US embassy cable - 03AMMAN2294

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) 
 
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SUMMARY 
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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. 
 
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ANTI-CHALABI TESTIMONIALS ABOUND 
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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. 
 
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GOJ CONCERNS ABOUT PREVIOUS ARMS SMUGGLING 
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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