Allawi’s Billion Dollar Buddy

How does Allawi pay for his lucrative contract with GOP lobbying powerhouse Barbour Griffith & Rogers? The obvious guess is that his old buddies at the CIA pay for him. But he may not need the agency’s cash. One member of his coterie is suspected of participating in what an Iraqi public-corruption judge calls “possibly the largest robbery in the world” — the theft of approximately $1 billion from the Iraqi treasury.

In mid-2004, Hazem Shaalan had it all: he had risen from being a small businessman in London before the war to becoming Ayad Allawi’s defense minister. (Shaalan had been a member of Ahmed Chalabi’s Iraqi National Congress, but the relationship between Shaalan and Chalabi became acrimonious, with the INC accusing Shaalan of being a Baathist spy.) The defense ministry was Allawi’s single biggest priority, as he owed his appointment — made jointly by the U.S. and the United Nations — to his promise of restoring stability to the insurgency-wracked country. Shaalan came through for him, fully backing the joint U.S.-Allawi decision to fight the Mahdi Army in the Shiite holy city of Najaf in August 2004.

But that wasn’t all Shaalan did at the defense ministry.

Shortly after the January 2005 elections left Allawi and Shaalan out of power, a wide-ranging audit of the defense ministry found nearly $1 billion missing. Iraq’s finance minister, Ali Allawi — Allawi’s cousin — discovered that Shaalan had taken practically the entire defense procurement budget from Iraq’s Central Bank and had little to show for it aside from obsolete Polish and Pakistani weaponry. A “charitable” accounting found that perhaps $200 million worth of usable equipment for the Iraqi Army resulted from the $1.3 billion fund.

What happened to the rest of the fund and other missing defense-ministry cash remains a mystery. But Iraqi auditors determined that around $1 billion moved from the Central Bank to accounts in Jordan held by a man named Naer Jumaili, an Iraqi businessman whom Shaalan made his unofficial procurement chief. Jordanian banks refused requests from Ali Allawi and other investigators to peruse the details of Jumaili’s accounts, so it remains unclear exactly how much money they possess.

Both Jumaili and Shaalan fled Iraq for Amman, where they’re dodging warrants: Shaalan has been indicted for fraud and Jumaili for theft. And both men loudly proclaim their innocence. Shaalan claims the charges against him are an Iranian plot.

The former defense minister currently pleads poverty, claiming that he had to sell his Amman villa and move into a small apartment. But reporters from the Times of London have spotted him at customs in London dividing up bundles of cash (in U.S. dollars) between his entourage; he has access to bodyguards and luxury cars in Amman; and in London, he’s known to stay at the ultra-posh Dorchester hotel.

More than anything else, Shaalan wants his name cleared. And given his apparent access to a ton of money, he might be able to afford to help pay the $300,000 it costs his old pal Ayad Allawi to forge a Washington-based path back to power.