WASHINGTON — In June 2001, at an annual retreat in fashionable Beaver Creek, Colo., for current and former world leaders, Pentagon adviser Richard Perle introduced two men to each other who would help guide the United States to war in Iraq.
Iraqi exile leader Ahmad Chalabi and Vice President Dick Cheney then went for a two-hour afternoon walk, according to a former senior U.S. government official who was present.
That day marked a turning point in the budding alliance between Chalabi and prominent U.S. conservatives. Both sides were eager to see Iraqi dictator Saddam Hussein ousted from power, and after the Sept. 11 terrorist attacks, although there was no evidence that Saddam was involved, they pushed that goal relentlessly.
The partnership involved overt and covert U.S. support for Chalabi's bid to be Iraq's next leader. His Iraqi National Congress in turn provided intelligence about Saddam's weapons programs and links to terrorism—most of which turned out to be bogus or unproved.
The alliance with Chalabi is now in ruins.
U.S. intelligence officials have accused his security chief of passing highly classified American secrets to Iran. Iraqi police, backed by U.S. personnel, raided Chalabi's home and his offices May 19, seeking to arrest associates on charges of financial corruption.
The FBI has opened a probe into who gave the compromised data—so sensitive that it put U.S. soldiers' lives at risk and was known to only a handful of government officials—to the INC.
Little has been made public about the investigation, but it's believed to be focusing on officials in the Pentagon and elsewhere in the U.S. government who were closest with Chalabi and were his strongest boosters.
Some current and former U.S. officials speculate that Iran not only received U.S. secrets but also used Chalabi's group to pass false threat information to the United States about Saddam, with whom Iran had fought an eight-year war. Iran's likely goal, they say, was to precipitate a U.S. invasion and take advantage of the ensuing chaos, or to keep pressure on for continuing U.N. sanctions that would keep Saddam contained.
Chalabi's longtime relationship with the theocratic regime in Iran was no secret.
He traveled frequently to Tehran and relied on the Iranian government's goodwill to establish a base of operations in northern Iraq, which was outside of Saddam's control for most of the 1990s.
The Bush administration allowed the INC, which received at least $40 million in U.S. funding over the years, to establish an office in Tehran, approving a special license required under U.S. sanctions on Iran.
CIA warnings that Chalabi had become too close to Iran's regime fell on deaf ears in Washington, current and former intelligence officials said.
"They ignored it," said Robert Baer, a retired CIA officer who dealt with Chalabi and other Iraqi opposition leaders in northern Iraq in the mid-1990s.
Baer said that the CIA suspected for years that Arras Habib, Chalabi's security chief, worked for Iranian intelligence. U.S. intelligence officials say Habib, now a fugitive, is an agent of Iran's Ministry of Intelligence and Security.
"We always assumed that he was an Iranian agent," Baer said in an interview. Habib's family was in Iran, he depended on Tehran for survival, and "our conclusion was that he was working more for Tehran than for anybody."
Moreover, counterintelligence experts in the Defense Intelligence Agency circulated a warning in mid-2002 that the INC had been deeply penetrated, this time by Saddam's agents, said a senior administration official, who like others spoke on condition of anonymity because of the sensitivity of the issue.
Chalabi denies that he or anyone in the INC passed U.S. secrets to Iran.
A senior INC adviser said Habib passed a polygraph exam that the CIA administered in London in the fall of 2002, when he was asked specifically about ties to Iran.
But a senior U.S. intelligence official said he knew of no such CIA exam.
Habib's cousin, Ali Karim, was one of several hundred Iraqis working with the CIA in northern Iraq who were evacuated by the United States in 1996 after Saddam's forces invaded the semi-autonomous region.
Karim and a half-dozen others were jailed in the United States after the FBI accused them of being spies. Karim, who was represented pro bono by former CIA chief James Woolsey, was granted asylum in June 2000 after a federal immigration judge declared the case against him "weak at best."
It remains unclear why the warnings about Chalabi and his group were ignored.
Baer says it reflects the same naivete that President Reagan demonstrated in dealings with Iran in the arms-for-hostages scandal known as Iran-Contra.
What's clear is that Chalabi and his group got extraordinary aid from some sectors of the U.S. government, even as the CIA, State Department and many in the uniformed military fought to limit reliance on him.
From 2000 to 2003, the INC received $33 million from the State Department, which was never enthusiastic about supporting the group. The State Department gave control of the funding to the Pentagon in October 2003, and the DIA paid several million more for the INC's information. The payments were ended only this month.
Middle East experts at the State Department who criticized Chalabi and his plans frequently were transferred or frozen out of U.S. policy-making on Iraq.
The senior INC adviser, who requested anonymity, said ties between Chalabi and conservatives in Washington are exaggerated. For example, he said, Chalabi hasn't spoken to Cheney since before the war began in March 2003, and he hasn't spoken with U.S. government officials at all since the raid on his house.
"The idea that there's some kind of very close, interlinked relationship is not true," he said.
But, in the opening days of the war, on Cheney's orders, Chalabi and several hundred of his fighters were flown from northern Iraq to an airbase in south-central Iraq.
During and after the conflict, uniformed and civilian Pentagon officials accompanied him, providing him with communications gear and other critical support.
In January, Chalabi sat near first lady Laura Bush during the president's State of the Union address.
In Iraq, Chalabi allies and relatives were given key spots in the Finance Ministry, the committee charged with purging members of Saddam's Baath Party, and in the prosecution of Saddam. The INC took control of the files of Saddam's brutal secret service, the Mukhabarat.
Now, while many of Chalabi's former backers in and out of government have cooled on him, a few continue to defend him.
Perle told the New York-based weekly newspaper The Forward last week that he believes Chalabi was the victim of a campaign orchestrated by Iran and the CIA. The Iranians "very well may have induced the CIA to believe Chalabi gave them (sensitive intelligence). And the CIA was certainly very happy to hear that," Perle was quoted as saying.
Others see a simpler explanation. Said the former official who witnessed the Cheney-Chalabi introduction: "Was Chalabi using us and being used by us?"