Friday, November 10, 2006 :::
 

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http://www.nytimes.com/2006/11/05/magazine/05CHALABI.html

November 5, 2006
Where Plan A Left Ahmad Chalabi
By DEXTER FILKINS
1. London, August 2006

Many miles away in a more dangerous place the dream is ending badly. The bodies pile up. Good people stream to the borders. Leaders pile money onto planes. The center is giving way.

The apartment on South Street in London is an antidote to Baghdad in nearly every respect. Where the Iraqi capital rings with chaos and violence, the sidewalks of Mayfair are quiet enough to hear your own voice above the cars. Baghdad is treeless and tan; the South Street apartment opens onto a private park filled with the lushness of an English garden. Just across the way is the Anglican church where General Eisenhower, stationed here as the commander of Allied forces during the war, came to pray. A maid greets you at the door, an elderly Lebanese woman who doubles as an Arabic teacher for the children.

The parlor is neatly appointed and filled with art, most of it European, different from the Baghdad house, where most of it is Iraqi. There is “Sketch of a Woman,” by Lucien Pissarro, the French painter who propagated Impressionism in London; it catches the light nicely. The furniture is expensive, the kind that makes you hesitate to sit down. But the place has a lived-in quality too; family members come and go, clutching bags and calling to one another down the hallways. No one seems the least bit awed by the man of the house, who is dressed in a bespoke suit and carries himself like a monarch, and who, until now, hasn’t spent more than a day at a time here since before the Iraq war began.

For Ahmad Chalabi, Iraq is an abstraction again. Once again, his native country is a faraway land ruled by somebody else, a place where other people die. It’s a place to be discussed, rued, plotted over, from a parlor on an expensive Western street. Iraq’s new leaders, the men who excluded Chalabi from the government they formed this spring, still call for advice — several times a day, Chalabi says. He is here in London, his longtime home in exile, temporarily, he says, taking his first vacation in five years. At lunch at a nearby restaurant an hour before, he ordered the sea bass wrapped in a banana leaf. He walks the streets unattended by armed guards.

But the interlude, Chalabi says, is just that, a passing thing. His doubters will come back to him; they always have. As ever, he wears a jester’s smile, wide and blank, a mask that has carried him through crises of the first world and the third. Still, a touch of bitterness can creep into Chalabi’s voice, a hint that he has concluded that his time has come and gone. Indeed, even for a man as vain and resilient as Chalabi, his present predicament stands too large to go unacknowledged. Once Iraq’s anointed leader — anointed by the Americans — Chalabi, at age 62, is without a job, spurned by the very colleagues whose ascension he engineered. His benefactors in the White House and in the Pentagon, who once gobbled up whatever half-baked intelligence Chalabi offered, now regard him as undependable and — worse — safely ignored. Chalabi’s life work, an Iraq liberated from Saddam Hussein, a modern and democratic Iraq, is spiraling toward disintegration. Indeed, for many in the West, Chalabi has become the personification of all that has gone wrong in Iraq: the lies, the arrogance, the occupation as disaster.

“The real culprit in all this is Wolfowitz,” Chalabi says, referring to his erstwhile backer, the former deputy secretary of defense, Paul Wolfowitz. “They chickened out. The Pentagon guys chickened out.”

Chalabi still considers Wolfowitz a friend, so he proceeds carefully. America’s big mistake, Chalabi maintains, was in failing to step out of the way after Hussein’s downfall and let the Iraqis take charge. The Iraqis, not the Americans, should have been allowed to take over immediately — the people who knew the country, who spoke the language and, most important, who could take responsibility for the chaos that was unfolding in the streets. An Iraqi government could have acted harshly, even brutally, to regain control of the place, and the Iraqis would have been without a foreigner to blame. They would have appreciated the firm hand. There would have been no guerrilla insurgency or, if there was, a small one that the new Iraqi government could have ferreted out and crushed on its own. An Iraqi leadership would have brought Moktada al-Sadr, the populist cleric, into the government and house-trained him. The Americans, in all likelihood, could have gone home. They certainly would have been home by now.

“We would have taken hold of the country,” Chalabi says. “We would have revitalized the civil service immediately. We would have been able to put together a military force and an intelligence service. There would have been no insurgency. We would have had electricity. The Americans screwed it up.”

Chalabi’s notion — that an Iraqi government, as opposed to an American one, could have saved the great experiment — has become one of the arguments put forth by the war’s proponents in the just-beginning debate over who lost Iraq. At best, it’s improbable: Chalabi is essentially arguing that a handful of Iraqi exiles, some of whom had not lived in the country in decades, could have put together a government and quelled the chaos that quickly engulfed the country after Hussein’s regime collapsed. They could have done this, presumably, without an army (which most wanted to dissolve) and without a police force (which was riddled with Baathists).

In fact, the Americans considered the idea and dismissed it. (But not, Wolfowitz insists, because of him. His longtime aide, Kevin Kellems, said that Wolfowitz favored turning over power “as rapidly as possible to duly elected Iraqi authorities.”) The Bush administration decided to go to the United Nations and have the American role in Iraq formally described as that of an “occupying power,” a step that no Iraqi, not even the lowliest tea seller, failed to notice. They appointed L. Paul Bremer III as viceroy. Instead of empowering Iraqis, Bremer set up an advisory panel of Iraqis — one that included Chalabi — that had no power at all. The warmth that many ordinary Iraqis felt for the Americans quickly ebbed away. It’s not clear that the Americans had any other choice. But here in his London parlor, Chalabi is now contending that excluding Iraqis was the Americans’ fatal mistake.

“It was a puppet show!” Chalabi exclaims again, shifting on the couch. “The worst of all worlds. We were in charge, and we had no power. We were blamed for everything the Americans did, but we couldn’t change any of it.”

It’s three and a half years later now. More than 2,800 Americans are dead; more than 3,000 Iraqis die each month. The anarchy seems limitless. In May 2004, American and Iraqi agents even raided Chalabi’s home in Baghdad. He has been denounced by Bremer and by Bush and accused of passing secrets to America’s enemy, Iran. At the heart of the American decision to take over and run Iraq, Chalabi now concludes, lay a basic contempt for Iraqis, himself included.

“In Wolfowitz’s mind, you couldn’t trust the Iraqis to run a democracy,” Chalabi says. “ ‘We have to teach them, give them lessons,’ in Wolfowitz’s mind. ‘We have to leave Iraq under our tutelage. The Iraqis are useless. The Iraqis are incompetent.’

“What I didn’t realize,” Chalabi says, “was that the Americans sold us out.”

Turkish coffee is served, then tea. I consider Chalabi’s predicament: the Iraqi patrician, confidant of prime ministers and presidents, the M.I.T.- and University of Chicago-trained mathematics professor, owner of a Mayfair flat, complaining of being regarded, by the masters he once manipulated, as a scruffy, shiftless native.

“I’ve been a friend of America, and I’ve been its enemy,” he says. “America betrays its friends. It sets them up and betrays them. I’d rather be America’s enemy.”

And so he is. Sort of. With Chalabi, it’s hard to be certain, and not just because his motives are so opaque, but because he is never still. He is enigmatic, brilliant, nimble, unreliable, charming, narcissistic, finally elusive. The journey to Mayfair is a long one. What happened to Chalabi?

Well, you might ask: What happened to Iraq?

2. Mushkhab, January 2005

The election is coming, and we are heading south. Twenty cars, mostly carrying men with guns. They hang out the windows, pointing their Kalashnikovs at the terrified drivers. Get out of the way or we shoot, and maybe we shoot anyway — that’s the message. But that’s Iraq. We move quickly, weaving, south in the southbound, south in the northbound. Very fast. Unbelievably fast. Drivers veer and career. We go where we want.

We’re low on fuel, and a gas station beckons. It is one of the strange and singular facts of Iraqi life that despite sitting atop an ocean of oil, Iraqis must wait hours — often days — for gasoline at the pumps. Lack of refining capacity, smuggling, stealing, insurgent attacks, Soviet subsidies: it’s complicated. On the road outside Salman Pak, the line is perhaps 300 cars long.

The Chalabi convoy cuts straight to the front of the line. No one protests. It’s the guns. The Iraqis wait for days, and our effrontery brings no protest. Not a peep. We get our gas and we speed away, guns out the windows. Very fast.

An hour later, we arrive at our destination, Mushkhab. It’s a mostly Shiite town about 100 miles south of Baghdad. It is friendly country — to Chalabi, and still, then, to Americans.

The whole town — the males, anyway — gathers round. Chalabi stands in the center, dressed in a dark gray Western suit. The Iraqis clap and read poetry; some of it they sing. It’s a tradition, a kind of serenade to the honored guest.

“Hey, listen, Bush, we are Iraqis,” the poet says, and everyone is clapping. “We never bow our heads to anyone, and we won’t do it for you. We have tough guys like Chalabi on our side — be careful.”

Everyone laughs.

We move inside the mudhif, a tall, long, fantastic structure woven of dried river reeds, a kind of pavilion of rattan. The room is laid with hand-woven carpets, and on the walls hang framed yellowed photographs of the leaders of the tribe, Al Fatla, meeting with their British overlords many years ago. A pair of loudspeakers are set up in the front. Chalabi takes a microphone.

“My Iraqi brothers, the Americans pushed out Saddam, but they did not liberate our country,” Chalabi tells the group. “We are asking you to participate in this election so that we can have an independent country. This is not just words. The Iraqi people will liberate the country.”

He goes on a little more, warming to the Iraqis assembled about him.

“On my way here, I saw a huge line of people waiting for gasoline,” Chalabi tells the group. “Some of them were there for two nights, carrying blankets with them. It makes me very sad to see my brothers wait for days to get gas at the station.”

Shameless, huh? I thought so, too. Almost a thing of beauty. It was so outrageous I almost wanted to forgive him, as a teacher might her sassy but cleverest boy. And that’s the thing about Chalabi: he’s very difficult to dislike. It may be his secret.

It was Chalabi, after all — a foreigner, an Arab — who persuaded the most powerful men and women in the United States to make the liberation of Iraq not merely a priority but an obsession. First in 1998, when Chalabi persuaded Congress to pass the Iraq Liberation Act (in turn leading to payments to his group, the Iraqi National Congress, exceeding $27 million over the next six years) and then, later, in persuading the Bush administration of the necessity of using force to destroy Saddam Hussein. And when it all went bad, when those nuclear weapons never turned up, the clever child shrugged and smiled. “We are heroes in error,” Chalabi told Britain’s Daily Telegraph. Almost with a wink.

Lunch is served: a long table heaped with rice and roasted lamb. No seats. Everyone stands, dozens of us, and we dig in with our fingers. After a time, we prepare to leave. The table and the ground around it are littered with rice and lamb bones. We re-form into a convoy and speed toward the holy city of Najaf.

By the time we arrive in Najaf, it’s dark. The fighting between American soldiers and the Mahdi Army irregulars laid waste to the city only a few months before, but on this night, Najaf seems remarkably calm. The pilgrim hotels lie in ruins, but the golden dome of the shrine of Imam Ali shimmers under a January moon.

Chalabi exits his S.U.V. and strides inside through the 20-foot-high wooden doors. A clutch of Sunni leaders, whom Chalabi has agreed to show around, trail in step. The curiosities intersect: the Sunnis are not Shiites, and this is the holiest of Shiite places, the tomb of the son-in-law of the Holy Prophet and the very heart of the Shiite faith. But they are still Muslims, and they are allowed to pass. As a non-Muslim, I wait outside in the street.

More unlikely than the presence of the Sunnis is their tour guide, Chalabi. Or it was unlikely. Not anymore. Chalabi, the Westernized, Western-educated mathematician, has entered his Islamist phase.

It’s not terribly convincing. He does not don a turban. He has no beard. He does not pray. He does not, really, even pretend. But as a practical politician — as an exile come home to a strange land getting stranger by the day — Chalabi had to do something. Relations between Chalabi and the Bush administration began to sour almost immediately after the fall of Hussein, when the Americans decided against putting Iraqis — presumably Chalabi — in charge. Bremer considered him an egomaniac. When no W.M.D. turned up, more and more Americans came to blame Chalabi for the war. Chalabi’s association with the Americans grew more disadvantageous by the day.

The break came on May 20, 2004, when the Americans, accusing Chalabi of telling the Iranian government that the Americans were eavesdropping on their secret communications, swooped in on his Baghdad compound. American troops sealed off Mansour, the neighborhood where Chalabi lived, while scores of Iraqi and American agents kicked in the compound doors. One of the Iraqis, Chalabi said, put a gun to his head.

“Look, I think they tried to kill him,” Richard Perle, the former Pentagon adviser and longtime Chalabi friend, said of the American and Iraqi agents. “I think the raid on his house was intended to result in violence. They had sent 20 or 40 Humvees over there. Chalabi was being protected by a force of about 100 guys with machine guns. It is a miracle that it didn’t result in a massive shootout.”

No shots were fired, but the break seemed final. Isolated, Chalabi turned to Islam — and, in particular, to Moktada al-Sadr, the Shiite cleric and leader of two armed uprisings against the Americans and the Iraqi government. Sadr is an erratic and unpredictable young man who sometimes ends his sermons with apocalyptic visions of the “hidden” 12th imam revealing himself. He is also the most popular man in Iraq. In the anarchy that ensued following the fall of Hussein, Iraqis, once known for their largely secular outlook, ran headlong toward Islam. Religion and anarchy moved together: the worse conditions got in the streets, the more Islamic Iraqis became.

In the three and a half years that I have known Chalabi, I never once saw him pray. Or give any indication that he harbored religious beliefs at all. Mowaffak al-Rubaie, the Iraqi national security adviser and a devout Shiite, told me once that when he and a group of five senior Iraqi politicians visited the Imam Ali shrine in 2004, all of them prayed but Chalabi. While the others knelt, Rubaie said, Chalabi stood quietly with his hands folded in front of him.

On this return visit to the Imam Ali shrine, Chalabi and his Sunni colleagues spent 10 minutes inside and exited without saying a thing. But word travels quickly down Najaf’s narrow streets, and by the time our convoy sped back to Baghdad, there were very few people in Najaf who did not know that Chalabi had come.

Once, when I asked Chalabi about his flirtation with the Islamists, he answered not in terms of religion but of politics. Moktada, he explained, was not essentially dangerous but merely misunderstood, an outsider who could be coaxed into Iraq’s new democratic order. Chalabi was happy to act as the bridge, and if he benefited politically from his efforts, he was not complaining.

“The Americans made a mistake when they excluded Moktada in the beginning,” Chalabi told me. “Our real business is to persuade everybody that Sadr is better inside than outside, and to provide some measure of comfort to the middle class that he is not going to eat them up.”

Indeed, Chalabi and Sadr are not as unlikely a pair as they may seem. Musa al-Sadr, the late Iranian-born ayatollah and Moktada’s cousin, presided over Chalabi’s wedding in Beirut in 1971. Chalabi’s wife, Leila, is the daughter of Adel Osseiran, a leader of the Lebanese independence movement. Musa al-Sadr was the founder of Amal, which became the prototypical Shiite party in the Middle East.

It seemed like a game, and not one that Chalabi liked to give away. Whenever I asked him about his coziness with Moktada, and how it squared with his own religious beliefs, I usually received a curt retort.

For a time, Chalabi — and the Americans — got the better of the deal. Moktada fielded candidates in the January 2005 election, and his militia, though still untamed, fell into line behind its leader. He endorsed something less than an absolute role for Islam in the Iraqi Constitution. By early 2006, parties loyal to Sadr held the largest bloc in the Iraqi Parliament. As for Chalabi, Moktada kept him afloat a little longer.

But in siding with the Islamists, Chalabi helped make them stronger than they were, and he threw his weight behind a number of trends that were only then becoming dominant: the Islamization of Iraqi society, the division of Iraq into sectarian cantons. Those trends later spiraled out of control, into the de facto civil war that is unfolding now. Some Iraqis who watched Chalabi then still don’t forgive him — and they think that ultimately, the Islamists got the better of him.

“Ahmad’s problem is that Ahmad is usually the smartest man in the room, and he thinks he can control what happens,” I was told by an Iraqi official who worked with Chalabi at the time and who would speak only anonymously. “But these guys don’t care if you have a Ph.D. in math; they’ll kill you. In the end, things went way past the point where Ahmad thought they would ever go. I can’t imagine he wanted that. But he helped start it.”

3. Baghdad, October 2005

Chalabi is standing on the rooftop of his ancestral home in Khadimiya, a heavily Shiite neighborhood known for its shrine. Mansour, the area where he has lived since Hussein’s fall, has slipped into anarchy. The final round of nationwide elections is a couple of months away. For the moment, Chalabi is the deputy prime minister, behind the affable but ineffectual Ibrahim Jaafari.

Across the street stand a pair of grain silos built by his father, Abdul Hadi Chalabi. Downstairs, on a wall in the sitting room, there is an old British map dating to the 1920’s, showing Baghdad, which was much smaller than it is now. North of Baghdad, in what was then farmland and what is now Khadimiya, a dot indicates a town. The dot says, “Chalabi.” At the time, Chalabi’s family owned nearly two and a half million acres throughout Iraq.

Those vast holdings are reduced to the compound where Chalabi now stands. It’s about 10 acres, including the main house, which a team of workers is renovating, a large swimming pool, a grove of date palms and, in the back, a mudhif. There is a row of garages, decrepit now, where workers once serviced the machinery and trucks that brought the wheat and dates to market.

“Imagine,” Chalabi says, turning to me. “And C.I.A. says I have no roots here.”

Chalabi spent 45 years in exile. Under the Hashemite monarchy installed by the British after World War I, the ruling class of the new Iraq was largely made up of Sunni Muslims, as it had been under the Ottoman Turks. The Chalabis were part of the small Shiite elite; most of the rest of the Shiite majority formed a vast underclass. The remnants of that Shiite elite now form a sizable slice of the political establishment of post-Saddam Iraq. In addition to Chalabi, there is Adil Abdul Mahdi, the vice president, a Chalabi friend since boyhood; Ayad Allawi, the former president, who is a Chalabi relative by marriage; and Feisal al-Istrabadi, the deputy ambassador to the United Nations in New York. In the 1950’s, Chalabi, Mahdi and Allawi were schoolmates at Baghdad College, an elite Jesuit high school. Even in their class photos, nearly a half-century old, all three men are instantly recognizable: Mahdi, the soft-spoken intellectual; Allawi, the charming bully; and Chalabi, the boy genius in a bow tie.

On July 14, 1958, King Faisal II, the British-backed monarch, was deposed and killed; a day later, the prime minister, Nuri al-Said, fled to the home of Chalabi’s sister, Thamina. She dressed Said in an abaya, the head-to-toe gown worn by women. With the army closing in, Thamina Chalabi took Said to the home of Feisal al-Istrabadi’s grandparents. Ahmad Chalabi, then 14, watched his mother and Bibiya al-Istrabadi weep as they pondered the prime minister’s fate.

“Three or four hours later, Said was dead,” Chalabi told me. “He shot himself.”

Chalabi fled Iraq a few months later, first for Lebanon, then England and then America, where he received a degree in mathematics from the Massachusetts Institute of Technology and a doctorate from the University of Chicago. (Dissertation title: “Jacobson Radical of Group Algebras Over Fields Characteristic p.”) He did not return to Baghdad until April 11, 2003.

Chalabi’s homecoming, after the U.S. invasion, was not the triumphant return he hoped it would be. What should have been his principal claim to legitimacy — his central role in toppling Saddam — never carried him very far; it became a liability as Iraq descended into chaos. In the new Iraq, Westernized elites carried less and less authority. Power belonged to the clerics and to the populists. And then there was the scandal at Petra Bank in Jordan, the outlines of which every Iraqi, no matter how dimly educated, seemed already to know: that Chalabi had been convicted in absentia for fraud and sentenced to 22 years in prison for embezzling almost $300 million. (Chalabi, who fled Jordan before he could be arrested, has long denied the charges, maintaining that they were cooked up by the Jordanian government under pressure from Saddam Hussein. Last year, the Jordanians signaled that they were willing to pardon Chalabi. But Chalabi insisted on a public apology, which the Jordanians refused to give.) Even the small army of Iraqi exiles that Chalabi had raised before the war never grew to be much more than a personal militia. One poll, conducted in early 2004, showed him to be the least trusted public figure in Iraq — even less trusted than Saddam Hussein.

Dexter Filkins

The suspicions that ordinary Iraqis harbored about Chalabi were never relieved by his industriousness. As oil minister and deputy prime minister, Chalabi worked night and day, often on the minutiae of Iraq’s oil pipelines and electricity lines or the precise wording, in Arabic and English, of the Iraqi Constitution. I typically went to see Chalabi at night, sometimes at 9 or 10, and usually had to wait an hour or so while he finished with his other visitors. If it was true that Chalabi had returned to Iraq with the expectation of acquiring power, it was not true that he was unwilling to work for it. Chalabi, like all Iraqi political leaders, functioned in conditions of mortal danger at nearly all times. Even when he wanted to walk into his backyard, he had to be followed by armed guards. It’s an exhausting and debilitating way to live. But while many Iraqi exiles either gave up and returned to the West, or now spend as much time outside the country as in, Chalabi stayed in Iraq almost continuously following Hussein’s fall.

For all the hard work, his zigging and zagging across the political spectrum frustrated many of the Iraqi elites — his only natural constituency — especially after his flirtation with the Islamists. “I don’t think Chalabi has any credibility left,” Adnan Pachachi, the 83-year-old former foreign minister, told me before the 2005 elections. “He is not acceptable to Iraqis. People don’t like him shifting all the time. This thing with Moktada — it’s ridiculous.”

One who remained true was his friend Mahdi, who seemed, perhaps from his boyhood days swimming in the Tigris with Chalabi, to carry a deeper understanding of his old friend. “This is the style of Ahmad,” Mahdi told me just before the elections. “He was a banker. He works a dossier. Each time it’s different — he invests here, he invests there, he invests elsewhere. He has had successes, he has had maybe his failures. I can work with him.”

Chalabi never grasped his essential unpopularity. In the first round of elections, in January 2005, Chalabi rode into office as a member of the United Iraqi Alliance, the Shiite coalition pulled together by Grand Ayatollah Ali al-Sistani, the powerful Shiite religious leader. Nearly every Shiite in Iraq voted for the U.I.A., and a name on its slate all but guaranteed a seat in the Parliament. The leadership of the U.I.A. was sharply Islamist.

Nearly a year later, as the December 2005 elections approached, Chalabi veered again, away from the Islamists, away from Moktada. Chalabi publicly chided the Shiite coalition as being too Islamic-minded, declaring he didn’t want to be a member of a government that was planning to transform Iraq into an Islamist state. By that time, of course, Iraq was already quite Islamist anyway. “They’re Islamist, and I don’t want to be part of the sectarian project,” Chalabi told me just before the elections that December. I actually believed him, but given his association with Moktada, it didn’t seem that many other Iraqis would.

The reality, anyway, was more complicated. In the weeks before the election, the Shiite alliance offered Chalabi and his supporters 5 seats on its 275-seat slate; Chalabi demanded 10. Some Shiite leaders told me that they had deliberately offered Chalabi a low figure in the hope that he would leave their alliance for good. Mahdi, the vice president, denied that this was true.

“For four days I tried to convince him; I even threatened him,” Mahdi told me. “I said, ‘Ahmad, if you leave this room, we will be no more friends.’ I was not serious. I was only threatening.”

So Chalabi went his own way. If he had wanted only a seat for himself, he could have taken his place in the Shiite alliance; plenty of other Iraqis did. In going alone, he must have known that he was risking disaster. He went ahead anyway.

A few days before the election, I drove up to Chalabi’s compound in Khadimiya for a lunch he was holding for tribal leaders. In much the same fashion as in Mushkhab 11 months before, about 100 sheiks from Sadr City listened to a Chalabi speech before descending on heaps of lamb and rice.

One of the sheiks, a man named Sahaeh Masif al-Kindh, approached me as he walked out.

“Chalabi didn’t forget us when we were living under Saddam,” al-Kindh told me. “He was Saddam’s biggest enemy. We don’t forget that.”

4. Washington, November 2005

The second round of Iraqi elections is only a few weeks away, and the wheel is turning again. Chalabi, once in favor, then out, is back in. Ostensibly, he has been invited to Washington by Treasury Secretary John Snow to talk about the Iraqi economy. But it’s more than that. He’s going to see Vice President Cheney, Secretary of State Condoleezza Rice and Secretary of Defense Donald Rumsfeld. The allegations that prompted the raid on Chalabi’s compound 18 months before, that he tipped the Iranians to American eavesdropping, are mysteriously forgotten. Indeed, everything seems to have been forgotten.

Chalabi is rising on the catastrophe that Iraq has become. The Bush administration is grasping for anyone who might help them. On paper at least, Chalabi has a shot at becoming prime minister.

Most of the meetings are private. There is a dinner at the home of Richard Perle for some of Chalabi’s old Washington friends. One of the events, a speech at the American Enterprise Institute, is public. The room is filled. At the end of a speech, Chalabi is asked by someone in the crowd if he would like to apologize for misleading the Bush administration about weapons of mass destruction in Iraq.

Chalabi nods as if he knew the question was coming.

“This is an urban myth,” he says. The audience gasps.

Chalabi told me later that his role as an intelligence conduit on weapons of mass destruction began shortly after the Sept. 11 attacks, when he was contacted by the Department of Defense. Not vice versa. “They came to us and asked, ‘Can you help us find something on Saddam?’ ” he said. “We put out feelers.”

By that time, the autumn of 2001, Chalabi had a long record of working with the American government in its shadow war against Hussein. Throughout the 1990’s, however, Chalabi demonstrated time and again that he would pursue his own interests, even if they clashed with those of the United States. There was the time in 1995, for instance, when Chalabi, under the employ of the C.I.A. in the Kurdish-controlled city of Erbil, launched an unauthorized attack on Hussein’s army. The attack failed to spark an uprising against Hussein; the Turks sent troops into northern Iraq; the C.I.A. was furious. It was a fiasco.

“Very quickly he got out of control,” one retired C.I.A. officer who worked with Chalabi told me. “We didn’t know what he was doing over there. He was trying to provoke a war with Saddam.”

Then there was the time, in 1996, when Chalabi interfered with a C.I.A. plot to topple Saddam. I heard the story not from Chalabi but from Perle, the Bush defense adviser and Chalabi friend. As Perle tells it, Chalabi called him in a panic from London, telling him that a C.I.A.-backed plot against Hussein was fatally compromised. The fact that the C.I.A.’s Iraqi front-man for the plot, Ayad Allawi, was a rival of Chalabi’s (as well as his relative) had nothing to do with his concerns, Perle said.

As Perle tells it, he quickly telephoned the C.I.A. director at the time, John Deutch, who agreed to meet in downtown Washington. Perle said he spent an hour laying out Chalabi’s worries.

“He was obviously concerned,” Perle said of Deutch.

The plot went ahead anyway. It was a catastrophe. Hussein arrested as many as 800 people and reportedly executed dozens of high-ranking officers. As a final indignity, Hussein’s men dialed up Allawi’s headquarters in Amman, Jordan, on a C.I.A.-provided communications device they captured from the plotters and left a message: “You might as well pack up and go home.”

Some people in the C.I.A. held Chalabi responsible, believing that he had spread word of the plot in order to deny Ayad Allawi the upper hand in the exile movement.

“There was abiding suspicion in the agency that Chalabi blew it,” the former C.I.A. agent said. The fallout over the failed coup precipitated the C.I.A.’s decision to break ties with Chalabi.

Chalabi dismisses those claims, and some in the C.I.A. from the period back him up. “Chalabi was as true to me as the day was long,” says Robert Baer, a former C.I.A. field agent in northern Iraq. “If Chalabi was going to blow the operation, why would he tell the C.I.A.?”

There was the money issue, too. Throughout the 1990’s, as the C.I.A. and Congress funneled millions of dollars to Chalabi’s organization, the Iraqi National Congress, rumors swirled about corruption. One of the skeptics was W. Patrick Lang, a senior official at the Defense Intelligence Agency. In 1995, Lang told me, he was sitting in the lobby of the Four Seasons Hotel in Washington, when he overheard a group of Iraqis talking about the money they had received from the American government.

“I knew who these guys were, and I heard them speaking Arabic, and it was obviously Iraqi Arabic,” Lang said. “So I went over and sat next to them and listened. So what they were talking about was how to spend the Americans’ money, going on shopping trips, stuff like that. Oh, they were talking about going shopping for jewelry for women, toys for kids. Consumer goods. They were also talking about Las Vegas. ‘We will sneak out of here and go to Las Vegas. We have a lot of money now.’ ”

A couple of years later, Lang said, he visited the office of Senator Trent Lott, then the Senate majority leader. After introducing an Arab businessman to Lott, Lang sat in Lott’s anteroom with a number of Capitol Hill staff members who helped draft the Iraq Liberation Act, which provided millions of dollars to Chalabi’s Iraqi National Congress. They were praising Chalabi: “They were talking about him, that Chalabi fits into this plan as a very worthwhile, virtuous exemplar of modernization, somebody who could help reform first Iraq and then the Middle East. They were very pleased with themselves.” Lang, an old Middle East hand who had worked in Iraq in the 1980’s, said he was stunned. “You guys need to get out more,” Lang recalls saying at the time. “It’s a fantasy.”

Years later, Lang said, many of the same men who were sitting in Lott’s office that day became key players in the Pentagon’s plans for an invasion of Iraq.

Which brings us back to Chalabi’s “urban myth”: the notion that he provided bogus intelligence to the Bush administration and helped persuade them — or provide the pretext — to invade Iraq. In his speech at the American Enterprise Institute, Chalabi exhorted the audience to turn to Page 108 of the Robb-Silverman report, a recently completed blue-ribbon investigation, which, he said, exonerates him.

It does, in a way. The report does not say that Chalabi & Company played an important role in the events leading to the war. It says only that the Bush administration did not rely much on intelligence Chalabi handed over in making the decision to invade.

“In fact, overall, C.I.A.’s postwar investigations revealed that I.N.C.-related sources had a minimal impact on prewar assessments,” the report says.

This is also Chalabi’s version. In the run-up to war, he says, he provided only three defectors to the American intelligence community. “We did not vouch for any of their information,” Chalabi told me.

One of the people whom the I.N.C. made available to American intelligence was Adnan Ihsan al-Haideri, who claimed that he had worked on buildings that were used to store biological, nuclear and chemical weapons equipment. Chalabi told me that he made Haideri available to American intelligence at a safe house in Bangkok. He didn’t think much of Haideri or his information, he says, and was astonished to learn later that the information he provided became a pillar of the Americans’ charges against Hussein.

“We told them, ‘We don’t know who this guy is,’ ” Chalabi said. “Then the Americans spoke to him and said, ‘This guy is the mother lode.’ Can you believe that on such a basis the United States would go to war? The intelligence community regarded the I.N.C. as useless. Why would the government believe us?”

Perle, from his perch on the Pentagon’s Defense Policy Advisory Committee Board, backs Chalabi’s version. He was privy to much of the intelligence the administration was collecting on Hussein in the days before the war. He says that American intelligence officials began from the premise that Hussein had never destroyed his stocks of banned weapons and that he had kept his programs alive. American spies were only looking to confirm what they thought they already knew. In any event, Perle said, very little of their information came from Chalabi.

“I had all the security clearances,” Perle said. “I was pretty much aware of the people that the I.N.C. was bringing to the table to talk about what they knew. Everything they did came with a disclaimer. To the best of my knowledge, there was no single important fact that was uniquely conveyed to U.S. intelligence by anyone who had been assisted by the I.N.C.”

Indeed, Chalabi says, much of the most important evidence that led America to war did not come from the I.N.C.: not the report on the uranium from Niger, and not Curveball, the Iraqi defector who made bogus claims about mobile biological weapons labs.

“It’s not our fault,” Chalabi says.

But the story doesn’t end there.

A second report, released by the Senate Intelligence Committee in September 2006, reached far more damning conclusions. The report states flatly that Chalabi’s group introduced defectors to American intelligence who directly influenced two key judgments in the 2002 National Intelligence Estimate, which preceded the Senate vote on the Iraq war: that Hussein possessed mobile biological-weapons laboratories and that he was trying to reconstitute his nuclear program. The report said that the I.N.C. provided a large volume of flawed intelligence to the United States about Iraq, saying the group “attempted to influence United States policy on Iraq by providing false information through defectors directed at convincing the United States that Iraq possessed weapons of mass destruction and had links to terrorists.” (Five Republican senators disagreed with the report’s conclusions about the I.N.C.)

Chalabi’s denials are unconvincing for another reason. His role in the preparations for war was not just as a source for American intelligence agencies. He was America’s chief public advocate for war, spreading information gathered by his own intelligence network to newspapers, magazines, television programs and Congress. (A New York Times reporter, Judith Miller, was one of Chalabi’s primary conduits; in an e-mail message sent in 2003 that has been widely quoted since, she wrote that Chalabi “has provided most of the front-page exclusives on W.M.D. to our paper” and that the Army unit she was then traveling with was “using Chalabi’s intell and document network for its own W.M.D. work.”) Indeed, the press proved even more gullible than the intelligence experts in the American government. In a June 2002 letter to the Senate Appropriations Committee, the I.N.C. listed 108 news articles based on information provided by the group. The list included articles concerning some of the wildest claims about Hussein, including that he had collaborated in the Sept. 11 attacks.

David Kay, the former chief weapons inspector in Iraq, offers one of the most compelling explanations for how pivotal Chalabi’s role was in taking America to war. Kay said that while the C.I.A. had long regarded Chalabi with suspicion, disregarding much of what he gave them, Chalabi had succeeded in persuading his more powerful friends in other parts of the government — Vice President Dick Cheney, for instance, and Wolfowitz. The pressure brought by those men, Kay told me, ultimately persuaded George Tenet, director of the C.I.A., that the White House was committed to war and that there was no point in resisting it.

“In my judgment, the reason George Tenet and the top of the agency came over to the argument that Iraq had W.M.D. was that they really knew that the vice president and Wolfowitz had come to that conclusion anyway,” Kay said. “They had been getting information from Chalabi for years.”

Of Wolfowitz, whom he has known for years, Kay said: “He was a true believer. He thought he had the evidence. That came from the defectors. They came from Chalabi.”

Kay said he continued to feel Chalabi’s influence with Wolfowitz even after the invasion, when Kay was leading the team searching for W.M.D. from mid- to late 2003. “Paul, when faced with evidence that we had developed on the ground, would say, Well, Chalabi says this, the I.N.C. says this, why are you not seeing it?” Kellems, the Wolfowitz assistant, disputed Kay’s story, saying that Tenet’s views were shared by officials across the government. “The position taken on weapons was the consensus view of the United States, including of the Clinton administration and other Western intelligence agencies — as well as that of Mr. Kay himself prior to visiting Iraq,” Kellems said.

Lawrence Wilkerson, chief of staff to Secretary of State Colin Powell in Bush’s first term, adds a final turn to the labyrinth. In the frantic days leading up to Powell’s speech at the United Nations in February 2003, when he laid out the case for war, Wilkerson said he spent many nights sleeping on a couch in George Tenet’s office. During those preparations, Wilkerson told me, Powell insisted that every point he would make at the U.N. had to be supported by at least three independent sources.

“We had three or four sources for every item that was substantive in his presentation,” Wilkerson told me in an interview in Washington. “Powell insisted on that. But what I am hearing now, though, is that a lot of these sources sort of tinged and merged back into a single source, and that inevitably that single source seems to be either recommended by, set up by, orchestrated by, introduced by, or whatever, by somebody in the I.N.C.”

Wilkerson said that the revelations, some of which he says he has heard from his own friends inside American and European intelligence agencies, have forced him to rethink how America went to war. “I have maintained pretty much the same thing that the president said, ‘Well, we all got fooled, it was lousy intelligence, and no one in the national leadership spun the intelligence,’ ” Wilkerson said. “I am having to revisit that. And that is disturbing to me.”

Wilkerson raises a crucial point. Assuming that Chalabi was a source for at least some of the bogus intelligence, we might ask ourselves: so what? Was the American national security apparatus so incompetent that it could be hoodwinked by a handful of shopworn engineers and an Iraqi mathematician to take the country into war? Or is the lesson more disturbing — that Chalabi simply gave the Bush administration what it wanted to hear?

“I think Chalabi and the I.N.C. were very shrewd,” Wilkerson said. “I think Chalabi understood what people wanted, and he fed it to them. From everything I’ve heard, no one says he is dumb.”

5. Tehran, November 2005

Amid the debate about Chalabi’s role in taking America to war, one little-noticed phrase in a Senate Intelligence Committee report on W.M.D. offered an important insight into Chalabi’s identity. One of the principal errors made by the Bush administration in relying on Chalabi’s Iraqi National Congress, the report said, was to disregard conclusions by the C.I.A. and the Defense Intelligence Agency that “the I.N.C. was penetrated by hostile intelligence services,” notably those of Iran.

The Iran connection has long been among the most beguiling aspects of Chalabi’s career. Baer, the former C.I.A. operative, recalled sitting in a hotel lobby in Salah al-Din, in Kurdish-controlled Iraq, in 1995 while Chalabi met with the turbaned representatives of Iranian intelligence on the other side of the room. (Baer, as an American, was barred from meeting the Iranians.) Baer says he came to regard Chalabi as an Iranian asset, and still does.

“He is basically beholden to the Iranians to stay viable,” Baer told me. “All his C.I.A. connections — he wouldn’t get away with that sort of thing with the Iranians unless he had proved his worth to them.”

Pat Lang, the D.I.A. agent, holds a similar view: that in Chalabi, the Iranians probably saw someone who could help them achieve their long-sought goal of removing Saddam Hussein. After a time, in Lang’s view, the Iranians may have figured the Americans would leave and that Chalabi would most likely be in charge. Lang insists he is only speculating, but he says it has been clear to the American intelligence community for years that Chalabi has maintained “deep contacts” with Iranian officials.

“Here is what I think happened,” Lang said. “Chalabi went and told the guys at the Ministry of Intelligence and Security in Tehran: ‘The Americans are giving me money. I’m their guy. I’m their candidate.’ And I’m sure their eyes lit up. The Iranians would reason that they could use this guy to manipulate the United States to get what they wanted. They would figure that the U.S. would invade. They would figure that we would come and we would go, and if we left Chalabi in charge, who was a good friend of theirs, they would be in good shape.”

Lang’s thesis is impossible to prove, and Chalabi denies it. And even if it were true, Chalabi’s role would be difficult to discern: so many different Iranian agencies are thought to be pursuing so many different agendas in Iraq that a single Iranian national interest is difficult to identify. Still, if Lang’s and Baer’s argument is true, it would be the stuff of spy novels: Chalabi, the American-adopted champion of Iraqi democracy, a kind of double agent for one of America’s principal adversaries.

In late 2005, I accompanied Chalabi on a trip to Iran, in part to solve the riddle. We drove eastward out of Baghdad, in a convoy as menacing as the one we had ridden in south to Mushkhab earlier in the year. After three hours of weaving and careering, the plains of eastern Iraq halted, and the terrain turned sharply upward into a thick ridge of arid mountains. We had come to Mehran, on one of history’s great fault lines, the historic border between the Ottoman and Persian Empires. As we crossed into Iran, the wreckage and ruin of modern Iraq gave way to swept streets and a tidy border post with shiny bathrooms. Another world.

An Iranian cleric approached and shook Chalabi’s hand. Then he said something curious: “We are disappointed to hear that you won’t be staying in the Shiite alliance,” he said. “We were really hoping you’d stay.” The border between Iraq and Iran had, for the moment, disappeared.

More curious, though, was the authority that Chalabi seemed to carry in Iran, which, after all, has been accused of assisting Iraqi insurgents and otherwise stirring up chaos there. For starters, Chalabi asked me if I wanted to come along on his Iranian trip only the night before he left — and then procured a visa for me in a single day: a Friday, during the Eid holiday, when the Iranian Embassy was closed. Under ordinary circumstances, an American reporter might wait weeks.

Then there was the executive jet. When we arrived at the border, Chalabi ducked into a bathroom and changed out of his camouflage T-shirt and slacks and into a well-tailored blue suit. Then we drove to Ilam, where an 11-seat Fokker jet was idling on the runway of the local airport. We jumped in and took off for Tehran, flying over a dramatic landscape of canyons and ravines. We landed in Iran’s smoggy capital, and within a couple of hours, Chalabi was meeting with the highest officials of the Iranian government. One of them was Ali Larijani, the national security adviser.

I interviewed Larijani the next morning. “Our relationship with Mr. Chalabi does not have anything to do with his relationship with the neocons,” he said. His red-rimmed eyes, when I met him at 7 a.m., betrayed a sleepless night. “He is a very constructive and influential figure. He is a very wise man and a very useful person for the future of Iraq.”

Then came the meeting with Mahmoud Ahmadinejad, the Iranian president. I was with a handful of Iranian reporters who were led into a finely appointed room just outside the president’s office. First came Chalabi, dressed in a tailored suit, beaming. Then Ahmadinejad, wearing a face of childlike bewilderment. He was dressed in imitation leather shoes and bulky white athletic socks, and a suit that looked as if it had come from a Soviet department store. Only a few days before, Ahmadinejad publicly called for the destruction of Israel. He and Chalabi, who is several inches taller, stood together for photos, then retired to a private room.

At the time of Chalabi’s visit, Iran and the United States were engaged in a complicated diplomatic dance; the American ambassador in Baghdad, Zalmay Khalilzad, had been authorized to open negotiations with the Iranians over their involvement in Iraq. Still, Chalabi insists he carried no note from the Iranians when he flew to Washington the next week. Officially, at least, Iran and the United States never got together.

As ever, Chalabi had multiple agendas. One was to learn whether the Iranians would support his candidacy for the prime ministership (the same reason he traveled to the United States). It makes you wonder, in light of the Baer and Lang thesis: was Chalabi telling the Iranians, or asking them for permission? Or making a deal, based on his presumed leverage in the United States? The possibilities seemed endless.

Chalabi played it cool.

“The fact that Iraq’s neighbor is also a country that is majority Shia is no reason for us to accept any interference in our affairs or to compromise the integrity of Iraq,” he said after his meeting with Ahmadinejad.

Richard Perle, Chalabi’s friend, discounted the idea that Chalabi might be a double agent. “Of course Chalabi has a relationship with the Iranians — you have to have a relationship with the Iranians in order to operate there,” Perle said. “The question is what kind of relationship. Is he fooling the Iranians or are the Iranians using him? I think Chalabi has been very shrewd in getting the things he has needed over the years out of the Iranians without giving anything in return.”

For all of the skullduggery surrounding the trip to Iran, though, the greatest revelation came later in the day. When the meeting with Ahmadinejad ended, he asked Chalabi if there was anything he could to do to make his stay more comfortable. Chalabi said yes, in fact, there was: would he mind if he, Chalabi, took a tour of the Museum of Contemporary Art?

So there we were, in the middle of the Axis of Evil, strolling past one of the finest collections of Western Modern art outside Europe and the United States: Matisse, Kandinsky, Rothko, Gauguin, Pollock, Klee, Van Gogh, five Warhols, seven Picassos and a sprawling garden of sculpture outside. The collection was assembled by Queen Farah, the shah’s wife, with the monarchy’s vast oil wealth. And now, with the mullahs in charge, the museum is largely forgotten. The day we were there, the gallery was all but empty. We had the museum’s enthusiastic English-speaking tour guide all to ourselves.

“Thank you, thank you, for coming!” Noreen Motamed exclaimed, clapping her hands.

We walked the empty halls. Chalabi moved through the place deliberately, nodding his head, pausing at the Degas and the Pissarro.

“Wow,” Chalabi said before Jesus Rafael Soto’s painting “Canada.” “Look at that.”

A retinue of Iranian officials walked with us, unmoved by the splendor. Ahmadinejad had stayed behind.

For all of the furies that emanate from the halls of the Iranian government, it has taken fine care of Queen Farah’s collection. Indeed, about the only way you would know you were not in a museum in New York or London was the absence of the middle panel from Francis Bacon’s triptych “Two Figures Lying on a Bed With Attendant,” which depicts two naked men.

“It is in the basement, covered,” Motamed said with disappointed eyes.

Finally, we came across a pair of paintings by Marc Chagall, the 20th-century Modernist and painter of Jewish life. The display contained no mention of this fact.

Chalabi gazed at the Chagalls for a time. Then, with a rueful smile, turned, to no one in particular, and said loudly: “Imagine that. They have two paintings by Marc Chagall in the middle of a museum in Tehran.” The Iranian officials seemed not to hear.

6. Baghdad, December 2005

A winter rain is falling. Chalabi is standing inside a tent in Sadr City, the vast Shiite slum of eastern Baghdad. He’s talking about his plans for restoring electricity, boosting oil production and beating the insurgency. People seem to be listening, but without enthusiasm. The violence here, worsening by the day, is washing away the hopes of ordinary Iraqis. Less and less seems possible anymore. People are retreating inward, you can see it in the glaze in their eyes.

As Chalabi speaks, I pull aside one of the Iraqis who had been listening. What do you think of him? I ask.

“Chalabi good good,” the Iraqi man says in halting English.

Whom are you going to vote for?

“The Shiite alliance, of course,” the Iraqi answers. “It is the duty of all Shiite people.”

When the election came, Chalabi was wiped out. His Iraqi National Congress received slightly more than 30,000 votes, only one-quarter of 1 percent of the 12 million votes cast — not enough to put even one of them, not even Chalabi, in the new Iraqi Parliament. There was grumbling in the Chalabi camp. One of his associates said of the Shiite alliance: “We know they cheated. You know how we know? Because in one area we had 5,000 forged ballots, and when they were counted, we didn’t even get that many.” He shrugged.

But the truth seemed clear enough: Chalabi was finished. Chalabi, who could plausibly claim that he, more than any other Iraqi, had made the election possible, had been shunned by the very people he had worked so hard to set free. No amount of deal making or of public relations foot-work, or of endorsements from friends, was able to save him. Chalabi may have helped bring democracy to Iraq, but it was democracy that finished him. He was, in the end, a parlor politician, someone from the world of his father or grandfather, or maybe of Victorian England: a brilliant negotiator and schemer who might settle a country’s problems over a cup of tea. But in Iraq, by late 2005, real power was no longer held by the parlor men, or by politicians at all. It was held by people like Moktada al-Sadr, populist leaders with a militia and a mass following in the street.

The election results were a harbinger of the civil war. Iraqis voted almost entirely along sectarian and ethnic lines: Kurds for the big Kurdish parties, Sunnis for the Sunni parties and Shiites for the big Islamist Shiite alliance. Iraqis who tried to run on a secular platform — Chalabi, for instance, and his relative, Allawi, in another party — found themselves abandoned. Just two months later, in February of this year, following the destruction of the Askariya shrine, a holy Shiite temple in Samarra, the civil war began in earnest: Shiite gunmen, who had for years been restrained by the Shiite leadership in the face of the Sunni onslaught, were finally free to retaliate.

Chalabi, shut out of the government, claimed that his sin was one of miscalculation. There was some truth to this: in all likelihood, Chalabi did not lose because he had been convicted of stealing millions of dollars from a Jordanian bank. Or because of the rumors swirling around Baghdad that he had looted the treasury. Or even because he was an exile close to the Americans. No: plenty of Westernized Iraqi exiles were elected to Parliament — among them Mowaffak al-Rubaie and Adil Abdul Mahdi — who, like Chalabi, didn’t have local followings and were trailed by similar questions. Practically speaking, Chalabi lost because he had broken from the big cleric-backed Shiite alliance that swept the election. “I had not realized how polarized Iraq had become,” Chalabi told me after the election.

He might have gotten a seat in the cabinet, but that didn’t work out, either. That stung: the new Iraqi government is staffed with Chalabi’s old colleagues, many of them members of the exile alliance he once led. Jalal Talabani is president. Adil Abdul Mahdi, his boyhood friend, is vice president. Barham Salih, comrade of many years, is deputy prime minister. His old confidant Zalmay Khalilzad, who played a central role in forming the new government, is the American ambassador. In the end, they couldn’t — or wouldn’t — bring him aboard. “Chalabi really made a mess of things,” said one Iraqi political leader who now occupies a key post in the government. He declined to elaborate.

As anticlimactic as was Chalabi’s fall, its real meaning lay in a paradox: democratic politics no longer mattered. For three years, the American-backed enterprise in Iraq rested on the assumption that the exercise of democratic politics would drain away the anger that was driving the violence. Instead of bullets, there would be ballots.

But at the culmination of that long process — two constitutions, two elections and a referendum — the violence was worse than ever. It turns out that democratic politics does not stop violence; indeed, the elections, by polarizing Iraq’s sectarian and ethnic communities, may have helped push the country into civil war.

Effectively, by the fall of 2006, the overwhelming majority of Iraq had no government at all. It was a failed state. Yes, there were Iraqis — Chalabi’s friends — who went to their jobs every day, toiling dutifully and not so dutifully inside the Green Zone, which every day seemed more and more divorced from the reality outside. In the Red Zone, as the real Iraq is called, Iraq was a nightmarish, apocalyptic place, where gunmen kidnapped children and sometimes killed them, where bodies turned up at the morgue peppered by holes from electric drills and corpses lay uncollected in the streets, along with the trash, for days on end.

Ahmad Chalabi devoted his whole adult life to toppling a dictator and achieving power in the place of his birth. He felled the dictator, helping along a reckless gamble that wagered the future of a nation. The gamble failed, a nation imploded and Chalabi never ascended to the throne he so coveted. But in an odd turn of fortune, the throne no longer had anything to offer.

7. London, August 2006

The conversation is wrapping up. The talk turns to the government of Prime Minister Nuri Kamal al-Maliki, the machinations of those around him, what the future might hold. Chalabi, in an expansive mood, gets up, goes into a closet and brings out a note that Bob Baer, the C.I.A. agent, scribbled to him in that hotel lobby when the two men plotted a coup many years before. The talk, improbably, turns to memoirs; at the moment, Baer’s, “See No Evil,” was a best seller. I ask Chalabi, who is back on the couch, if it isn’t time that he write his own.

He doesn’t hesitate to answer.

“Too early!” Chalabi says. “Too early!”


Copyright 2006 The New York Times Company

::: posted by Stewart at 4:43 PM


 

http://select.nytimes.com/2006/11/07/opinion/07kristof.html




--------------------------------------------------------------------------------

November 7, 2006
Op-Ed Columnist
America’s Laziest Man?
By NICHOLAS D. KRISTOF
Last year, Barry Diller took home a pay package worth $469 million, making him the highest-paid chief executive in America.
His shareholders didn’t do so well. Stock in the main company he runs, IAC/Interactive, declined 7.7 percent last year. For the three years ending in December 2005, the stock was up just 11 percent — compared with 49 percent for the S. & P. 500.

Just think! If you’re capable of running a company only a little worse than the average C.E.O., then Mr. Diller thinks you’re worth almost half a billion dollars!

So I’m delighted to announce that Mr. Diller is this year’s winner of my Michael Eisner Award, given annually to commemorate the former Disney chairman’s pathbreaking achievements in corporate rapacity. The winner of the Eisner award receives a shower curtain — this year it’s a lovely pink floral model costing $5 — in honor of the $6,000 one that Tyco’s shareholders purchased for their former C.E.O.

There’s nothing wrong, in principle, with a big pay package. Baseball players, movie stars and investment bankers often get outrageous pay, but after arms-length negotiations. That is capitalism at work, and nobody is getting ripped off.

In contrast, as John Kenneth Galbraith once noted: “The salary of the chief executive of the large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.”

Consider Mr. Diller. As my Times colleague Geraldine Fabrikant noted in an article about his pay, he owns 2 percent of IAC but controls 56 percent of the voting stock. In effect, he chooses the board — and thus the members of the compensation committee who decide his pay.

There are different ways of valuing compensation. A research firm called the Corporate Library calculated Mr. Diller’s as $295 million from IAC (not counting another $174 million from Expedia, an IAC spinoff). Most of these sums were in options that had been granted much earlier but exercised last year.

Another way to look at it is to focus not on the value to Mr. Diller but on the cost to the company. By that method — counting newly issued options but not the exercise of older ones — IAC paid him $85 million last year, according to a research firm called Glass Lewis & Company.

Each research firm said that by the method it used, Mr. Diller was the highest-paid chief executive last year.

“This is a grab fest,” said Jonathan Weil, managing director of Glass Lewis. “I don’t see any justification for this company paying him that.”

So how does the company justify it? In its proxy statement, IAC said that its aim was partly to align Mr. Diller’s interest with those of the shareholders. Funny alignment, since it meant that a sum equivalent to 9.8 percent of the company’s profits last year vanished into his pocket. In contrast, in the best-governed companies the chief executive takes home an amount equivalent to 0.2 percent of earnings.

IAC also said that the package was necessary to “motivate Mr. Diller for the future.” Goodness, this man needs a lot of motivation! He required about $150,000 every hour just to get motivated — suggesting that he may be the laziest man in America.

Mr. Diller spent 20 minutes trying to drum sense into me, but I’m not sure it was worth $50,000 worth of his time.

“It’s by any standard a great deal of money,” he said of his compensation, but he also advised that “it’s lazy and dumb” to focus on income from options that were issued years ago. His icy tone almost froze my telephone line.

As for the newly granted options, he noted that to be exercised the stock price must rise and he must stay with the company for five years. He initially insisted that they thus had no value, although he backed off when I cited Black-Scholes option pricing models that value his new options in the tens of millions of dollars.

Am I being mean to Mr. Diller? Perhaps. He is a giant in corporate America who has sometimes shown tremendous vision on behalf of shareholders (the same was true, early on, of Mr. Eisner).

But we have a broad problem in this country of C.E.O.’s reaching into the till and overpaying themselves at shareholders’ expense. The average C.E.O. earns 369 times as much as the average worker, compared with 36 times as much back in 1976.
Better governance and more transparency may encourage restraint, and so may a dash of ridicule. Let’s hope that Mr. Diller will shower behind his pink vinyl shower curtain and learn the concept of shame.



Copyright 2006 The New York Times Company

::: posted by Stewart at 3:52 PM


 

http://www.latimes.com/news/printedition/la-me-texts7nov07,1,1296079.story
When you can't afford to go buy the book
By Stuart Silverstein, Times Staff Writer
November 7, 2006


College student Rob Christensen has tried nearly every trick in the book to save money on the books.

Last year, Christensen said, he borrowed a psychology text from his university library and kept it all semester. It dawned on him that the fines (which turned out to be $8) would be less than the price (around $40).

Christensen also has borrowed volumes from friends, split book costs with classmates and occasionally skipped buying expensive texts, hoping to get by without doing all the reading. He often shops for discounts online, sometimes snaring older editions or versions that aren't packaged with software or study guides that raise the cost.

Christensen attends school at a time when "Sociology: Your Compass for a New World" lists for $108.95, "Principles of Economics" for $150.95 and "Marketing Management" for $153.35.

"It's a tough fight to get textbooks for an affordable price," said Christensen, a Humboldt State University senior who hopes to become a high school history teacher.

The era of heading to the college bookstore and compliantly buying everything that a professor deems required reading — to the extent that those days ever really existed — is receding into the pages of history. The escalating costs of higher education and the ease of online shopping have spurred students to seek money-saving alternatives.

Three years ago, 43% of the students surveyed by the National Assn. of College Stores indicated that they "always purchase required textbooks." Last fall the figure sank to 35%.

Even though not buying a book might hurt their grades, "some just roll the dice and hope," said Albert N. Greco, a Fordham University business professor who studies the college textbook business.

UCLA economics professor Lee Ohanian recalls that when he started teaching in 1992, "there was never any question" about purchasing texts. "Now, I receive literally dozens of questions about whether the book is 'really needed.' "

Still, a College Board report released last month estimated that students at public four-year colleges are spending $942 on books and supplies this school year. Another analysis found that hardcover college textbooks are selling, new, for an average of about $120.

Finding ways to cope is particularly crucial at California's community colleges. About half of the state's full-time community college attendees pay no attendance fees through a program intended to help low-income students, "but they still have to come up with the money for textbooks," said Bruce D. Hamlett, chief consultant to the California Assembly's Higher Education Committee.

Some of those disadvantaged students sign up for Extended Opportunity Program and Services, a counseling and tutoring initiative that also provides money for textbooks.

Sandra Escobedo, 19, who studies nursing at Pierce College in Woodland Hills, receives $250 a semester for books under the program. But she also uses other tactics to save money.

This semester Escobedo dropped a psychology course because she already had too many expensive textbooks to buy and couldn't afford another $100 tome. For a political science class last spring, she bought just one of the five books assigned.

Even that text, she said, was a waste of money. "I never opened the book, and I passed that class," said Escobedo, who relied on the notes she took in lectures.

Some students fire up the photocopy machine. Last fall's survey by the college store association found that 14% of students polled admitted that they sometimes photocopy a book or other copyrighted materials.

Another technique: Order from overseas websites to buy cheaper foreign editions.

The trends frustrate college bookstore operators vying for the estimated $7 billion a year that students spend on new and used texts.

Jennifer Libertowski, a spokeswoman for the college store association, noted that students increasingly balk at buying textbooks even as they gobble up iPods and cellphones.

"There's definitely a value shift," she said.

Textbook prices have troubled state and federal lawmakers as well as student activists. The U.S. Government Accountability Office reported last year that college textbook prices have climbed at twice the rate of inflation over the last two decades. Members of the House Education and Workforce Committee in June called for a one-year study that, among other things, is to recommend ways to ease the burden of paying for texts.

A handful of states have passed related legislation. California's law, signed two years ago, was an advisory measure calling on publishers and college governing boards and faculty to pursue ways to help students save money on books.

Amid that pressure, textbook publishers offer such reduced-price options as black-and-white texts and electronic books that can be read online.

With e-books, students lose their access to the material at the end of the term but typically plunk down 50% less than for hardcover.

The Assn. of American Publishers, which represents the nation's college textbook industry, says prices have held steady in recent years and disputes the notion that book costs are too high. It points to research showing that typical students at four-year colleges paid $644 for textbooks last year, far less than the College Board estimates and only about one-third of what students spent on entertainment.

"The real outrage should be directed at the suggestion that textbooks are a legitimate place to scrimp," Patricia Schroeder, a former Colorado congresswoman who is the association's president, wrote in a recent newspaper commentary.

In addition, the association says publishers revise texts about every four years and often include CDs and workbooks to update content and take advantage of new educational technologies, not to boost profits.

But Humboldt State's Christensen, a 24-year-old from Lake Forest in Orange County, doesn't buy those arguments. Christensen, who relies on a scholarship, grants, loans and a 20-hour-a-week job to pay for his education, has honed his skills at saving. This term he bought a used book from another student for $5 instead of getting it new for $22.

Sometimes Christensen will buy books at the university bookstore only to return them if he spots cheaper copies online.

One possible side effect of high textbook costs is that students eagerly sell their books, even at cut-rate prices, rather than build a personal library. "You just want to get rid of it," said Juan Pablo Moncayo, the student government president at Cal State Fresno.

"I see my parents and their culture of keeping books and appreciating a book for the value of having a library and whatnot. With my generation, that's completely gone."

*


--------------------------------------------------------------------------------
stuart.silverstein@latimes.com

*

(INFOBOX BELOW)

65%

of college students didn't buy all required textbooks.

45%

bought at least one textbook online (main reason: price).

14%

photocopied books or other materials sold by publishers.

13%

resold a textbook online.

6%-7%

bought all of their textbooks online.

*

Source: National Assn. of College Stores, fall 2005 survey of more than 16,000 U.S. college students

::: posted by Stewart at 3:46 PM


 

--------------------------------------------------------------------------------
http://www.nytimes.com/2006/11/05/business/yourmoney/05giffen.html
November 5, 2006
Oil, Cash and Corruption
By RON STODGHILL
ON a warm afternoon in late September, Nursultan A. Nazarbayev strode across the tarmac at Andrews Air Force Base to board his private 767. Surrounded by an entourage of security guards and political advisers, Mr. Nazarbayev, the president of Kazakhstan, was heading home after an eventful visit that included a meeting with President Bush in the White House and a boating jaunt in Maine with the president’s father, George H. W. Bush. He also attended a swank fete at the Capital Hilton Hotel where his hosts, the business mogul Ted Turner and former Senator Sam Nunn, praised him for closing a major nuclear test site.

Warm welcomes aside, human rights groups frequently characterize Mr. Nazarbayev as a dictator who, during 15 years of rule, established a hammerlock on his country’s oil riches and amassed a fortune at the expense of an impoverished citizenry. Supporters say he has wedded a draconian political order to clear-eyed economic policies, making his country hospitable to foreign investment. But his White House visit came at a tender moment. About a month earlier, the Bush administration introduced its National Strategy to Internationalize Efforts Against Kleptocracy, an initiative aimed at preventing public graft worldwide by, among other things, denying corrupt leaders access to the United States financial system.

“Kleptocracy is an obstacle to democratic progress, undermines faith in government institutions and steals prosperity from the people,” President Bush said. “Promoting transparent, accountable governance is a critical component of our freedom agenda.”

Mr. Nazarbayev’s visit, coming on the heels of those sentiments, sparked renewed criticism of his leadership and questions about the White House’s dedication to battling corruption overseas — possibly explaining why the administration decided against holding a state dinner in the Kazakh leader’s honor. But behind the scenes, a legal drama has been playing out that analysts say may more fully explain why Mr. Nazarbayev and the White House are engaged in such an elaborate form of political kabuki.

In February, the United States attorney’s office in Manhattan is scheduled to go to trial in the largest foreign bribery case brought against an American citizen. It involves a labyrinthine trail of international financial transfers, suspected money laundering and a dizzying array of domestic and overseas shell corporations. The criminal case names Mr. Nazarbayev as an unindicted co-conspirator. The defendant, James H. Giffen, a wealthy American merchant banker and a consultant to the Kazakh government, is accused of channeling more than $78 million in bribes to Mr. Nazarbayev and the head of the country’s oil ministry. The money, doled out by American companies seeking access to Kazakhstan’s vast oil reserves, went toward the Kazakh leadership’s personal use, including the purchase of expensive jewelry, speedboats, snowmobiles and fur coats, federal prosecutors say.

Beyond the large amounts of cash involved and the top-flight access such sums often secure, the case against Mr. Giffen has opened a window onto the high-stakes, transcontinental maneuvering that occurs when Big Oil and political access overlap — a juncture marked by intense and expensive lobbying, overseas deal-making and the intersection of money, business and geopolitics. It is a shadow world of nebulous boundaries that people like Mr. Giffen establish and define, often on the fly. The case also illustrates the government’s struggle to reconcile its short-term energy interests with its longer-term political goal of encouraging democracy in countries the international community has deemed corrupt.

To be sure, many an American president has entertained a foreign leader under a cloud of suspicion, but Mr. Nazarbayev’s role in a federal criminal investigation makes him an unusual entry into that company. Bush administration officials have acknowledged that the Kazakh government falls short in its democracy-building efforts. But some foreign policy specialists see Kazakhstan as an important ally in the administration’s campaign against terrorism and a bountiful alternative to oil reserves in the volatile Persian Gulf — all of which promise to make the opening of the Giffen trial more than just hit-and-run bribery fare.

“The administration is naturally reticent about Giffen’s case,” said Raymond W. Baker, an energy policy analyst on loan to the Brookings Institution, a liberal research group. “It would probably be a lot easier on everyone if he had gotten away with it.”

IN a world long accustomed to outsize public corruption, some analysts say Mr. Nazarbayev is in a class by himself. “I can’t think of a leader in the free world as notoriously corrupt as Nazarbayev,” said Jonathan Winer, a former deputy assistant secretary of state during the Clinton administration. “We’ve known about his corruption for at least 15 years because our own intelligence agencies have told us.”

Mr. Nazarbayev is certainly a mixed bag of goods, others said, but that is the way the world works. As Jerry Taylor, a senior fellow at the Cato Institute, a libertarian research group, put it, “Kazakhstan’s human rights record may be checkered, but if the United States were to disengage from those countries with checkered human rights and other bad actors, we’d be history.”

The Clinton administration itself embraced Kazakhstan in the 1990s and praised Mr. Nazarbayev for leading his country toward economic and democratic reform. Administration officials, including the former Secretary of State Madeleine K. Albright, also met with Mr. Nazarbayev in Kazakhstan.

“The Clinton administration certainly had enough information about Nazarbayev’s corruption,” Mr. Winer said. “The information on him was open, notorious and present.”

The work of defending the curious financial and diplomatic portfolio of Mr. Giffen is the job of William J. Schwartz and Steven M. Cohen, of Cooley Godward Kronish in Manhattan. The firm’s 48th-floor conference room offers some of the standard accoutrements of the white-collar defense bar — handsome wood paneling, a flat-screen television, a skyline view facing south toward Wall Street and a long oval table surrounded by leather chairs and punctuated at its center by a bouquet of sharpened white pencils.

In the spring of 2003, federal agents arrested Mr. Giffen as he and Mr. Schwartz prepared to board a flight from New York to Paris. Prosecutors accused him of overseeing a tangled bribery network in the 1990s designed to buy access and influence in Kazakhstan for oil giants like Exxon Mobil, BP Amoco (now BP) and Phillips Petroleum (now ConocoPhillips). The payments, prosecutors said, violated the Foreign Corrupt Practices Act, which forbids American citizens or corporations from paying bribes to foreign officials to obtain business. None of the oil companies have been accused of any wrongdoing.

While Mr. Giffen’s lawyers have conceded that their client shuffled money from one secret bank account to another, they have maintained that he did not act alone. “Mr. Giffen was working with the knowledge of our government,” Mr. Schwartz said. “Jim’s access in Kazakhstan was a function of a bizarre historical time.”

At the heart of Mr. Giffen’s defense is a motion filed by his lawyers in June 2004 to Judge William H. Pauley III of Federal District Court in Manhattan, seeking access to classified government documents for his defense.

For now, each of the names, titles, and government affiliations of individuals mentioned in the document are blacked out on virtually every page. Mr. Giffen’s lawyers have argued that much of the evidence necessary to prove his innocence rests with various officials and agencies that helped him conduct business in Kazakhstan. Without such witnesses, the lawyers say, it will be difficult for them to prove their client was performing his duties as an American. Court filings by Mr. Giffen’s lawyers suggest that senior officials at the Central Intelligence Agency, State Department and White House encouraged him to use his close ties with Kazakh leaders to ferry valuable intelligence back to the United States. Judge Pauley has written an opinion supporting the motion, but the United States attorney’s office has appealed it.

“Before this is over, Giffen’s lawyers will file a variety of motions to get at the classified stuff, but the history of that isn’t terribly terrific,” said Jack Blum, a former investigator for the Senate Foreign Relations Subcommittee. “Senior officials can very conveniently avoid governmental embarrassment by keeping everything classified.” Mr. Blum added, “When you have a kind of blink-and-nod, clandestine waiver of the law with the government, once the problem blows up, you’re going to get hung out to dry.”

Spokeswomen from the C.I.A. and the White House declined to comment.

Congress passed the Foreign Corrupt Practices Act in 1977 after concluding that bribery abroad had become an important foreign policy issue that “embarrasses friendly governments, causes a decline in foreign esteem for the United States and casts suspicion on the activities of our enterprises, giving credence to our foreign opponents.”

Mr. Giffen’s lawyers say he cannot be found guilty of bribing a foreign government because his activities were part of his official duties as an adviser to the Kazakh government and they received the blessing of senior American officials who regularly debriefed him on his activities.

That contention has prompted a blizzard of motions, memorandums and filings between the federal government and Mr. Giffen’s lawyers. Federal prosecutors have sought to block Mr. Giffen’s access to documents on the grounds that disclosing them could breach national security interests.

It was not only individuals in Kazakhstan who received some of their client’s bounteous fees, former associates of Mr. Giffen said. In 1998, two years before federal investigators began looking into Mr. Giffen’s activities in Kazakhstan, he invited Mark Siegel, a Washington political consultant, to join a group of policy experts to develop a blueprint for reforming Kazakhstan’s economy and government. It was an ambitious task, Mr. Giffen conceded, but its participants would be well compensated. Mr. Siegel, a former executive director of the Democratic National Committee, agreed to a monthly retainer of $30,000 for his firm and soon found himself on a flight to Almaty, Kazakhstan’s former capital.

As it turned out, Mr. Siegel was in high-powered company. Mr. Giffen had harnessed prominent businessmen, policy experts, lobbyists and former government officials to serve on the committee. Among those included in the group were Robert Blackwill, a former ambassador during the first Bush presidency, and Philip D. Zelikow, now a counselor to Secretary of State Condoleezza Rice, Mr. Siegel recalled in an interview. Neither Mr. Blackwill nor Mr. Zelikow responded to interview requests.

“We were a kind of a Great White Hope,” Mr. Siegel said. The committee was divided into a “P Group” and an “E Group” to distinguish political and economic experts in the group. Mr. Nazarbayev “came across as a reformer open to free markets and fair elections.”

According to his lawyers, Mr. Giffen, at Mr. Nazarbayev’s direction, paid several million dollars in fees from Swiss accounts — many of the same accounts named in Mr. Giffen’s indictment — to committee members for their expertise on a range of policy issues involving Kazakhstan.

The group’s recommendations can be found in two spiral-bound documents that came to be known simply as the Red Books. Mr. Giffen’s lawyers, as well as Mr. Siegel, said the creation of the committee reflected Mr. Giffen’s interest in helping Mr. Nazarbayev move his country away from an authoritarian government to a more democratic model. While the Red Books lists an impressive array of financiers and policy makers in its membership ranks, some of those named in the document said they never worked with Mr. Giffen. One of those people, John C. Whitehead, the former chairman of the investment banking giant Goldman Sachs, acknowledged being an acquaintance of Mr. Giffen but said he was never part of the group. “I’ve never been to Kazakhstan,” Mr. Whitehead said, “and I’ve certainly not had that kind of formal relationship with Jim Giffen.”

Mr. Giffen’s lawyers declined to discuss any other aspects of his work with the committee, but said that the committee’s existence proved that the scope of his influence with policy makers far transcended energy matters.

SUPPORTED or not by the federal government, Mr. Giffen reportedly managed to orchestrate what the government describes in its indictment as an elaborate money laundering and tax fraud scheme carried out in six separate oil transactions from 1995 to 1999, all of which involved defrauding the government of Kazakhstan. Mr. Giffen is accused of hiding some of the proceeds in each of the deals through a series of wire transfers that ultimately landed in Swiss bank accounts. One deal Mr. Giffen’s indictment details involved Mobil Oil’s 1996 purchase of a 25 percent interest in Kazakhstan’s Tengiz oil field. Located in the mineral-rich Caspian region, Tengiz is the sixth-largest oil field in the world, producing 285,000 barrels a day, or about a third of the country’s daily production.

The indictment states that after Mobil paid Mr. Giffen a $51 million fee for negotiating the deal, he transferred half of the money to a Swiss account and then sent the money on a circuitous path through a number of other accounts, including one registered to a British Virgin Islands company. Exxon and Mobil merged in late 1999 to form Exxon Mobil, the world’s largest oil company. Russ Roberts, an Exxon spokesman, said Mobil was not the source of any payments to Mr. Giffen.

“Exxon Mobil has no knowledge of any illegal payments made to Kazakh officials by any current or former Mobil employees,” Mr. Roberts wrote in an e-mail response to an interview request. “We also have no knowledge of any illegal payments received by any current or former Mobil employees.” Mr. Roberts said neither Mr. Giffen nor his company, Mercator, had represented Mobil or Exxon Mobil.

In 2003, a former Mobil manager pleaded guilty to evading taxes on $7 million he received from Mr. Giffen starting in 1993. Mr. Roberts noted that Mr. Giffen’s payments to the manager had begun several years before any Mobil acquisition in Kazakhstan and that Mobil had not been the source of the payments. Although prosecutors described the payments to the manager as “kickbacks” for work done on Mobil’s behalf, the manager, Mr. Roberts said, repudiated that accusation. Mr. Roberts declined to further discuss the matter.

But according to the indictment, Mr. Giffen wired another chunk of what court papers describe as a Mobil fee, about $20 million, into another pair of Swiss accounts. Nurlan Balgimbaev, the former prime minister and oil minister of Kazakhstan, controlled one of the accounts, according to the indictment. A Liechtenstein trust, of which Mr. Nazarbayev and his family were beneficiaries, controlled the other account, the indictment asserts.

In the process, the government asserts, Mr. Giffen paid $36,000 of Mr. Balgimbaev’s personal bills for the upkeep of a house in Newtown, Mass., spent $30,000 to buy fur coats for Mr. Nazarbayev’s wife and daughter and bought a Donzi speedboat as a gift from Mr. Nazarbayev to Mr. Balgimbaev.

ConocoPhillips and BP, two of the other oil companies which the indictment says paid Mr. Giffen, declined to comment. A lawyer and former federal prosecutor who represents the Republic of Kazakhstan, Reid H. Weingarten, declined to discuss the case. But few involved on either side of Mr. Giffen’s case have denied that his ties to Mr. Nazarbayev were substantial, longstanding and gilded.

“Everyone agrees on one thing, which is that Nazarbayev took bribes,” said Rinat Akhmetshin, director of the International Eurasian Institute, a Washington research group that supports Mr. Nazarbayev’s political opponents. Mr. Akhmetshin said the case was being closely followed in Kazakhstan and that Mr. Nazarbayev’s political future could turn on the trial’s outcome. “The moment Giffen goes to jail, Nazarbayev is finished as a politician,” he said.

JAMES GIFFEN’S financial ascent — from a young banker on the make into a well-heeled political insider with a bodyguard, a chauffeur-driven Mercedes-Benz and a Kazakh diplomatic passport — was a serendipitous blend of lucrative financial opportunities in Eastern Europe and Central Asia and old-fashioned elbow grease.

The son of a clothier in Stockton, Calif., Mr. Giffen, who is now 65, had ties to the Soviet Union dating back to the early 1970s. After graduating from the University of California, Berkeley and the School of Law at U.C.L.A., he started his career at a minerals trading firm before joining a subsidiary of the Armco Steel Corporation (later acquired by AK Steel). Armco was led by C. William Verity Jr., a champion of increased trade with the Soviet Union who would later serve as commerce secretary in the Reagan administration. Mr. Giffen became a vice president at the Armco subsidiary, which sold drilling equipment to the Soviet Union.

Although Mr. Giffen did not speak Russian, and the Soviets showed little interest at the time in trading with the West, he persistently courted Russia’s leaders. Nattily dressed and with a cigarette constantly in hand, Mr. Giffen exuded an affecting bluster and self-assurance — many who know him call it bravado — that eventually gained him the ears of high-ranking Soviet leaders. By the mid-1980s, Mr. Giffen had left Armco and founded his own company, Mercator, a boutique merchant bank headquartered in New York. He began the company with a five-year contract from Armco and a board of directors that included Mr. Verity and two former government officials.

Over the next decade, his lawyers have said, Mr. Giffen came to count Mikhail Gorbachev in his network of powerful friends within the Soviet government, the Communist Party and the K.G.B. In the late 1980s, Mr. Giffen convinced Chevron, Eastman Kodak, Ford Motor and RJR Nabisco to form a coalition aimed at penetrating the Soviet market through joint ventures — deals that Mercator would handle.

Although that initiative collapsed with the Soviet Union in 1991, Mr. Giffen had apparently become a conduit for information involving United States-Soviet affairs. On one occasion, the White House asked him to describe a meeting he had had with Mr. Gorbachev and to suggest trade issues that the first President Bush should raise with Mr. Gorbachev, according to filings in the federal court case. A memo, which an American official apparently prepared for the first President Bush, recounts Mr. Giffen as stating the president had “hit paydirt” with Mr. Gorbachev and that “whatever President Bush wants to do, Gorbachev will try to do.”

When 15 independent states emerged from the collapse of the Soviet Union, Mr. Nazarbayev contacted Mr. Giffen, his lawyers say. Mr. Nazarbayev, head of Kazakhstan’s Communist Party, and Mr. Giffen, who was president of the U.S.-U.S.S.R. Trade and Economic Council, had become close friends by that time, said Mr. Schwartz, the lawyer.

DURING Chevron’s discussions to acquire an interest in the Tengiz oil field, the company became one of Mr. Giffen’s clients. The company says the relationship was short-lived. “In the early 1990s, Chevron obtained the services of Mr. Giffen with respect to business opportunities with Russia and the individual republics,” the company said in an e-mail response to an interview request. “Chevron terminated that relationship in 1992.”

Mr. Nazarbayev asked Mr. Giffen to play an advisory role within the newly sovereign nation of Kazakhstan, according to Mr. Giffen’s lawyers.

As the country’s first president, Mr. Nazarbayev was determined to attract the involvement of multinational oil companies in developing his country’s bountiful oil fields, according to political and economic analysts. To that end, Mr. Nazarbayev hired Mr. Giffen to serve dual roles. As a special adviser to Kazakhstan, Mr. Giffen oversaw the country’s efforts to attract investment from the United States, while his company, Mercator, advised the Kazakh government on oil and gas transactions.

“Giffen was able to cast himself as a bigger-than-life figure who really knew how to work the West,” said Martha Brill Olcott, a specialist on Central Asian and Caspian affairs with the Carnegie Endowment for International Peace. “Nazarbayev liked that and they created a relationship of great personal trust.”

Mr. Giffen’s and Mr. Nazarbayev’s close relationship sparked resentment among some senior Kazakh officials. “The biggest problem with Giffen was that he was trying to create an instrument of government that would keep himself and the president in power,” said the former prime minister of Kazakhstan, Akezhan Kazhegeldin. “He never dreamed he’d be so close to power.”

In a telephone interview, Mr. Kazhegeldin declined to discuss Mr. Giffen’s indictment but said that he and Mr. Giffen had clashed on several occasions. Within Kazakhstan’s senior ranks, Mr. Kazhegeldin had gained a reputation as a champion of free enterprise economics and someone favored among Western leaders, Ms. Olcott said. Mr. Kazhegeldin himself asserted that his penchant for economic reform and his calls to reform his country’s autocratic government ultimately alienated both Mr. Giffen and Mr. Nazarbayev.

Now living in Italy and London, Mr. Kazhegeldin said he had spent millions of dollars on lobbyists and public affairs specialists in the hope of defeating Mr. Nazarbayev in Kazakhstan’s next election, scheduled for 2011. “There is a small group of people getting rich — and I mean really rich — in Kazakhstan while the rest of society remains really poor,” Mr. Kazhegeldin said. “The leadership is not interested in pushing a market economy. They keep two sets of books, one for themselves and another for everyone else.”

Mr. Kazhegeldin, however, is a veteran of the pell-mell economic scramble of the post-Soviet years. He amassed his wealth as a rogue salesman in the waning years before the Soviet Union’s dissolution, selling scrap metal on the black market while studying international business at Moscow’s K.G.B. Academy, according to a résumé furnished by a close associate who asked not to be identified because of the nature of the work he does for Mr. Kazhegeldin. After the spy school kicked him out in 1989 for his moonlighting activities, Mr. Kazhegeldin went on to make his millions exporting chemical fertilizer, the associate said.

Mr. Nazarbayev began his own investigation of Mr. Kazhegeldin’s finances in the fall of 1998 — to score political points, Mr. Kazhegeldin’s supporters said — which snowballed into an international scandal when it led the United States government to examine Mr. Giffen’s activities more closely.

In fall 1999, the Kazakh government accused Mr. Kazhegeldin of embezzling several million dollars into an offshore account that he controlled. Mr. Kazhegeldin denied any wrongdoing and said neither he nor any family members had access to the account.

Mr. Kazhegeldin accused Mr. Nazarbayev of arranging the deposit and leaking information about it to the news media to secure victory in a 1999 presidential election. A 1999 State Department examination of the Kazakh investigation into the accounts reportedly linked to Mr. Kazhegeldin concluded that the investigation, “while possibly grounded in facts, appeared motivated politically.”

After Kazakh officials contacted Belgian and Swiss authorities to examine Mr. Kazhegeldin’s possible role in the looting of government funds, the Swiss contacted the Justice Department to discuss what appeared to be a pattern of questionable transactions between Kazakhstan and American and European oil companies.

As federal investigators reviewed the transactions in 2000, they noticed that Mr. Giffen was party to many of them, according to his lawyers. Over the next two years, investigators focused more closely on Mr. Giffen and subpoenaed records from Mercator. A treaty between the United States and Switzerland permitted investigators to obtain detailed records of Mr. Giffen’s financial activities in New York and Switzerland, according to his lawyers. In February 2003, the United States attorney’s office in Manhattan won a grand jury indictment against Mr. Giffen on fraud charge. A month later, as Mr. Giffen boarded a flight from New York to Paris with his lawyers, federal authorities arrested him.

As the Giffen trial moves forward, with the possibility that more information about Mr. Giffen’s interactions with the Kazakh government, Washington policy makers and multinational corporations may emerge, it promises to shine a spotlight on the terms of engagement when the United States courts resource-rich countries riddled with corruption.

“Corruption is at the heart of what causes poverty in third world countries,” said Mr. Blum, the former Congressional investigator. “We tell ourselves that in the short term, we can buy these guys who will serve the national interest, but in the long run it always turns into a disaster.”

The World Bank, the Washington economic development organization that focuses its efforts on needy countries, has brought much of the current debate about overseas financial corruption to the fore. In the early 1990s, the bank started measuring corruption within the governments of its member countries. The initiative was controversial because until then, economists had largely considered corruption to be an ethical or cultural issue. The bank began interviewing hundreds of private citizens, as well as employees in government and business, trying to pin down the pattern and prevalence of corruption in areas like banking, real estate, health care, media and education.

“What we realized was that corruption is not just a moral or ethical issue but an economic development issue,” said Daniel Kaufmann, an economist who began the World Bank’s corruption studies. “We estimated that with good governance, there is a threefold increase in per capita income as funds that should be allocated toward the gross domestic product are not siphoned off.”

BY 1995, Mr. Kaufmann’s team developed a rating system that measured factors like corruption control, absence of violence, government accountability and regulatory quality in various countries. The ideas became a cornerstone of the bank’s agenda. Since the mid-1990s, it has started more than 600 anticorruption programs in nearly 100 countries. Under Paul D. Wolfowitz, who became head of the World Bank last year, it has continued its anticorruption efforts. In what Mr. Wolfowitz described as efforts to stem corruption, he recently threatened to cut loans and development contracts in India and Kenya. Mr. Wolfowitz, a former deputy defense secretary in the Bush administration and an architect of its policies in the Middle East, has received the White House’s backing in prioritizing anticorruption campaigns. But some research groups, and some of the bank’s own administrators, have criticized Mr. Wolfowitz for using the World Bank to advance the White House’s foreign policy goals in countries like Iraq, where the bank recently increased its lending support.

A World Bank spokesman denied that Mr. Wolfowitz was serving the White House’s interests. “He doesn’t hesitate to serve as an independent voice for the poorest people — including when it goes against the grain on issues like trade, debt relief and support for official development assistance,” the spokesman wrote in an e-mail message.

Kazakhstan, and Mr. Nazarbayev’s stewardship of the country, have been fodder for World Bank scrutiny. According to the bank’s 2005 Worldwide Governance Indicators, Kazakhstan ranks with Angola, Bolivia, Kenya, Libya and Pakistan among the world’s corruption hotspots.

Other anticorruption watchdogs, like Transparency International, also rate Kazakhstan poorly for its governance practices. The State Department’s 2005 Kazakhstan Country Report on Human Rights Practices noted that the Kazakhstan government’s “human rights record remained poor” and that “corruption remained a serious problem.”

Despite such low scores and scathing critiques, the World Bank has lent Kazakhstan more than $2 billion for 28 projects since 1992. In fiscal 2006, commitments to Kazakhstan totaled $130 million, with overall commitments for active projects at $648 million.

Juan José Daboub, who oversees the World Bank’s governance program, declined to comment specifically on corruption issues in Kazakhstan or on Mr. Nazarbayev’s leadership.

“We respect what countries pick in terms of leadership,” said Mr. Daboub. “We are not judges, prosecutors or investigators.”

But Mr. Baker, the energy analyst at the Brookings Institution, saw things differently: “If you’re a country with a lot of oil, you get a lot of free passes.”

Human rights groups have spent years blasting Mr. Nazarbayev for shutting newspapers critical of his regime; passing laws that threatened to prosecute individuals whose actions were considered threats to the country’s economic development efforts; tolerating and participating in vast graft; and the like. But rarely have American policy makers openly opposed Mr. Nazarbayev’s leadership and actions, analysts said.

“He has done a pretty sophisticated job of reaching out to many sectors,” said Thomas O. Melia, deputy director of Freedom House, a liberal research group in Washington. “He is not like a lot of leaders, who put all of their eggs in the White House basket.”

Even so, the White House, through successive administrations, has been a reliable and enormously influential ally of Mr. Nazarbayev, and its continued embrace of Kazakhstan’s leader rankles some members of Congress.

“It’s just hypocritical for President Bush to issue statements on combating foreign corruption and then to embrace a dictator,” said Senator Carl Levin of Michigan, the ranking Democrat on the Senate Governmental Affairs Committee. “It sends a real negative message to countries that you’re trying to win support from.”

Senator Levin characterized Mr. Nazarbayev as “an iron-fisted dictator who imprisons his opponents, bans opposition parties and controls the press.”

But some say the White House should be worldly wise when it comes to supporting certain countries in volatile but resource-rich regions. Ariel Cohen, a senior fellow at the Heritage Foundation, a conservative research group, said the Bush administration had effectively balanced its long-term foreign policy goals involving energy issues with its human rights standards in Central Asia. Because of turmoil in other Central Asian countries, Kazakhstan has emerged as a possible military foothold for the United States there.

“When it comes to Kazakhstan, it’s all about three things; energy, democracy and security,” Mr. Cohen said. “I would argue that relative to his competition in Central Asia, Nazarbayev is the most successful in pursuing each of them. Sure, there is still corruption and insufficient rule of law, but this is a country that 15 years ago had no statehood. They have started from scratch.”

If Mr. Giffen’s trial gets under way in February, it may enrich and shed light on the debate about the United States’ engagement with Kazakhstan and other countries that have poor anticorruption records.

FOR their part, Kazakh officials worry that Mr. Giffen’s trial may set their nation on a backward course. Mr. Weingarten, the lawyer representing the Kazakh government, wrote a letter in 2002 to the Justice Department on behalf of his client. The letter was straightforward: “Even if it were possible for the prosecutors to indict President Nazarbayev, we cannot envision a scenario where the United States would deem it in its interest to indict the leader of an important strategic ally.”

Even more important, said some of Mr. Giffen’s allies, is that the whole messy affair of moving bribes and laundered money around the world has caused Mr. Giffen’s work to become unfairly mischaracterized.

“If this whole thing was just about oil, it was one of the biggest snow jobs in U.S. history,” said Mr. Siegel, the Washington lobbyist who aided Mr. Giffen’s efforts in Kazakhstan. “I believed that we were doing God’s work.”



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