WASHINGTON – The American appointed chief judge of Iraq’s central criminal court who earlier this year brought and then dropped charges against one-time American ally Ahmad Chalabi has been demoted, The New York Sun has learned.

American and Iraqi officials tell the Sun that Zuhair al-Maliky will step down from his powerful post as chief investigative judge to deputy prosecutor for the Baghdad neighborhood known as Sadr City. The decision came after Mr. al-Maliky launched investigations into both Mr. Chalabi and his nephew Salem that critics said were politically motivated. Earlier this month, Mr. al-Maliky issued a summons for the head of Iraq’s debaathification committee on charges that he violated a 1969 Baathist law prohibiting Iraqis from visiting Israel. At the time Mithal al-Alusi told the Sun that he would not comply with what was reportedly an arrest warrant.

In late September Mr. al-Maliky went after members of Prime Minister Allawi’s political faction, investigating Iraq’s interior minister, Falah al-Naqib, and the intelligence chief, Mohammed Al Shahwani, for harassing members of Iraqi Hezbollah.

“The process of Iraqi democracy is beginning to work itself out and we are glad to see the responsible voices in Iraq’s legal system beginning to take control,” a Washington adviser to the Iraqi National Congress, Francis Brooke, said yesterday.

Sources familiar with Mr. al-Maliky’s case say that Iraq’s equivalent of the Supreme Court met last week to discuss dismissing him altogether but stopped short, opting instead to transfer him to the local court in Sadr City. Mr. al-Maliky was appointed to the post as a chief investigative judge in April of this year when the chief of the Coalition Provisional Authority, Paul Bremer, appointed him to the position. A former translator for the Iraqi Justice Ministry, Mr. al-Maliky soon got to work and launched an investigation into an INC official positioned as a guard and office manager at the Finance Ministry was strong-arming Finance Ministry employees to confess to crimes they had not committed.

The investigation into Sabbah Nouri Ibrahim al-Salem was the pretext for a May 20 raid on the offices and home of Ahmad Chalabi in Baghdad, the symbolic event that signaled the White House’s decision to cut ties with the former leader.

Some of Mr. al-Maliky’s other cases have been dropped soon after he announced them in the press. A month after announcing that Ahmad Chalabi was being investigated in August on charges that he counterfeited Iraqi dinars when he was chairman of the Iraqi Governing Council’s Finance Committee, Mr. al-Maliky announced that he was dropping the case for lack of evidence. It turned out Mr. al-Maliky’s evidence was found in last May’s raid, when Iraqi authorities found a little less than two dollars worth of Iraq’s old currency in his possession.

Mr. al-Maliky also had to drop charges against Mr. Chalabi’s nephew Salem Chalabi, who was until recently the chief administrator of the special tribunal charged with trying Saddam Hussein and other high-level Baathists. Salem Chalabi was charged with murdering the Finance Ministry official in charge of state properties, Haitham Fadhil, after his widow said Mr. Fadhil was visited by Salem Chalabi two days before his murder.

“I have never dealt with the state property issue and I never met with Haitham Fadhil,” Salem Chalabi told the Sun last week in an interview. He said he was summoned by the court after the charges appeared in Iraqi newspapers, but only agreed to see Mr. al-Maliky if he was summoned as a friendly witness for the investigation.

Salem Chalabi said that Mr. al-Maliky in their meeting at the court agreed to drop the charges, but Mr. al-Maliky told reporters last month that Salem Chalabi was still a target of his probe.

The appearance of the charge, however, most likely led to Mr. Allawi’s decision to accept a resignation, which was never offered, from Salem Chalabi’s post as the chief administrator for the Iraqi Special Tribunal. He said, “I was resigned.” Under the Transitional Administrative Law, Mr. Allawi may not hire or fire people from the special court.