Discredited Iraqi ally regroups
Ahmed Chalabi is trying to build a Shiite power base in the wake of a US raid.
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After getting his degree, Chalabi moved to Beirut, Lebanon, where his brother Jawad was running the Middle East Banking Corp., or Mebco. After a few years, Chalabi decided to help expand the family banking empire, moving to Jordan to found Petra Bank in 1978.Skip to next paragraph
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In the 1980s, Petra flourished, introducing computer banking systems to Jordan. Chalabi also excelled at currying favor, growing particularly close to Jordan's then Crown Prince Hasan bin Talal, the brother of Jordan's deceased King Hussein. "In those days, Chalabi was almost like the uncrowned king of Jordan,'' says Jamal Dmour, a military-court prosecutor who helped investigate Petra and is now a member of parliament.
His position was cemented, at least in part, by strategic lending to influential figures. In particular, Jordanian officials say Chalabi lent about $30 million to Prince Hasan, and his relationships with key officials enabled the bank to keep operating for years despite warning signs, according to Mr. Dmour.
But in late 1989, with a banking crisis looming, Mohammed Said Nabulsi, the former Jordanian central bank governor who coordinated the bailout of Petra after its 1989 collapse, made a strong case to the late King Hussein to put the bank under government supervision. Chalabi fled two days after the order was given to allow government officials to review the bank's records. What they found there stunned them.
"The scale of fraud at Petra Bank was enormous,'' says Mr. Nabulsi, who is now an investment banker. "It was like a tiny Enron."
After two years of investigations, Chalabi was convicted on embezzlement and fraud charges, and sentenced in 1992 by a military court to 22 years.
Last week in Baghdad a Chalabi spokesman, Mithal al-Alusi, gave reporters a document he claimed cleared Chalabi of all charges at Petra Bank. Mr. Alusi said the letter, not on official letterhead or bearing any sort of seal, nor carrying Chalabi's name, proved his prosecution was improper. "We thank God this dirty plot has been disclosed which was intended to hurt relations between Jordan and Iraq," Mr. Alusi said.
The failure of Chalabi's banking interests didn't hurt him for long.
Armed with Washington contacts provided by Perle and what some people call a preternatural charm, Chalabi convinced the US that he was the man to lead an exile opposition to Hussein after the 1991 Gulf War.
CIA aid flowed to the nascent Iraqi National Congress, to the tune of $100 million, which set up training camps and propaganda operations in Northern Iraq, which a US-imposed no-fly zone kept largely autonomous.
While the CIA relationship soured in 1995, mostly because case officers felt he couldn't deliver on his promises but also over concern about Chalabi's contacts with Iran, he was by now a well-known figure to the US government. Congress guaranteed his INC money in 1998 and with the presidency of Mr. Bush, Chalabi's most fervent supporters were back in government.
Chalabi's backers have frequently said that they believe Chalabi's version of events, and some still do.
Perle, who's out of government at the moment but was the principal broker between Chalabi and the US, says criticism of Chalabi is the product of an irrational dislike of him on the part of the State Department and the CIA.
Danielle Pletka of the American Enterprise Institute, a Washington think tank where Perle is a resident scholar and Mr. Cheney used to sit on the board, dismissed the corruption conviction against Chalabi in a written commentary earlier this month.
"Throughout the 1990s, Chalabi was regularly accused of malfeasance by his enemies,'' she wrote. The conviction in Jordan "has never been documented."
Still, the man whose British-installed Hashemite family, which was exiled in 1958 by a nationalist coup, may be using his falling out with the United States to gain credibility in Iraq as an independent.
"What the Americans have done earned me a medal from the Iraqi people," he said in an interview with Al Arabiya television in Dubai. "It invalidated everything that had been said about me being with the Americans."
People close to Chalabi say he's trying to build a new power base, primarily among Shiite religious figures and politicians, as his key to survival in the emerging Iraqi political order.