BASRA, Iraq - Controversial Iraqi politician Ahmed Chalabi hit back Sunday at the country's defense minister Hazem Shaalan over threats to arrest him.
Chalabi, a dark horse candidate for prime minister, denied he had fled to the southern city of Basra after Shaalan threatened to jail the one-time Pentagon favourite for slandering his ministry.
"My answer to Shaalan is that he knows nothing about law or how a state is to be administered and he cannot overcome Iraqi authority and thus he cannot arrest anybody," a defiant Chalabi told reporters in the southern port of Basra.
Chalabi reiterated his accusations that Shaalan and other government officials had engaged in suspicious activities, transferring large sums of money out of the country to buy weapons for the Iraqi army.
"Hazem Shaalan illegally leaked out millions of dollars through opaque channels. This is the first time such a thing happens in that way."
Chalabi arrived at a Basra hotel under heavy security with bodyguards and 16 four-wheel drive vehicles, accompanied by Shiite political leader Abdul Kareem al-Mohammadawi, head of the fundamentalist Hezbollah party.
On Friday, Shaalan said the Baghdad government would shortly arrest Chalabi for staining his ministry's reputation.
"We will arrest him and hand him to Interpol... He sought to tarnish the image of the defense ministry and... the reputation of the defense minister," Shaalan told Qatar-based Al-Jazeera television.
Chalabi's comments put an unwanted spotlight on the financial dealings of Prime Minister Iyad Allawi's government, raising questions about its conduct.
Fanning the controversy, The New York Times reported that Allawi, Shaalan and a small circle of council members sent 300 million dollars to a bank in Lebanon last week.
Iraqi officials told the Times the money had been sent out to buy tanks and other weapons from arms dealers for the Iraqi army, but the covert nature of the deal had raised eyebrows.
Chalabi, who fell out of favour in Washington over US accusations that he had been passing top-secret US intelligence assessments to neighbouring Iran, has himself long been dogged by allegations of corruption and was convicted by a Jordan court for embezzling funds from the collapsed Petra bank.