- The Washington Times - Monday, December 2, 2002

He has powerful allies in Congress, in Vice President Richard Cheney's office, in the upper echelons of the Pentagon's civilian leadership, in the Defense Policy Board chaired by his close friend and most enthusiastic supporter Richard Perle, and in one of Washington's leading think tanks. They all see Ahmad Chalabi, head of the London-based Iraqi National Congress (INC), as the democratic alternative to Saddam Hussein, a sort of Iraqi "Karzai," installed in what some of them see as a U.S. military cakewalk.
But as Mr. Chalabi's team moves forward against five competing exile teams, umpires at the CIA and the State Department keep throwing yellow flags on the field. They see Mr. Chalabi as a charming, articulate, multilingual Iraqi exile leader, better suited to the cut and thrust of London's exile politics than to the cut-throat politics of post-Saddam Iraq.
Mr. Chalabi's detractors say he has only known comfortable exile, first in Jordan, then in Britain. He counters these critics with nine by his reckoning assassination attempts against his own life ordered by Saddam, and is fully cognizant of the rough neighborhood he aspires to lead. The Chalai family, one of the country's most notable, chose exile when the military assassinated King Feisal in 1958, abolished the monarchy and seized power in the name of "progressive, revolutionary socialist principles," otherwise known as the Ba'ath Party.
Between 1919, when Iraq, formerly Mesopotamia, was carved out of the disintegrating Ottoman Empire, and 1958, Iraq experienced eight Kurdish revolts, nine Shi'ite rebellions, and three pogroms (two of them against the Jews, one against Assyrians).
Following the Persian Gulf war in 1991, tens of thousands of Kurds in the north of Iraq and marsh Arab Shi'ites in the south, were slaughtered in an uprising that had been encouraged by a victorious United States and supressed with helicopter gunships the United States had allowed the defeated Iraqis to keep, ostensibly for humanitarian purposes. Saddam's role model has long been Stalin, whose methods and techniques he emulated to cower three disparate pieces of Iraq into blind compliance.
No one is more upset at the idea of Mr. Chalabi becoming Washington's man in Baghdad than Jordanian leaders, past and present. He was sentenced April 9, 1992, to 22 years hard labor by a Jordanian state security court on 31 charges of embezzlement, theft, misuse of depositor funds and speculation with the Jordanian dinar. The court also handed down harsh sentences and fines to 16 others, including several brothers and close relatives who were members of the board of Mr. Chalabi's Petra Bank, or owners of affiliated companies.
Mr. Chalabi, a one-time favorite of King Hussein's royal court, had already skipped across the border to Syria hidden in the trunk of a royal palace car. Mr. Chalabi says former Crown Prince Hassan drove him to the border. Both the driver and the woman friend who organized the getaway deny this.
No sooner did Mr. Chalabi reach London from Syria than he denounced the late King Hussein, accusing him of profiting from smuggling and weapons trading deals with Saddam.
What was undeniable was that Mr. Chalabi's Petra Bank, Jordan's third largest, had gone belly up and some $300 million in depositors' accounts had suddenly vanished. Mr. Chalabi, who had studied at the Massachusetts Institute of Technology and earned a doctorate in mathematics from the University of Chicago in 1969, denies wrongdoing and claims jealous royal courtiers framed him.
In the 12 years between when Mr. Chalabi founded the bank and its crash, this scion of a wealthy and powerful Iraqi Shi'ite family developed a reputation for contacts at the highest level. When the free market value of the dinar plunged in 1988, it was common knowledge in Amman that the Petra Bank was one of the most active purchasers of dollars. Yet when Central Bank Governor Mohammed Said Nabulsi sought to enforce a requirement on banks to deposit 30 percent of their foreign exchange holdings with the Central Bank as part of his efforts to prop up the currency, Petra was unable to comply.
Mr. Nabulsi, a widely respected central banker held the job for two stints for a total of 19 years (1972-85; 1989-95), which he believes is a world record. Between the two, he was the U.N. man in Baghdad. In Amman recently, this writer looked up Mr. Nabulsi, now a private financial adviser, in a small, modest office on the outskirts of the capital. His version of the Petra Bank scandal is a tad different than Mr. Chalabi's:
"The Central Bank began noticing signs of financial irregularities at the Petra Bank between 1982 and 1985, but not enough for a solid case. When I came back as governor in 1989, Jordan was suffering from acute fiscal and monetary problems. The depletion of our monetary reserves was of grave concern to King Hussein, who asked me to take over again as governor. But as I addressed our Central Bank crisis, I discovered Petra had a huge problem of equal dimension.
"I asked all Jordanian banks to deposit 30 percent of their hard currency holdings with the Central Bank. Of the 20 banks solicited, only Petra was unable to transfer anything, yet it had $200 million on its books. I then conducted a full examination of Petra's books and concluded they had been cooked and that Ahmad Chalabi was the master cook who had been in collusion with his auditors.
"I then asked King Hussein whether anyone was above the law as I was aware of Chalabi's closeness to Crown Prince Hassan. The king told me there were no exceptions and to proceed according to the law of the land.
"Petra also had a branch in Beirut called MEBCO that was liquidated by the Central Bank of Lebanon and his brother, who had flown the coop, was sentenced to two years in abstentia. Swiss authorities also liquidated MEBCO Geneva.
"Petra in Amman was picked clean before Chalab took off a few steps ahead of law enforcement. Petra in Washington, D.C., called me with a demand that all depositors be paid off immediately. The U.S. Federal Reserve asked for payment in full, $300 million as required to cover all losses. I then formed six committees, each with three members, to conduct separate investigations.
"Their findings were given to the public prosecutor's department. Chalabi was found guilty, and all those who had investigated can attest Chalabi was not framed as he claims.
"Civil court actions followed as the liquidation agency attempted to recover some of the losses. The total loss climbed to $500 million, of which $300 million was paid to depositors by the Central Bank at the direction of King Hussein. Another $200 million was obtained from the liquidation of assets."
Mr. Nablsi's conclusion a the end of a 60-minute interview: "Chalabi was one of the most notorious crooks in the history of the Middle East."
What seems small compared to the recent humongous Wall Street scandals was enormous for a poor Middle Eastern country of 5 million people. Mr. Chalabi dismisses the entire Petra Bank saga as a political vendetta.
Interestingly enough, his close friend, former Crown Prince Hassan, who was passed over as heir apparent to the throne by King Hussein as he lay dying from cancer, in favor of Hussein's son, now King Abdullah II, showed up at a recent London meeting of some 400 Iraqi officers now in exile. King Abdullah believes Uncle Hassan was lobbying to be recognized as king under a restored Hashemite dynasty in a liberated Iraq. Prior to 1958, Jordan and Iraq were part of the same royal federation with two kings Hussein and Feisal alternating as top monarch.
King Abdullah took a dim view of his Uncle Hassan by saying in an interview he had "blundered into something he did not realize he was getting into, and we're all picking up the pieces."
Jordan's establishment does not look forward to a Chalabi-run Iraq propped up by the U.S. military. But given Jordan's total dependence on Iraqi oil, it's a safe bet that a President Ahmad Chalabi would receive a royal pardon in Jordan.

Arnaud de Borchgrave is editor at large of The Washington Times and of United Press International.


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