. At a bare minimum it was ?fteen days too late. On September 12, 2002, President George Bush stood before the General Assembly of the United Nations and gave a speech that largely foreshadowed the case for war, as troops were already heading toward the Gulf. That same day, the White House released a fact sheet to go along with the presidential speech, which was supposed to assist reporters in their coverage of the story. It repeated the now well-worn allegations about Salman Pak. "Former Iraqi military of?cers,� it said, clearly referring to Abu Zainab and Sabah Khodada, "have described a highly secret terrorist training facility in Iraq known as Salman Pak, where both Iraqis and non-Iraqi Arabs receive training on hijacking planes and trains, planting explosives in cities, sabotage, and assassinations.�

It had been nearly a full year since Ahmad Chalabi met with the DIA (Defense Intelligence Agency) to tell them the tale. It had been fully investigated and essentially discarded. Even Chalabi's own people didn't believe the chief source.

But still, Chalabi's allegations about Saddam's role in training hijackers had found their way into the White House press of?ce as it made the case for war.

The whole story cost the INC no money at all. Not a dime. After all, the group's budget was entirely paid for by the State Department, which grudgingly and unwittingly paid for all expenses. Abu Zainab's expenses � and everything the INC spent on their efforts was paid for by American taxpayers.

Part 5: Chalabi's Iran connection

Excerpts of Aram Roston's book, �The Man Who Pushed America to War'

Aram RostonInvestigative producer The Iranian Revolutionary Guard's Quds Force, which is tasked to propagate Iran's Islamic Revolution, divided its operations in Iraq into three directorates after the U.S. invasion (of Iraq). The southernmost is referred to by the Quds Force as the "Ramadan,� or "Ramazan� (in Farsi), command, and the complex Iranian operations there are overseen by Gen. Ahmed Frouzanda (sometimes transliterated as "Frohazendah�). It is the most important region of Iraq, from Iran's perspective, not just because of the shared border but because the area is home to Iran's Shiite constituency. Ayatollah Khomeini had sought to make it his second Islamic Republic.

Frouzanda is one of Iran's master operatives. U.S. military and counterterrorism officials treated him as a "high-value� intelligence target for years, even before the Iraqi invasion, and they try to track his whereabouts. They believe he cut his teeth working in Lebanese Hezbollah operations against the United States and Israel in the 1980s.

Chalabi had met him at least twice before the war, according to former INC official Nabeel Musawi. Frouzanda is said to be distinctive in appearance, getting portly in his fifties but with handsome features and a salt-and-pepper beard. He is, as Musawi points out, a "handsome� man. Musawi says he was at a lunch meeting with Frouzanda and Chalabi, where they discussed how to ensure that INC operations in southern Iraq went smoothly.

There can be no doubt about Frouzanda, according to American intelligence experts. "He is a murderer of Americans,� said a former CIA official familiar with Frouzanda's file and with the hunt for him. "He is an intelligence officer of a hostile service which is directly involved with operations that kill Americans. He is a paramilitary officer with the Revolutionary Guard and a skilled one. He is an enemy of the United States.�

Once the United States invaded Iraq and Chalabi continued to accept DIA (Defense Intelligence Agency) cash, according to U.S. intelligence sources, he did not cut himself off from Frouzanda or other members of Iranian intelligence. In the late winter and spring of 2004, the United States was battling Sunnis in the west of Iraq and Shiites in the south, and cracking down on Muqtada al-Sadr's Mahdi Army. Chalabi had positioned himself ever more closely to the Shiite bloc.

It was then, sources say, that the CIA believed there was another meeting between Ahmad Chalabi and Frouzanda. The meeting, they believed, took place in northern Iraq, near the small border town of Penjwin, and was set up by Aras Habib Kareem, Chalabi's enforcer and intelligence chief.

(Editor's Note: In January 2008, the U.S. government issued an Executive Order designating Ahmed Foruzendeh (a different spelling of his name) and others as threatening the stability of Iraq. Among other things, the order said that Foruzandeh "leads terrorist operations against Coalition Forces and Iraqi Security Forces, and directs assassinations of Iraqi figures.�)

It was in this same time frame that the NSC intercepted communications indicating that Tehran had been warned its codes had been broken. It was a high-level breach of U.S. intelligence. Soon, the FBI began investigating. "It was an enormous investigation,� said a CIA official on the ground at the time. FBI agents from their counterintelligence squads, as well as their national security division, began trying to uncover the source of the breach. They quickly pulled the DIA agents in from their assignments over at the Iraqi National Congress headquarters to interrogate them. DIA agents were sent home to the States in shame for questioning.

FBI interview never happened
After the case went public, an FBI official involved in it said the agents quickly tried to set up an interview with Ahmad Chalabi. "We were not looking at him as a subject,� the agent emphasized. "Chalabi was looked at as a witness.� From an FBI perspective, even if Chalabi had revealed U.S. secrets, it is not at all clear that he would have been committing a criminal offense. More important to the bureau was how Chalabi would have learned of the information in the first place. That was the riddle, the FBI official said: could it have been espionage, or indiscretion, or even an accident � unintentionally disclosed by an American? Over the next few months, the FBI, according to the agent, hashed out an agreement with a member of Chalabi's U.S.-based legal team. He agreed to do an interview, the agent said, but it never happened.

Certainly Chalabi continued to deal with Iran. Middle East intelligence sources maintain that Chalabi's operation collecting Baathist files and documents after the U.S. invasion was useful for the Iranians. One intelligence source alleged in an interview that "He gave intelligence documents to the Iranian MOIS� (Ministry of Intelligence and Security). But if he did, there is no law against this, especially if they were not actually U.S. documents.

Officials began to re-examine the relationship Chalabi's INC had maintained with the Iranians all along. "The Defense Intelligence Agency has concluded that a U.S.-funded arm of Ahmed Chalabi's Iraqi National Congress has been used for years by Iranian intelligence,� reported Newsday's Knut Royce, "to pass disinformation to the United States and to collect highly sensitive American secrets, according to intelligence sources.�

After the war, some speculated that Chalabi may have been an Iranian intelligence "agent� throughout the 1990s and may have lured America into war on behalf of his real spymasters in Tehran. Both the CIA and the DIA suspected the INC was penetrated by the Iranians all along. But this new allegation ratcheted up the concerns several notches, in calling Chalabi an active agent. It is also almost certainly a myth, though. Iran, no doubt, had the same difficulty that the United States had in controlling him.

A more precise analysis is put forward by former CIA officers who believe that Chalabi was probably an "agent of influence� for Iran. They doubt he was paid anything but believe there was a convergence of interests and a loyalty to the Shiite regime there. Whitley Bruner, who first contacted him all those years ago on behalf of the CIA, came around to that view after seeing how influential Iran was in the new Iraq. Bruner acknowledges that there are different ways to see it. "You can make a coherent case that he's been an Iranian agent since the beginning. If you look at it from that prism, it makes sense,� he says. But Bruner actually discounts that "agent� theory in favor of the "agent of influence� interpretation. "It became a question to me: what were his long-term objectives, and where, other than himself, are there allegiances? I think when he thinks big, Iran plays a major role. I guess I come belatedly to the idea that there was a very close sense of identity with Chalabi in terms of Iran, and a very emotional tie. Whereas the Americans were always just a means to an end. We were much more of an instrument. The Iranian role was long-term.�

Robert Grenier, who also was part of the CIA's Iraqi Operations Group in the early days and later during the U.S. invasion, says he doesn't think Chalabi is anyone's agent; he thinks Chalabi worked with Iranian intelligence only opportunistically. "Ahmad has always had the ability to manipulate people he needs to,� Grenier argues.

No one will know unless a mob of outraged Iranians revolts against the mullahs in Iran and the crowd opens up the files of the Revolutionary Guards, just as they once opened the files of the cruel SAVAK. Then, perhaps, they will pull out the Chalabi folder. But he is no Manchurian candidate of the Iranians in Iraq. The real question is not whether he was an Iranian agent but whether he was more loyal to Iran or the United States. Certainly in pure intelligence terms, weighing his behavior over the years, he was indisputably more helpful to Iranian intelligence than he was to the CIA, with whom he had such a troubled relationship.

(Editor's Note: On March 14, NBC Nightly News ran a story about Ahmad Chalabi and referred to the meeting with Frouzanda, the wanted Iranian general. Asked for comment, Chalabi provided NBC News with this statement: "The U.S. did not publish the names of any wanted Iranian for activities in Iraq in 2004. So there is nothing to the false implication that I knew this individual was wanted by the U.S. authorities at that time. Moreover, all top Iraqi leaders who visit Tehran meet regularly with Iranian revolutionary guards, including this individual. To illustrate this: some of the Iraqi leaders who met with President Bush as recently as 2007 have met with the man named in your question, and did so before and after their meetings with President Bush. Moreover, the U.S. itself has met with many individuals it has decried as having done something wrong. The object of any meetings I attend is to promote the stability that my country needs, and speaking to people from various points of view sometimes moves the process in a favorable direction."� Click here to watch the Nightly News piece.)