CHALABI TURNS TO U.S. FEDERAL COURT TO CLEAR HIS NAME

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The New York Sun

WASHINGTON – The embattled Iraqi political figure, Ahmad Chalabi, filed suit in federal court yesterday accusing the government of Jordan of seizing and looting a bank he founded, and of destroying his reputation.


The suit for unspecified damages is part of an effort to clear the name of the Iraqi political leader, who until recently was held in high esteem by the American government and was considered a potential leader of postwar Iraq, his lawyer said. The suit accuses the Jordanians of planting rumors about Mr. Chalabi, including allegations that he gave military secrets to Iran.


Mr. Chalabi returned to Iraq from Iran yesterday to face charges issued by an Iraqi court of counterfeiting Iraqi dinars. At a press conference here, his daughter, Tamara Chalabi, denounced the charges as ludicrous and politically motivated.


The 52-page statement of claim filed in U.S. District Court in Washington, D.C., accuses the Jordanian government of, among other things, conspiring with Saddam Hussein to kidnap, torture, and murder Mr. Chalabi after he disclosed in the early 1980s that Jordanian officials were secretly buying arms for Saddam in violation of an international embargo during the Iran-Iraq war.


Fearing for his life, Mr. Chalabi fled Jordan and did not return to stand trial on charges of embezzling millions of dollars from a Jordanian bank he founded in 1977, the claim states. He was convicted in absentia and sentenced to 22 years in prison for charges stemming from the bank’s collapse, in what his lawyer called a sham trial.


Mr. Chalabi’s Boston-based lawyer, John Markham, said documents have come to light over that past year that prove the conviction was based on fraud. He said he can demonstrate that two senior Jordanian officials conspired to ruin the bank and an American subsidiary, and that they siphoned 106 billion Jordanian dinars into a secret account, while accusing Mr. Chalabi of looting the money.


“The fall of Saddam Hussein has made it much easier for certain people to speak and has given access to documents that heretofore you couldn’t get literally if your life depended on it,” Mr. Markham said.


Mr. Chalabi brought the suit on behalf himself and the bank, Petra Bank, and its American subsidiary, Petra International Banking Corp. The named defendants are the kingdom of Jordan, the country’s central bank, the former central bank governor, Muhammed Saeed El-Nabulsi, and the former prime minister, Mudhar Bardran.


The centerpiece of the complaint are excerpts from a letter written by a military prosecutor appointed to investigate the collapse of Petra Bank in 1989, General Hafez Amin, that has only “recently came into plaintiff’s possession.”


Mr. Amin is quoted as writing that the Jordanian government’s dealings with Petra Bank stemmed from “personal hatred and envy” of Mr. Chalabi. He also accuses the governor and prime minister of “directing the judiciary and attempting to deflect them from their neutrality.” The complaint alleges that the Jordanians replaced Mr. Amin, on account of his refusal to charge Mr. Chalabi, with a more compliant prosecutor who eventually charged him.


Mr. Amin’s letter, if authentic, could also confirm a key allegation of Mr. Chalabi’s: that Jordanian officials successfully plotted to spark a liquidity crisis at the bank by pressuring other banks to withhold their deposits from it.


The crisis became the pretext for the Jordanian government’s seizure of its assets and the charges against Mr. Chalabi.


Critics of Mr. Chalabi have said that the bank collapsed after the central bank governor attempted to prop up the dinar by requiring banks to deposit a large portion of their foreign exchange with the central bank. An investigation was launched when Petra bank failed to comply.


Ms. Chalabi said her father would be cleared. “The days of smearing my family by unsubstantiated rumor whispered to the media by unnamed sources is hopefully over. We will prove what we have alleged here,” Ms. Chalabi said.


The suit portrays Mr. Chalabi as an Iraqi patriot and longtime target of Saddam and his Jordanian allies. It states that in 1983 Mr. Chalabi alerted the central bank governor, Mr. Nabulsi, that highly placed members of the Jordanian government were making a profit by purchasing weapons for Saddam Hussein in violation of a United Nations embargo.


Mr. Chalabi claims he tried to stop these transactions by pressuring the central bank not to issue letters of credit to the dictator to enable the purchases. He also claims he exposed the assistance provided by the Central Intelligence Agency to Saddam during the Iraq-Iran war.


These disclosures led Jordanian officials to attempt to destroy his bank and hand him over to the Iraqi dictator, the suit states.


“All of these charges form from the Jordanian government, which has never forgiven my father for exposing their secret and illegal arms purchases for Saddam,” said Ms. Chalabi, 31, who recently completed a doctorate in Mid-East Studies at Harvard University.


“We have been suffering for a long time and it’s time that we speak out,” she said.


Petra Bank was a fast-growing bank and the first in Jordan to use a computerized banking system and introduce credit cards, travelers’ checks, and branch banking. By the time it was taken over, its American subsidiary had deposits of $50 billion and earnings of more than $1 million a year, the suit states.


A 1989 audit signed by Arthur Anderson & Co., in Geneva, showed that the bank was insolvent, and that many unpaid loans had been made to Mr. Chalabi’s friends and relatives. The suit counters that the audit was conducted by accountants in Jordan “based on false information” supplied by Mr. Nabulsi after the bank had been taken over by the state.


It describes Jordan’s military intelligence arresting Petra Bank employees, torturing and intimidating them, “in order to attempt to coerce them into providing false evidence against Ahmad Chalabi.”


Ms. Chalabi described both the Jordanian conviction by a military court and the counterfeiting charges in Iraq as made by courts “outside” of civil law legal systems and “where due process is not considered.”


A spokeswoman for the Jordanian embassy did not return a call for comment yesterday. (She was quoted in the New York Times stating that the embassy was surprised by the lawsuit and had not yet formulated a response.)


Complicating the case is the attempt by Mr. Chalabi, an Iraqi citizen, to sue in American federal court based on events which took place 15 years ago in Jordan.


The Foreign Sovereign Immunities Act allows suits against foreign governments only in very limited circumstances, including those in which defendants carry out commercial activities in American which have direct effects here.


The New York Sun

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