Iraqi group linked to questionable intelligence loses U.S. funding

Knight Ridder NewspapersMay 18, 2004 

— WASHINGTON — The Pentagon is cutting off funds for a former Iraqi exile group that supplied defectors who provided exaggerated, fabricated and unproved information on Iraq's weapons programs and said Iraqis would greet U.S. troops as liberators, U.S. officials said Tuesday.

The Iraqi National Congress was informed last Friday that the $335,000 monthly payment it's received from the Defense Intelligence Agency would stop in June, they said. The payments were first reported by Knight Ridder on Feb. 21.

The funding cutoff represents a major setback to administration hardliners, who had hoped to position INC leader Ahmad Chalabi to head a democratic Iraqi government that would sign a peace treaty with Israel, allow the United States to build permanent military bases in Iraq, and serve as a model for the rest of the Middle East.

A fierce struggle had raged over Chalabi's post-invasion role between his champions in the Pentagon and Vice President Dick Cheney's office and his detractors in the uniformed military, the CIA and the State Department.

Chalabi, a former banker who opposed Saddam Hussein for decades from exile and spent years lobbying for the United States to help overthrow him, is a member of the U.S.-installed Iraqi Governing Council.

The INC has received millions of dollars from the United States since 1998. Some of the money underwrote an Information Collection Program, which began as an effort to gather intelligence on Saddam's regime.

After the March 2003 invasion, the INC started providing U.S. commanders with information on the anti-U.S. insurgency.

U.S. officials credit INC-supplied intelligence with saving the lives of U.S. soldiers. The INC also has been helping U.S.-led weapons inspectors in Iraq.

But U.S. intelligence officials have determined that prewar information from INC-supplied defectors on Saddam's illegal arms programs and his alleged cooperation with Islamic terrorists was marginal at best, and some was exaggerated or fabricated.

Even so, some defector claims found their way into the CIA's key pre-invasion assessment of Iraq's illegal arms programs, into President Bush's 2003 State of the Union address and into a Feb. 5, 2003, speech by Secretary of State Colin Powell to the U.N. Security Council.

On Monday, Knight Ridder reported that the White House publicized one defector's allegations nine months after the defector showed deception in a lie detector test and was dismissed as unreliable by U.S. intelligence agencies.

INC officials have denied that the group knowingly provided defectors of dubious credibility. They insisted that the INC did its utmost to check their identities and reliability before turning them over to U.S. officials.

Deputy Secretary of Defense Paul Wolfowitz, a key architect of the invasion and a leading Chalabi supporter, said the Pentagon was cutting funds for the INC because it wouldn't be proper for the United States to continue supporting the group's information collection effort after an interim Iraqi government assumes limited sovereignty on July 1.

"There's been some very valuable intelligence that's been gathered through that process that has been very valuable for our forces. But we will seek to obtain that in the future through normal intelligence channels," Wolfowitz told the Senate Foreign Relations Committee.

But a senior administration official, speaking on the condition of anonymity, said the administration had concluded that U.S. support for Chalabi was undercutting U.S. efforts to allay suspicions that Washington was seeking long-term influence in Iraq.

Entifadh Qanbar, an INC spokesman, declined to comment, saying the funding was confidential.

But he said that after June 30, all funding for U.S. intelligence activities in Iraq "must be stopped. I am referring to the CIA. Iraq will be a sovereign government and also an ally of the United States."

U.S. officials said that other factors contributed to cutting off the INC's funds.

For the past few months, Chalabi has angered the Bush administration with his criticism of U.N. envoy Lakhdar Brahimi, who's leading efforts to select an interim government that would replace the Governing Council on July 1.

Brahimi, the senior administration official said, "is not a fan of Mr. Chalabi."

A senior U.S. official said that there are several investigations into allegations of "massive corruption on the part of INC folks."

Chalabi's allies in the Pentagon, he said, may have decided to begin insulating themselves from any political fallout produced by the probes.

The INC, said the senior administration official, angered Washington by refusing to hand over Iraqi intelligence files that its militia seized after the Pentagon allowed it into Baghdad shortly after the city fell.

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(c) 2004, Knight Ridder/Tribune Information Services.

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