Chalabi Accused of Aiding Iran Spies

[J-10]

By Bob Drogin, Times Staff Writer

WASHINGTON — Ahmad Chalabi, the controversial Iraqi exile who provided the Bush administration with faulty prewar intelligence on Iraqi weapons, told Iranian intelligence officials that U.S. eavesdroppers were monitoring top-secret communications by Tehran's chief spy service, U.S. officials said Tuesday.

The officials said the apparent betrayal of America's secret eavesdropping and code-breaking operation could pose a significant setback to U.S. intelligence, given Iran's nuclear program, its support for Islamic militant groups and its growing political and religious ambitions inside neighboring Iraq since the ouster of Saddam Hussein last year.

The officials said that FBI counterespionage agents, seeking information on Chalabi's source for such closely guarded information, plan to question officials at the U.S. Defense Department. Only a handful of U.S. officials would have clearances high enough to know that America's code-breakers had cracked Iran's most secret communications.

The Times and several other news organizations learned last month that Chalabi and at least one aide were suspected of disclosing details of top-secret electronic intercepts to Iran, but agreed to an administration request not to publish reports on what they knew to protect what officials described as an ongoing national security investigation.

U.S. intelligence officials withdrew the request late Tuesday when several news organizations began revealing major new allegations.

According to the New York Times, Chalabi told the Baghdad station chief of Iran's Ministry of Intelligence and Security about six weeks ago that U.S. intelligence had broken Iran's encryption code and was reading its intelligence traffic.

The Iranian intelligence official in Baghdad then sent an encrypted cable back to Tehran, using the compromised code, to detail his conversations with Chalabi, U.S. officials said. Authorities in Tehran then sent back a bogus message, indicating the location of a weapons cache in Iraq, presumably to see if U.S. military forces would respond.

They didn't, in part because the U.S. National Security Agency, which handles eavesdropping and cracking codes, already had intercepted and read the Iranian cables.

A U.S. official said the Iranian intelligence official had directed covert operations against the United States.

U.S. intelligence officials were aghast to discover the Iranian eavesdropping operation had been betrayed.

"This is highly sensitive, highly classified material," said one official. "Intercepts are the crown jewels."

In television interviews on May 23, Chalabi acknowledged that he was a frequent visitor to Tehran and had last visited there about six weeks ago. He also said that as a member of the U.S.-chosen Iraqi Governing Council, he met Iranian diplomats in Baghdad on a regular basis.

Like most Iranians and the majority of Iraqis, Chalabi is a Shiite Muslim. His exile group, the Iraqi National Congress, has maintained an office for years in Tehran.

But Chalabi repeatedly denied passing any classified U.S. information to Iran. He said such allegations were a "smear" orchestrated by his enemies at the CIA to undermine his political authority. He insisted that he had no access to U.S. classified documents and had never been given a classified briefing.

Chalabi had at least some direct knowledge of America's secret communications operations, however. During the late 1990s, U.S. intelligence operatives gave Chalabi special encryption software and equipment so they could communicate with him.

Before the war began last year, Chalabi's organization steered a series of Iraqi defectors to U.S. and other Western intelligence services with a broad array of detailed information alleging forbidden chemical, biological and nuclear weapons programs in Iraq.

Over the last year, however, U.S. authorities have determined that most of the defectors had been coached to provide false information and that most of the information they provided was inaccurate or fabricated.

Chalabi nonetheless retained loyal support from a small but influential group of people in the Bush administration and on the margins of government. But his fall from grace has been sharp and sudden. The Pentagon last month said it would cut a monthly $340,000 fee to the Iraqi National Congress for intelligence, and Iraqi police backed by U.S. forces raided Chalabi's home and office in Baghdad.


http://www.latimes.com/news/nationworld/iraq/la-fg-chalabi2jun02,1,2629843.story?coll=la-home-headlines

[J-10]

Chalabi Told Iran That U.S. Broke Iranian Spy Code, NYT Says

June 2 (Bloomberg) -- Ahmad Chalabi, the former Iraqi exile who served on the U.S.-appointed Iraqi Governing Council, told an Iranian official the U.S. broke the secret communications code of Iran's intelligence service, the New York Times said, citing U.S. intelligence officials.

About six weeks ago, Chalabi told the Baghdad station chief of Iran's Ministry of Intelligence and Security that the U.S. was deciphering the spy service's code, the newspaper reported, citing officials. The code was a primary source of information for the U.S. on Iranian operations within Baghdad, the Times said.

After stories of Chalabi's betrayal began appearing in the press last month, the Bush administration, which cut off finances to Chalabi's Iraqi National Congress, requested that the New York Times not publish details, the newspaper said. That request was lifted Tuesday, the Times reported.

An Iranian official in Baghdad said in a message to Tehran that Chalabi said he heard of the broken spy code from a drunk American official, the newspaper said.

Chalabi denied telling Iranian intelligence officials about the code break in an interview on ``Fox News Sunday,'' the newspaper reported.



http://quote.bloomberg.com/apps/news?pid=10000087&sid=awuSNLf3WmaY&refer=home

[2RHPZ]

Inside The Takedown

A TIME investigation reveals why the U.S. dumped Chalabi and what he may have
told Iran
By BRIAN BENNETT; MICHAEL WEISSKOPF/WASHINGTON

Monday, Jun. 07, 2004 (posted in advance)

The White House meeting in late April opened with the presentation of a seven-page,
single-spaced memo titled "Marginalizing Chalabi." Drafted by the National
Security Council (NSC), the document detailed three options for sidelining the
controversial Iraqi political figure Ahmad Chalabi ? methods ranging from gently
pushing him offstage to cutting off U.S. funds for his intelligence-gathering
operation. Once a Pentagon favorite to lead Iraq, Chalabi had been criticizing
Washington for dragging out the transfer of power to Iraqis. It was time for
Chalabi to go.

The April memo marked the beginning of the White House's strategy to cut its
ties to Chalabi ? a campaign that reached its climax late last month when Iraqi
police, backed by U.S. forces, raided the former exile's house and office in
Baghdad. But that move hardly came out of the blue. New details of the
relationship between the U.S. and Chalabi, provided to TIME by senior
Administration and intelligence officials, reveal that after a decade of
lobbying Washington, Chalabi began to lose his footing early this year after he
ran afoul of President Bush and L. Paul Bremer, the U.S. administrator in Iraq.

The extent of Chalabi's alleged malfeasance is still being unearthed. Senior
Administration officials tell TIME that the U.S. is investigating whether
Chalabi revealed to the Iranians highly sensitive information about how the U.S.
gathers intelligence in the region. Other U.S. officials told TIME that the FBI
has begun reviewing logs and other data that might turn up clues as to when
sensitive information was divulged; the feds are also interviewing and giving
lie-detector tests to U.S. officials in Iraq who may have had access to the
information.

The White House has been steadily losing patience with its former client. The
beginning of the end came in February when Chalabi was quoted in a London Daily
Telegraph article saying that even if the intelligence about Saddam Hussein's
weapons programs that Chalabi passed to the U.S. before the war was faulty, it
was "not important," compared to the end result of toppling Saddam. "We were
heroes in error," he said in the article. Chalabi insists he was misquoted, but
the damage was done. "That set the President off," a senior Administration
official told TIME. The general feeling among top officials was "We gotta do
something about this guy."

The NSC office of Iraqi expert Robert Blackwill was commissioned to draft a plan
to cut its ties to Chalabi. Blackwill's recommendations for "marginalizing
Chalabi" were endorsed by State Department and CIA officials, who have long
criticized intelligence provided by Chalabi.

The Iraqi had also fallen out with Ambassador Bremer. In early spring an Iraqi
judge issued a search warrant in an investigation into alleged theft of property
and government vehicles by members of Chalabi's Iraqi National Congress
(I.N.C.). Bremer wanted to make an example of the I.N.C. and prove that no
political party is above the law, but the search was stymied: according to a
senior U.S. official, the police couldn't get into the I.N.C. offices the first
time they went. Defense Intelligence Agency (DIA) officials who were working in
a Pentagon-funded intelligence program attached to Chalabi's group stopped the
officers at the door, arguing that the sensitive intelligence inside needed to
be protected. But on May 13, after the Administration decided to cut off the
$335,000 monthly subsidy to the I.N.C., the DIA agents vacated the I.N.C.
offices. Administration officials say Bremer sent the police back a week later,
backed by U.S. soldiers. Bremer has denied prior knowledge of the raid, but
sources say he authorized it. Bremer didn't inform the White House or the
Pentagon of the timing of the move, an official says, but Chalabi had few allies
left in Washington willing to defend him. "Nobody can protect anyone anymore,"
says a Pentagon official.

It was the CIA that was responsible for launching the separate leaks probe, which Chalabi's backers see as just the latest in a long series of attempts by the agency to undermine him. Richard Perle, a Bush defense adviser who has met with White House officials to plead Chalabi's case, says, "The CIA has disliked Chalabi for a long time and has concocted a case against him." Chalabi has described the accusation that he gave intelligence to Iran as "nonsense."
If Chalabi did betray U.S. secrets to Iran, it appears he was playing a brazen double game. U.S. commanders in Iraq have said the information Chalabi's organization has passed on to the U.S. since the war began has been helpful. According to a March assessment by a high-ranking military intelligence officer reviewed by TIME, the I.N.C. provided about 50 reports a month last year of "actionable" intelligence, which, among other things, led to the arrest of former leaders of Saddam's regime. The officer stated that the I.N.C. was "directly responsible for saving the lives of numerous" U.S. troops. For his part, Chalabi is attempting to turn the U.S.'s campaign to "marginalize" him into a political coup, telling any Iraqi who will listen that he is clearly no U.S. stooge. Says a senior White House official: "We expect Chalabi to be very politically active on the ground there." That may be the only thing you can count on from Ahmad Chalabi.