Identifier
Created
Classification
Origin
03AMMAN2294
2003-04-15 15:32:00
SECRET
Embassy Amman
Cable title:  

TFIZ01: WHY JORDANIANS OPPOSE A ROLE FOR AHMED

Tags:  PREL KCRM PGOV IZ JO 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
S E C R E T SECTION 01 OF 02 AMMAN 002294 

SIPDIS

CENTCOM FOR POLAD

E.O. 12958: DECL: 04/15/2013
TAGS: PREL KCRM PGOV IZ JO
SUBJECT: TFIZ01: WHY JORDANIANS OPPOSE A ROLE FOR AHMED
CHALABI IN A NEW IRAQI GOVERNMENT

REF: AMMAN 2117

Classified By: PolCouns Doug Silliman for reasons 1.5 (B) and (D)

-------
SUMMARY
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S E C R E T SECTION 01 OF 02 AMMAN 002294

SIPDIS

CENTCOM FOR POLAD

E.O. 12958: DECL: 04/15/2013
TAGS: PREL KCRM PGOV IZ JO
SUBJECT: TFIZ01: WHY JORDANIANS OPPOSE A ROLE FOR AHMED
CHALABI IN A NEW IRAQI GOVERNMENT

REF: AMMAN 2117

Classified By: PolCouns Doug Silliman for reasons 1.5 (B) and (D)

--------------
SUMMARY
--------------


1. (S) Both the official and popular reaction in Jordan to
the return to Iraq of Iraqi National Congress (INC) leader
Ahmed Chalabi has been sharply negative. Foreign Minister
Muasher told the Ambassador that a Chalabi role in Iraq would
cause "serious problems" for Jordan. Press and popular
commentary has focused its attention on Chalabi's
"corruption" as proof of U.S. bad intent in Iraq.


2. (S) Chalabi has particular problems in Jordan. His
involvement as the head of the failed Petra Bank in the
1980's led to his fleeing the country and conviction in
absentia on serious embezzlement, fraud, and banking charges.
Many believe Chalabi to be personally responsible for
Jordan's economic collapse and balance of payments crisis in

1989. According to several prominent Jordanians familiar
with Chalabi, his alleged corruption extends beyond the Petra
Bank scandal into financial meddling with other failed
companies, and there are also allegations of his involvement
in smuggling of weapons to Shia factions in Lebanon in the
1980s. Most admit that Chalabi is an erudite, well-read, and
persuasive spokesman for himself "and whatever cause he is
supporting at the minute," but that the USG should look at
his history of corruption and shady dealings as
representative of his true nature. We are in no position to
determine the strength of the case against Chalabi, but note
the political significance here of the very widely held view
of Chalabi as a felon convicted in Jordanian court. END
SUMMARY.

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JORDAN ON CHALABI: AN ARTICULATE, WELL-EDUCATED CROOK
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3. (S) Jordanian reactions to the return of INC leader
Ahmed Chalabi to Iraq have been almost universally negative.
Foreign Minister Marwan Muasher told the Ambassador April 8
that Chalabi's presence in a senior position in the new Iraqi
government would cause "serious problems" for Jordan (ref).
A few days later, the MFA's legal advisor provided us with

the Jordanian charge sheet against Chalabi. Chalabi was
charged with -- and, after fleeing Jordan, tried in absentia
for -- embezzlement, fraud, and "misuse of credit" for his
role in the collapse of Petra Bank in the late 1980's. In
the 1992 in absentia trial, Chalabi was convicted on these
charges and sentenced to a total of 22 years in prison and a
fine of almost USD 27 million. The legal advisor explained
that, if Chalabi returned to Jordan, he would be liable for
arrest and retrial on the same charges. In addition to the
Jordanian criminal charges, we understand that Petra
International Bank, a U.S. subsidiary of Petra Bank which was
taken over by the Central Bank of Jordan, has filed suit
against Chalabi in a U.S. court to try to recover assets
believed to be held in the U.S.

--------------
ANTI-CHALABI TESTIMONIALS ABOUND
--------------


4. (S) Chalabi, a former professor of mathematics at the
American University of Beirut, is universally described by
Jordanians who had personal dealings with him as a bright,
articulate, and well-read man who was able to match wits --
and strike up a friendship -- with Jordan's
academically-inclined Prince Hassan. A confidant of Prince
Hassan, Hussein Toga, described Chalabi as "very slick,"
saying that Chalabi was able to convince him, Prince Hassan,
and investors in Petra Bank and other Chalabi-related
businesses of his bona fides. In the end, Toga said, he and
Prince Hassan felt that Chalabi had "used" the Prince's
prestige to cement financial and political support for
several of his business ventures. "Why did you guys fly him
into Iraq? Everyone now thinks he is America's man, and his
(bad) reputation is going to ruin yours."


5. (S) Rajai Muasher, Chairman of the Jordan National Bank,
nearly exploded at the mention of Chalabi's name. Even
though Chalabi was head of one of Jordan's largest banks,
Muasher said, "he played politics, he didn't play banking."
Chalabi, Muasher claimed, promoted himself as a "liberal
banker willing to take risks in issuing business loans."
Instead, he continued, Chalabi funneled Petra Bank's foreign
exchange holdings into overseas "investments," including
Chalabi's Lebanese bank MEBCO and a Chalabi-owned holding
company in Switzerland. When the Jordanian dinar crashed in
1989 and the Central Bank asked all banks to increase their
forex holdings, Petra Bank was the only commercial bank in
Jordan unable to meet the increased forex requirements. This
led to a change of the bank's board, and the first "exposure"
of Chalabi's business practices at Petra Bank which
eventually led to the criminal charges and convictions.


6. (S) In addition, Rajai Muasher said that when he was
Minister of Industry and Trade in the 1980's, all of the 28
financially-troubled companies that his ministry had to
reorganize had significant connections to Chalabi, a close
Chalabi relative, or Petra Bank. Although criminal charges
were never filed in these cases, Muasher blamed Chalabi
directly for the failure of two other companies, Amman Bank
and the Jordan Industrial Investment Company. "I trusted
him, but he abused that trust," Muasher groaned. Noting that
the first thing Chalabi said publicly when he arrived last
week in an-Nasiriya was to blame the U.S. for the lack of
security and humanitarian assistance in Iraq, Muasher said
"he has never been loyal, not to his business, not to Iraq,
not to the U.S. He will be a big problem for you (the United
States)."


7. (C) At an April 14 lunch, members of the Nabulsi and
Fakhoury families -- while very positive on recent USG
actions in Iraq -- attacked Chalabi. They told PolOff that
Chalabi is a known criminal and asked how the USG could have
been so shortsighted to have associated Chalabi with
American-led reform and reconstruction in Iraq.

--------------
GOJ CONCERNS ABOUT PREVIOUS ARMS SMUGGLING
--------------


8. (S) In addition to shady business practices, a senior
MFA official told us this week that the GOJ believes that
Chalabi had been involved in smuggling weapons to different
Shia factions in Lebanon during the Lebanese civil war in the
1980s.

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COMMENT
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9. (S) The criminal convictions and allegations against
Chalabi in Jordan are serious and lie at the center of
Jordanian objections to Chalabi. Jordan would have serious
political and legal problems if it had to deal with Chalabi
as a representative of a new Iraqi government. In addition,
many Jordanians are seizing on Chalabi's irredeemable
reputation here and his very direct association with the
United States as further proof of U.S. bad intent in setting
up a governing authority in Iraq.

GNEHM