Chalabi and his ambitions

PV Vivekanand


For a while it seemed that Ahmed Chalabi, a
London-based Shiite and former banker who leads an
umbrella body of Iraqi exile groups, was most favoured
to take over power in a hypothetical post-Saddam Iraq.
However, American priorities and strategies have
shifted since then, and Chalabi might not find himself
in the presidential palace unless his powerful friends
in Washington turns things around. However, that might
not be easy either, writes PV Vivekanand, who also
traces Chalabi's background as a banker in Jordan and
his experience in dealing with the Iraqi exiles.


AHMED CHALABI, leader of the Iraqi National Congress
(INC) and self-styled candidate to succeed Saddam
Hussein, has been dealt a severe blow to his
aspirations to occupy the presidential palace in
Baghdad.
Obviously, Washington has its own plans and designs
for a post-Saddam Iraq and Chalabi, a Shiite with a
chequered past as a banker in Jordan, appeared to
have found little room to accommodate himself in the
American scheme of things that envisages a military
occupation of the country after toppling Saddam.
Chalabi, who maintains offices in London and
Washington as well as northern Iraq beyond Saddam'
reach, has been building a case for himself as a
potential successor to the Iraqi president since 1991.
He had been a frequent visitor to Washington in order
to promote himself and secure American political and
financial support against Saddam.
The administration seems to have played an off-again,
on-again game with him, with the Central Intelligence
Agency (CIA) raising questions about his use of
American funds given to him to build a viable Iraqi
opposition front to challenge Saddam. Others say
Chalabi had spent his own money on trying to build an
anti-Saddam coalition in northern Iraq. He had even
set up a radio station to beam anti-Saddam rhetoric to
the people of Iraq. His efforts came to nought in 1996
when two Kurdish groups fought each other for
prominence in the region, and Saddam's agents managed
to penetrate into the area. That posed a direct threat
of military action and Chalabi, like others who had
set up presence there, had no choice but to order his
set-up dismantled and his people evacuated. He has
re-established an INC presence there now.
However, the most prominent American reason to
sideline him now seems to be the realisation that
other Iraqi exile groups had never really accepted the
INC leader as a possible successor to Saddam and that
he might not be the right candidate capable of dealing
with the ground realities in Iraq; and that seems to
have shut out -- at this jucture -- Chalabi's dreams
of riding atop an American military tank into the
presidential palace of Baghdad.
He has publicly rejected US plans to install an
American military administration based on the
remnants of the current Iraqi regime once Saddam is
toppled.
Speaking from an undisclosed location in northern
Iraq, Chalabi told ABC Television on Tuesday: "Iraqis
must choose their own government."
Describing as "unacceptable" the reported US plan to
have a reformed ruling Baath Party "work de facto
under the protection of US military administration,"
Chalabi told ABC: "An extended US administration...in
Iraq is unworkable....a US administration will have
very little knowledge of Arab society."
Chalabi's misfortune of falling out with the American
plans is not unique. It is simply that a liberal like
him with modern views and more attuned to dealing with
Western democratic setups than the peculiarities of
the Iraqi society is no match for the heavy
undercurrents and tribalism that dominate the Iraqi
scene today. The exigencies posed by post-war chaos in
Iraq could be too strong for him to survive.
Over the decades, the Iraqi exile groups -- at one
point there were over 60 of them -- which espouse
differing ideologies, self-interests and political
priorities have never been able to come together on a
practical platform, Their only common interest was a
desire to see Saddam departing from power. They never
trusted each other and suspected that every
group/leader was playing puppet to strings pulled by
external forces with vested interests.
It is not even likely that more than a few hundred
people might even know Chalabi in Baghdad, a fact
admitted by his spin doctor in Washington, Entifadh
Qanbar, who says that people in Baghdad "may not know
the man, but he represents their views."
That is a tall claim indeed.

Banker in Jordan

I have met Chalabi several times at public meetings
while he was a banker in Jordan during the 80s, but
never had an opportunity to get wind of his political
plans. His prominence as a Jordanian banker did not
matter much to me as a journalist since I had access
to the Shomans, who owned the Arab Bank -- the largest
commercial bank in Jordan. But then, it had never
occurred to me that Chalabi, a seemingly streetwise
banker and financier, had political ambitions; and it
is more likely that he did not have any and that he
turned himself to an active anti-Saddam activist after
leaving Jordan in a cloud of controversy and settling
down in London along with some of his close aides from
the banking era.
He established the INC in 1992 and since then his
efforts have been focused on pushing the US to finish
the uncompleted task of the 1991 war -- ouster of
Saddam.
I have spoken to him several times in London in the
late 80s and early 90s, but those conversations had to
do with the banking scandal he left behind in Amman
when he fled in July 1989, purportedly hiding in the
trunk of a car.
Those conversations formed part of the basis for my
numerous reports on the banking scam to the extent
that I was once told that my telephone was tapped
since Jordanian intelligence wanted direct access to
the information that Chalabi was "feeding" me.
However, I was never questioned by Jordanian
intelligence over Chalabi (perhaps because there was
always a trace of animosity in our conversations and I
was not always buying his versions of the scandal and
often challenged him to substantiate his contentions).

I had the first confirmation of Chalabi's political
ambitions after the Gulf war of 1991.
I received a telephone call in Jordan from a close
Chalabi associate, Ali Sarraf, in March 1991. I had
just returned from post-war Baghdad and I told him how
bad the situation was for the people of Iraq after the
war over Kuwait.
Sarraf had earlier given me clues how to locate some
of his relatives in Baghdad (I had opted aginst the
idea since establishing connections with them would
be construed as me acting as a link between Iraqi
exiles and their supporters in Baghdad; this would
have seen me rotting in one of the notorious prisons
of Iraq with my jailers having thrown away the key).
During that March 1991 conversation, the shape of
post-war Iraq came up.
"Give us one year and imagine who you'd see in power
in Baghdad," Sarraf quipped. "The doctor (Chalabi)
will be the president of Iraq and guess who would be
his finance minister," he added with an unmistakeable
echo of glee over the electronic waves, obviously
imagining himself to be in control of the finances of
a country which holds 12 per cent of the world's oil
reserves.
"Best of luck Ali," I told him, "and please tell the
doctor to grant me the first interview from the
presidential palace in Baghdad. I am sure the
Jordanians and others would be anxious to hear what he
has to say."
"Well, you wait and see what we are going to do to
Jordan and the Mickey Mouses there," was Sarraf's
rejoinder in a reference to Jordanian ministers and
officials who were at that time building a case
against Chalabi and others, including Sarraf himself.
"We'd kick butts so bad that Jordan might not exist by
the time we are finished with it."
Here it needs a little background.
Chalabi belonged to an influential Shiite family in
Iraq. He studied at the Massachusetts Institute of
Technology and earned a doctorate in mathematics from
the University of Chicago in 1969.
He left Iraq when the Hashemite monarchy was
overthrown in 1958. He was given refuge in Jordan,
where, using his connections with the Hashemite royal
family there, he set up Petra Bank in 1977.
By mid-80s, Petra Bank had grown to be the second
largest commercial bank in Jordan after the Arab Bank.
It even had a affiliate bank -- Petra International --
in New York. Petra also had a branch in Beirut called
MEBCO that was liquidated by the Central Bank of
Lebanon and Chalabi'ated MEBCO Geneva.
He was also generous to socio-economic projects and
educational development in Jordan. Petra Bank was
among the first to introduce computerised operations
in Jordan.
However, in the second half of the 80s, Jordan's
economy stumbled because of heavy foreign debts and
foreign exchange reserves dried up. The late King
Hussein appointed veteran Mohammed Saed Nabulsi as
governor of the Central Bank with the mandate of
shoring up the country's monetary situation.
Nabulsi took stock of the situation and asked all
commercial banks to deposit 30 per of their foreign
currency holdings in the Central Bank. All banks
obliged, but Petra Bank and another small bank did not
and this prompted a closer look at the banks'
activities. The books showed that Petra Bank held $200
million in foreign currency, but the money was
missing.
Soon, according to Nabulsi, it emerged that Petra Bank
-- and, by extension, the smaller bank -- were
involved in a complex network of illegal operations.
He ordered a Central Bank take-over of Petra Bank and
an investigation June 1989 and this opened a Pandora's
Box that led to the collapse of the bank and Chalabi's
flight from Jordan.
Nabulsi accused Chalabi of spiriting away depositors'
money and Central Bank funds. The collapse of Petra
Bank is said to have caused Jordan $500 million. The
actual amount the treasury lost was eventually put at
$300 million after the liquidation of the bank.
Investigations followed the collapse of the bank and a
government committee submitted its findings that led
to a trial in 1992.
Chalabi and 16 others -- most of them tried in
absentia -- were found guilty on several counts in a
trial after an investigating commitee reported its
findings to the government. He was sentenced in April
1992 to 22 years hard labour by the 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 the others, including several brothers and
close relatives who were members of the board of
Petra Bank, or owners of affiliated companies.
Jordan tried to secure Chalabi's deportation from the
UK to the kingdom, but it did not work out.
Ali Sarraf --the man who wanted to become Iraq's
finance minister under a Chalabi reign in Baghdad --
was Chalabi's chief foreign exchange dealer at Petra
Bank.
When the banking scam came to light, the Jordanian
authorities had seized the passports of Chalabi as
well as several others but almost all of them managed
to flee the country in mysterious circumstances.
Chalabi was believed to have been driven to the Syrian
border by "someone high up" who used his influence to
see the Iraqi across the frontier from where he took
off for London and applied for asylum in the UK.
Sarraf was caught at Amman international airport a few
days later as he was about to board a London-bound
flight with a suitcase full of documents and over
$25,000 in cash. His passport was also seized and he
was detained for a few days and then released.
My instincts told me there was much more than met the
eye in the Petra Bank scam. I got in touch with
Sarraf after his release and invited him to a Chinese
lunch along with one of the my colleagues at the
Jordan Times. I wanted to hear his story first hand.
However, while Sarraf talked at length about how the
Jordanian government had "mistreated" Chalabi and
himself at the behest of Saddam, he gave away little
in substance about how Petra Bank collapsed. He was
evasive to pointed questions and in fact I was more
perplexed about the affair that I started off before
the lunch.
Anyway, we parted with a promise that we'd remain in
touch. He gave me Chalabi's telephone number in
London, but before I could get around to calling the
"doctor," I started receiving calls from the banker
himself, telling me his version of the Petra Bank
episode. His stories made little sense to me, perhaps
because I did not understand high finance banking
practices and the extent of Chalabi's "connections" in
Jordan. However, he used to issue regular threats
against prominent Jordanians, saying "all I need is to
open my mouth and name some names...that would make
the Central Bank governor lose his pants....."
He insisted that he left Jordan because Saddam's
agents were after him and he feared for his life. He
also accused Saddam of pressuring Jordan into forcing
the collapse of Petra Bank.
Chalabi's persistent contention was that there was
nothing wrong with Petra Bank, he had not stolen any
money and that all Jordanian charges against him were
fabricated. However, the facts of the case, as it
unfolded in a Jordanian court much later, spoke
otherwise.
After his every call to me, I tried to match what he
told me with information gleaned from Jordanian
officials, including some from the Central Bank, and
write reports in the Jordan Times. One day a friend of
mine-- with connections in Jordanian intelligence --
advised me to stop covering the Petra Bank issue. "It
is not worth to get too deep into it because it could
harm you....and your reputation" for whatever that was
worth, I was told.
A few days later, Sarraf's Amman telephone stopped
answering, and I found out he had mysteriously fled
the country.
Shortly thereafter, I estabished an excellent rapport
with the head of the committee investigating the Petra
Bank scandal, and I became privvy to an unfolding
tale of Chalabi's banking tentacles spread not only
in Jordan but also in several Arab and African
countries as well as Switzerland and the US. Some of
the details revealed to me went into reports while I
maintained the confidentially of others.
I also developed a close relationship with the finance
minister as well as the governor of the Central Bank.
I could call them on their direct line or at home
whenever I had questions for them. Obvioiusly I was
"safe" because by then they had realised that I knew
what the sensitivities were. Earlier,
the officialdom was upset because they thought Chalabi
was using me to air his version of the bank collapse
(as I came to know much later, some had even suspected
that Chalabi was paying me).
In expert opinion, Petra Bank would not have collapsed
had it not been for Chalabi's one-track mind to build
a business empire with his finger of every pie in the
industrial and trade sectors. He financed businesses,
took them over when they hit troubles and sought to
revive them after appointing "experts" loyal to him --
including a veteran Indian economist then in his 70s
-- to run them. All the "experts" were supposed to
report directly to him, and none of them knew each
other.
His business "interests" included industrial units,
computer firms, travel agencies, export companies,
hotels, real estate, construction, insurance.. you
name it and he had interests in the sector. It took
the investigating committee years to unravel them.
Jordan's banking system tottered for some time after
the Petra Bank collapse because, as officials charged,
Chalabi had drained the last of the country's scarce
foreign exchange reserves, thus adding the kingdom's
burdens.
When the whole picture was unveiled to me, I wrote a
lengthy piece in the Jordan Times saying Chalabi was
either one of the best banking brains in the Arab
World or the worst crook depending on how one viewed
him and his activities.
The very day the report appeared, I got a call from
Chalabi, who was obviously getting Jordanian newspaper
clippings faxed to him in London every day.
"I have half a mind to sue the hell out of you and
your paper for calling me a crook," he told me in a
stern voice. Go ahead and do that, I told him
(knowing well that he stood no chance against me in a
Jordanian court at that point in time). "Don't worry,
I won't do that," he said. "But I am flattered by the
picture you painted of me... that of a banking
superman sitting behind a computer console in the
top-floor office my bank manipulating the economy,
banking and finances of Jordan..."
Well, that was exactly what he was doing and he had
left Jordan in a serious mess.
Jordanian sources who were close to Chalabi affirm
that anti-Saddam politics was never his priority while
in the kingdom. The picture that emerges is of a man
who portrayed himself to be Saddam's victim and
started believing in his own tales and transformed
himself to be a leading opponent of the Iraqi
strongman.
Chalabi now says he was targeted for assassination by
Iraqi agents in at least nine attempts since his
flight from Jordan. Probably it is true.
Senior Iraqi officials whom I met after the 1991 war
dismissed Chalabi as irrelevant and non-consequential.
That was indeed a short-sighted assumption since
Chalabi went on to make himself dear to the US
administration, secured the support of leading
congressmen and built a strong lobby for himself. He
managed to project himself as a possible successor to
Saddam, but fell afoul of US intelligence agencies
when they detected what they saw as discrepancies in
the way he used to spend American funds.
Ironically, a story that went around in Jordan in the
mid-90s was how a group of Iraqi army generals plotted
a coup against Saddam over several months and managed
to keep it top secret. The coup, according to the
sources who had the story, would have been
successfully staged had it not been for the "mistake"
that the generals made by informing Chalabi of their
plans. The next thing the plotters knew was their own
arrest by Saddam's secret police. Almost all of them
and their supporters were executed, went the story.
How did that happen? Well, the story says that when
Chalabi was informed of the plot, he tipped off the
CIA and Saddam got wind of the plans through a CIA
"leak."
Or did Chalabi himself use his channels to tip off
Saddam because he feared that a coup would only lead
to generals assuming power in Baghdad and that would
have dealt the death blow to his own ambitions?
Despite his split with the US over plans for post-war
Iraq, Chalabi might yet stage a comeback. He has
powerful friends in Washington. Apart from influential
members in the US Congress, those who favoured
Chalabi as a democratic alternative to Saddam include
Vice President Richard Cheney, Defence Secretary
Donald Rumsfled, Defence Policy Board head Richard
Perle, Deputy Secretary of Defence Paul Wolfowitz and
the Pentagon's Middle-East policy executors such as
Peter Rodman, Douglas Feith, David Wurmser and Michael
Rubin, says American writer Robert Dreyfuss.
With such a heavyweight lobby behind him, Chalabi
seemed to have all but clinched his role as Saddam's
successor a few months ago. At that point, the shrewd
banker even promised that American oil companies would
have the run of Iraq's oil wealth as and when he
assumed power in Baghdad.
However, his detractors are in the CIA and the State
Department who describe him as better suited to the
cut and thrust of exile politics and diplomacy in the
West than the cut-throat politics of post-Saddam Iraq
where tribalism is expected to play the dominant role.
Chalabi's hope of salvation hinges on his success to
set up a "leadership" council made up of Iraqi exile
leaders and appoint himself as its head. That would
give him a position of prominence if and when he
enters a Saddamless Iraq or he would find himself as
one of the thousands of exiles returning to their
homeland. Obviously, the way to the top from the
"leadership" council would be easy if his friends in
Washington turns the thinking around in the CIA and
the military establishment.
But then, keeping him popped up in power could come at
the cost of American lives since it would pit the
Chalabi camp against what is emerging as a powerful
alliance grouping the two main Kurdish parties, the
Kurdistan Democratic Party and thePatriotic Union of
Kurdistan, the Iraqi National Accord, a CIA-backed
faction, and the Iranian-supported Supreme Council for
the Islamic Revolution in Iraq,